Nonfungible tokens (NFTs) prove ownership by creating a unique digital certificate for a specific asset.

A decentralized digital ledger that keeps track of all nonfungible token transactions and ownership changes is used to create each NFT. When generated, an NFT has a unique digital signature, signifying the ownership of the asset it stands for.

This signature is recorded on the blockchain with all the information about the asset and the transaction. Since the blockchain is decentralized and offers immutability, it provides a secure and transparent record of ownership that cannot be altered or deleted.

Once an NFT is minted, it can be transferred from one owner to another through a safe and transparent mechanism. Similar to changing ownership of tangible assets, this procedure is digitally recorded on the blockchain.

Related: Nonfungible tokens: How to get started using NFTs

Each NFT is distinct and has a distinctive digital signature, making it possible to establish ownership of a particular item. For instance, if a creator makes an NFT for a piece of digital art they have produced, the nonfungible token can be used to demonstrate that the creator of the NFT is the rightful owner of the piece of art.