The term NFT stands for Non-Fungible Token Standard. The smart contract standard of NFTs is the ERC-721. They are decentralized programmes on a programmable blockchain.
Instead of being an ERC-20 standard for fungible units, they are non-fungible or unique objects inside a blockchain.
Although NFTs are best known for representing images and digital art for now, they can be associated with any other physical or digital object external to the blockchain through metadata.
NFTs are transferable, can be bought and sold, and can be rented just like any physical object in the real world.
They can be used as collateral for loans, so this, combined with the fact that they may represent a wide variety of physical and digital objects, lends itself to build complex structures in the future for the trading, hypothecating, lending, and leasing of all sorts of objects on the blockchain.
The blockchain in itself, with the private and public key system, serves as the property registry for NFTs.
NFTs may serve many use cases
Collectibles: This is the first and most well known use case for now. NFTs are practically a synonym for digital art and images on the blockchain.
Intellectual property: Other kinds of intellectual property may be represented as NFTs on programmable blockchains, these may include music, movies, books, scientific papers, articles, documentaries, and other kinds of IP.
Movable property: Cars, trucks, boats, and all sorts of movable property may be represented on the blockchain as NFTs.
Real estate: Houses, apartments, hotel rooms, buildings, office space and all sorts of real estate may be represented as NFTs on the blockchain.
Cash flows: Non-fungible future cash flows, for example invoice discounting, may be represented as NFTs on the blockchain.
Supply chain objects in general: Containers, ships, goods, pallets, and other supply chain objects may be represented as NFTs on the blockchain.