NFTs are meant to be user owned and users pay the price for the ownership of may be unique stuff like a domain name, a limited-time skin for a video game, digital properties which belong to a user, and it is known that they are not mutually interchangeable. NFTs are different from cryptocurrency.

The important application of NFTs is to create digital ownership and scarcity. NFTs with similar standards create the potential for interoperability across multiple platforms in a blockchain.  The interoperability factor contributes to be the management layer for NFTs.

NFTs which are interchangeable are listed in market places where they are subject to speculative buying and selling providing for ownership of digital intellectual property to buyers and sellers.

When people did not understand NFTs they were given it free of cost.  For instance, Cypher Punks.  The Punks were initially made available to users free of cost.  They were provided with anyone with an Ethereum Wallet.

To provide for scarcity only 10,000 Punks were developed and no two punks were created alike to make it unique. The average cost for which punks later sold were approximately $2,998 on December 29, 2020.  CryptoPunks is just one example of a rare digital art.

NFTs were also made available through blockchain games like Cryptokitties built on the Ethereum blockchain.  These NFTs represented in-game assets. It was also possible to trade these in-game assets in third party marketplaces. There as no permission required from the developer to trade these in the third-party market places.

There are different standards for NFTs. NFTs become valuable by virtue of their standards.  The standards determine how the NFTs are supposed to behave in the market. Also, standards guarantee that the non-fungible assets will behave in a particular way and therefore describe exactly how they will interact with the basic functionality of the specific asset.

The first standard, which represented non-fungible assets used to be the ERC-71 from Crypto kitties.

What do you mean by “The ERC-721 standard”? This is an inheritable Solidity smart contract, which means other developers will be able to use the ERC-721 to create and develop new compliant contracts, which means ERC-721 will give the permissions required to transfer non-fungible assets from one party to another eventually providing an identifier for that asset’s current owner.

Similarly, there are ERC-1155, ERC-721 and others.  Just to say that NFTs are more than JPEGs and there is more to NFT transactions than just what meets the eye.