What are Smart Contracts in NFTs?

4 mins read
What are smart contracts in nfts

NFTs have become so popular that almost everyone must’ve heard about them. So far it has managed to remain the trendy topic all around the world for a very long time. NFTs or nun-fungible tokens are irreplaceable tokens that keep the authenticity and proof of ownership.

They have taken over the world and are on the course to change the way we are viewing tokens. While getting into NFTs you will come across a myriad of other terms related to NFTs.

A Smart Contract is one such term that you will come across when looking through NFTs. With the inclusion of the word “contract”, you might be thinking that it’s something complicated or something that is hard to grasp.

Well, it isn’t! It is relatively easy to understand and you don’t need to bring out your inner “Einstein” to understand Smart Contracts.

Before discussing why Smart Contract is included in NFTs let’s bide towards what they essentially are.

What are Smart Contracts?

A contract is an array of statements to which two parties agree to execute a particular task. A contract comes in between several things such as bank loans, trading activities, and many more. Smart Contract holds several similarities with a normal contract but is a digital contract with a bit of added functionalities. It is an assortment of agreements that are stored on a blockchain as codes. They are set up with pre-arranged conditions and these contracts automatically execute only if the conditions are met. A Smart Contract once set up cannot be hampered or meddled.

For example,

Suppose you build up a Smart Contract for a project that you are coming with the agreement that the contract will hold the money until a project is completed. So the completion of the project is the goal and the Smart Contract will only execute when the goal is reached.

Surprisingly there are people who wish to help you by donating some amount, so the money that they donated will remain with the contract. From there the money goes to you. So a cause emerges making you unsuccessful in your project. The Smart Contract will return the money to the supporters without any hesitation as the criteria of the goal are not met.

Smart Contracts bring in a multitude of advantages. With Smart Contracts, there is no need for a third party or a mediator who is a contract is usually required to handle certain things. Whereas in the case of Smart Contracts they are formed between the members directly and precisely. The information of the Smart Contract is also possessed by all the members leaving no room for any member to change any aspect of the agreements. Once the required conditions of the Smart Contract are met, the contract involuntarily executes without the need for any kind of hassle. The execution has proceeded quickly and without misconception.

In addition to it, Smart Contracts being stored on a blockchain make it near impossible to tamper with. So if you’re thinking that a hacker will meddle with it, don’t worry, no hacker in their right minds will alter the contract on the blockchain. So Smart Contracts are safe and unalterable.

NFTs and Smart Contracts

So by now, you have got an idea of what Smart Contracts are. Eventually, you are left with the question what’s with the inclusion of Smart Contracts in NFT?

Smart Contracts are an integral part of NFTs. As explained before Smart Contracts are a set of agreements that exist as codes on the blockchain and these codes are permanent and are accessible to every member as it is decentralized. With them being a part of NFTs it gives the functionality of making the ownership and identity of it certain and unalterable. The Smart Contract is stored on a blockchain make every information regarding the NFT such as transaction, ownership, and identification, permanent and irrevocable.

Why Smart Contracts?

Makes NFTs unique

With Smart Contracts come the immutable identity assurance. Therefore, the likeliness of a counterfeit of an NFT to exist is out of the question. Thereby making the NFTs exclusive and uncopiable. It is the perfect remedy against them being copied. This is why NFTs hold so much significance and their values have sky-rocketed.

Preserves Originality of the NFT

This is a crucial aspect that the Smart Contract determines about an NFT. It holds the information on the methods that went on the generation and development of the NFTs, and the creators behind the NFT. As mentioned before makes them non-changeable. This significant information is displayed to everyone.

Protects NFTs against replication

Smart Contracts are embedded in the blockchain. Therefore, indicating the storage of every information regarding the NFT. This also signifies the storage of every activity that goes on with the NFT on the blockchain. This includes every transaction and with it comes the ownership. It verifies the ownership and nothing can alter that. Let’s take for example if you own an avatar NFT and you wish to sell it or want to flex it. This means that you are making it available for everyone to see it. A whole lot of enthusiasts would want that rare avatar as well but they won’t be able to copy or hack it, as the ownership is embedded on the blockchain. So if its copy is floating around it won’t account for any value as the ownership is already stored. Ownership is only changed if the verified owner sells it or transfers it to someone else.

When is Smart Contract coded?

The said process is executed during the minting of the NFT. During the process of minting the code of the Smart Contract is fabricated. With this, the particular NFT will be added to the respective blockchain. By now several standards are available for the Smart Contracts of NFTs. The most relevant one is the standards in Ethereum and they are ERC721 and ERC1155 Let’s check out the standards in the Ethereum blockchain.


You must have come across ERC721 a lot if have looked into NFTs. The ERC721 is a distinct standard and it also defines the method of fabricating NFTs on the Ethereum blockchain. The rules that this standard comes with also make it user-friendly.


This comes as a multi-token standard. It can handle both fungible and non-fungible tokens with a single contract.

Smart Contracts are very important when it comes to NFTs. The functionalities that they make NFTs availed of are very significant and make them valuable. They take away a chunk of unnecessary stuff out of the way like mediators and bring in a lot of values into NFTs. They add a great help by adding up full trust between participants. Not just in NFTs they can be used in several other kinds of stuff as well and are paving a path towards an easier future.


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