An NFT is a unique, indivisible token that can represent ownership of just about anything. An NFT can represent a work of art, a digital playing card, a deed to a house, or really just about anything. They are defined by the standard put forth in ERC-721.
Unlike Fungible Tokens (like ETH or tokens of a specific ERC-20), one NFT is not a drop-in replacement for another.
Simple Fungible/Non-Fungible example:
- Fungible: If we trade and you pay me with $5, I don't care which $5 I get.
- Non-Fungible: If we trade and you are to give me a place to live, I will definitely care if you give me a tent when I was expecting Windsor Castle.