Many people choose to be blind to the fact that Blockchain technology blessed us to be able to do other things than the creation of digital money (such as bitcoin and the likes). Cryptocurrency and digital money are only one of the very vast uses of Blockchain technology. One use of Blockchain technology is the creation of Non Fungible tokens. To first understand what a Non Fungible Token, we will break it down and explain from the start in its most basic form.
For a currency or an asset to be said to be Fungible, that means the assets individual units are indistinguishable from each other in terms of value and functionality. That in layman terms means that the currency is able to retain its value over time and they cannot be differentiated. For instance, if I have $5 and you also have $5, both are separate individual units but they have the same value and that means that the $5 with me as well as the $5 with you are equal in value and magnitude, regardless of what date they were printed and how circulated one has been. Now that's out of the way, you understand that it's an important feature of currencies. Imagine if one $5 bill was worth $5, while another was worth $4 because it had been in circulation a year longer than the other, and a last $5 was worth $3 because it had been in circulation for 5 years more than the other two. Imagine the chaos that would bring and then you will better understand and appreciate Fungibility.
So now that we understand what fungibility means, we just need to add "non" to it and we get "non-fungible". Well non means not, so we can say Non Fungible means tokens that are not fungible. In other words different from each other and unable to retain the same value overtime. So in essence, a non fungible token can be simply put as a special type of token used to represent something unique. They are also unique in a sense cos they are ERC-721 not ERC-20 specification.
Now we know that Non fungible tokens are created to NOT hold the same value overtime and each is different from the other. But the million dollar question is why would you want to use something that has a different value today from what it has yesterday?
Well Non Fungible Tokens work as a kind of database for information or an entries of information. So they are used where differentiability and identity are needed eg, Ethereum blockchain collectibles (like the Crypto kitties)
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