Unless you’ve been living under a rock, you know that blockchain technology’s non-fungible tokens are polarizing. And they are here to stay!
You probably already know that non-fungible tokens are one of the most divisive features of blockchain technology, unless you’ve been hiding out under a rock. NFTs have exploded in popularity in recent years, and as the dust settles, one thing is becoming more obvious – NFTs are here to stay, love them or hate them. Also, they are developing.
When searching for the next Beeple or Bored Ape Yacht Club, NFT collectors would only be discovered on NFT marketplaces like OpenSea. It appeared that trading NFTS and selling JPEGs for a profit was the technology’s sole application.
Mass adoption is currently in full swing. Some of the biggest businesses in the world, including Starbucks and Amazon, are using NFTs into their business strategies. The internet was taken by Reddit avatars, which introduced NFTs to millions of new users.
Despite the NFT ecosystem’s evident expansion, certain unanswered questions still surround these digital assets. We’ll go back to the basics in this essay. How do NFTs and digital collectibles interact?
So, what is an NFT, exactly?
Infusible Token is referred to as NFT. A blockchain like Ethereum (ETH) or Solana hosts this special token (SOL). A digital item can represent each NFT as a distinct asset. Every type of digital material can be an NFT, though tokenizing digital artwork is the most prevalent usage for NFTs.
Minting your master’s thesis as an NFT is the best approach to guarantee its eternal existence. It will be preserved in a blockchain-based digital wallet rather than collecting dust in a library.
NFTs are non-fungible, which is a key distinction between them and conventional cryptocurrency tokens like Bitcoin (BTC). But what does this actually mean?
Assets that are fungible can be swapped out for equivalent items. Think of a brand-new, crisply printed dollar note from the United States. The clean, 20-year-old note that has fallen behind the couch has the same value as the one that is newer, shinier, and more immaculate in every way.
There is no requirement that I return a friend with exactly the same amount of sugar if I borrow 1 kg from him. The borrowed sugar is fungible because it is disposable and interchangeable. Likewise with cryptocurrencies. On a DeFi app, I can borrow 1 ETH and pay it back with any other ETH.
- Money and Cryptocurrency
- Stocks, Bonds, and Equities
- Oil and precious metals
Non-fungible assets cannot be traded for equivalent items. The Mona Lisa cannot be substituted. While being real estate assets, a home and an apartment are distinct.
As a result, a single JPG from the same collection cannot be used to substitute a token in an NFT collection. A floor punk cannot replace an alien cryptopunk because of its special metadata and characteristics.
- Baseball Cards/Trading Cards
- Real Estate
- Fabergé Eggs
What adds value to NFTs?
Like luxury apparel and art, value is subjective. Van Gogh’s sunflowers are worth millions due to their cultural significance, but a non-artist could think they’re worthless.
Fashion often does this. Louis-Vuitton handbags should not cost 100 times more than leather ones. They pay the premium because it’s valuable.
NFT is a murky market. Traders may gather NFTs from content producers they dislike to make quick money. This illustrates the Greater Fool Theory.
Collectors can validate their ownership of digital items using NFTs. Digital art can be ‘right-click saved’ or screenshotted by anyone, but it does not mean they genuinely own it. Also, the NFT establishes the originality of the digital content, which is crucial for authenticity in the virtual world.
In keeping with the idea of eternal art, an NFT represents the distinction between an original painting and a printed replica.
In 2012, Yoni Assia proposed “Coloured Coins,” rarer bitcoins, as the first NFTs. Assia’s plan was limited by the Bitcoin network, unlike the 2023 Bitcoin Ordinal protocol that went viral.
2014-First NFT Kevin McCoy’s “Quantum” was the first NFT. The 2014 GIF video clip “Quantum” pioneered NFT art and inspired other digital content creators to explore this intriguing new medium. Quantum sold for $1.4M at Sotheby’s.
2017-Timeless NFT Projects Excluding Counterparty and Rare Pepe Cards, NFT history between 2014 and 2017 is unclear. NFTs became desirable once Cryptopunks and other Ethereum blockchain NFT collections appeared in 2017.
Cryptokitties pioneered NFTs as gaming objects and characters. Crypto video games and metaverse projects are now a major blockchain business specialty.
NFT Mania 2021. NFTs become mainstream and hyped. Stars and athletes want NFTs. Jack Dorsey’s first tweet becomes a meme and a $2.9M ERC-721 NFT.
Traditional art faces digital art. Christie’s auction house displays Bored Ape Yacht Club NFTs and crypto art from top digital artists like Beeple. Rarible, SuperRare, and OpenSea handle millions of trades and pay content authors supplementary royalties. Fans collect NBA Top Shot highlights.
2022/2023 – NFT Space Matures Thousands of dealers and collectors are still swapping JPEGs after the 2021 NFT market crash. Lacoste, Porsche, and Starbucks establish NFT-powered loyalty programs.
Avatars are introduced to Reddit in a major NFT event. Reddit renamed NFTs digital collectibles. Avatars can be customized using collectibles.
NFT enthusiasts see Reddit Avatars as a major step toward broad adoption. It changed popular social media perceptions of NFTs and gave over seven million users NFTs and crypto wallets.
What can NFTs Be Used for?
In 2021, NFTs were intensively studied. The public saw the NFT market as a fad full of frauds and cash grabs. Fortunately, NFT use cases are discovered and tested often. NFTs go beyond joining online forums and collecting digital art:
- NFT Gaming is a major cryptocurrency market. Interoperable metaverses will revolutionize gaming. Imagine a game environment like The Oasis in Ready Player One, where your character, items, and crypto wallet are tradeable on a secondary market.
- Cryptocurrency has been used to buy flight tickets for a time. TravelX is testing NFT flights. This lets you purchase, sell, and exchange flight tickets on a secondary market and avoid cancellation and change penalties.
- E-commerce NFTs Internet stores reward loyal consumers with discount vouchers. How can a firm prevent discount codes from being shared? NFTs and blockchain smart contracts let store owners token-gate pages and deals for loyal customers. This aids limited-edition and unique merchandise. Shopify and Doodlez, one of Ethereum’s major NFT collections, have started these connections.
- Kings of Leon and other famous artists have released NFT records. This provides them more influence over music distribution earnings. NFTs can impact the music industry in other ways. Sigur Ros offers complimentary NFTs with presale tickets and signed albums.
- NFTs for Proof-of-Attendance It sounds like a tacky reward for the school. Proof-of-Attendance-Protocol uses blockchain technology to issue NFTs to event attendees. It may validate your attendance at concerts, conferences, and institutions. Event organizers can airdrop future invitations or chances to past guests. POAP can also clarify a candidate’s career and education history and help businesses avoid fraud.
NFTs go beyond JPEG flipping. The world’s biggest brands and enterprises are integrating NFT use cases into their platforms regularly. Understanding NFTs, how they work, and their uses can help you make bitcoin and digital asset decisions.