Back to Basics: What are NFTs and What Happens Next With Them?

Indeed, NFTs are worth every bit of the hype, it is a brilliant innovation that is very much on course to disrupt several industries going forward.

It is way more than most people imagined it. In fact, the extent of what it can do in the future can not be accurately predicted.

What comes to everyone’s mind at the mention of NFT is art or picture, this is because most people don’t even understand what an NFT truly is let alone its underlying principles.

Well, this does not disprove that the initial stage of NFTs was flocked with arts and pictures, in fact, this early stage of NFT saw it shake the market with staggering statistics.

Still asking ‘what are NFTs?’ then this article is for you as it would explain what NFTs are to clear out any confusion you may have about them, as well as explain where it is headed in the near future.

Understanding What NFTs are

A Non-Fungible Token (NFT) is used to identify anything or anyone in a unique way. NFT is created using the same type of programming code used for cryptocurrencies. In simple terms, they are cryptographic unique assets validated by blockchain technology. They cannot be exchanged or traded equivalently like other cryptographic assets.

Although NFTs can exist in several other blockchains, the Ethereum blockchain is the most prevalent, besides, it started there.

So, on this Ethereum chain, NFT ownership is represented with the ERC-721 standard, and it also defines the minimum interface. NFTs can also be ERC-1155 tokens which help to reduce transaction and storage costs.

A distinct attribute of NFT is that unlike cryptocurrencies and Physical currencies which are fungible, they can not be exchanged for one another at equivalency.

To put it simply, you can exchange a $1 note with another $1 note while maintaining the equivalent value. But for NFT, you can’t, why? Because every NFT is unique. Collectible cards, pieces of art, tickets for flights, etc. are examples of the kinds of items that can be NFTs. They are all distinct from one another and cannot be used interchangeably.

It is impossible for one non-fungible token to be equal to another and this changes the crypto paradigm by making each token distinct and irreplaceable. Because each token carries a unique, non-transferable identity to tell it apart from other tokens, they have been compared to digital passports and are digital representations of assets.

How Does NFT Work?

Blockchain, a distributed public ledger that stores transactions, is where NFTs are found. You’re probably most familiar with blockchain as the mechanism underpinning cryptocurrencies.

NFTs are held on the Ethereum blockchain in particular, while they can also be supported on other blockchains.

An NFT is created, or “minted” from digital objects that represent both tangible and intangible items, such as:

• Art
• Real estate
• Domain names
• Videos and sports highlights
• Collectibles
• In-game items like avatars,
• Designer sneakers
• Music
• Event tickets.

Why Do We Need NFTs?

Considering the fact that NFTs can be used to represent any assets whether physical or digital. These attributes have made its use cases highly appreciated in so many sectors.

Imagine, representing your house on the blockchain as NFT, this would help you take track of any development in the house. And you get the chance to sell it easily. The same applies to vehicles or cars.

In the same vein, the music industry has also been disrupted by the evolution of NFT. Artists get to boycott streaming platforms (Spotify, Apple Music) or others in favor of representing their content on the blockchain. When an artist creates an NFT of their work, they can set it to sell for a certain price. If someone buys the NFT, they will own it forever and can use it however they please.

This is not all, there are a ton of undiscovered potentials embedding NFTs that will unravel as time goes by.

The Next Level NFT (NFT 2.0)

Since the inception of this groundbreaking technology, it is not surprising that it is beginning to see a large adoption rate. More so, it is transitioning from the conventional notion of collecting NFTs to now using them.

Early last year, when the NFT rave started, it was more about artwork, pictures, avatars, digital collectibles, etc. But NFTs are dynamic and much more than that, now, we get to use NFTs for real.

The next iteration for NFTs is utilities. As mentioned earlier, we get to use these NFT tokens to represent almost anything, be it, physical or digital, tangible or intangible items.

We are starting to see several sectors integrate it into their business models: Fashion, Sports, Real Estate, Entertainment, Education, etc. And the best part is that we are still early.

Some of the features that make NFT 2.0 an improved version of its prior iteration are listed below:

Composability: It is a crucial factor since it will allow NFTs to be modified by adding metadata and changing the artwork to which they are attached.

Interlinking NFTs: The idea of asset ownership will have additional layers as a result of this element. In essence, you will be able to link NFTs to other NFTs, hold fungible tokens, and even be linked to other data sets thanks to this capability.

Dynamism: Through the addition of new commands that allow for the execution of various updates to other NFTs connected to it, this crucial feature will increase the robustness of NFTs. The developer of the overall project determines an NFT’s capabilities and characteristics.

Concluding Thoughts

If 2021 was a significant year for NFT sales and buzz, this year, 2022, and the following years may be even more significant as the industry reaches its technological turning point. NFTs’ full potential hasn’t even been scratched.

A growing number of applications for NFT 2.0 will find a home in the future and converge the real and virtual worlds. As a result, it makes many intriguing promises about what will fall under its purview.

About IncubateX

IncubateX is the 1st women-led incubator & NFT launchpad on web3. We are here to promote big ideas and revolutionary projects in clean energy, tech, social reinvention, sustainable manufacturing, and more.

We specialize in helping innovative projects incorporate web3 infrastructure -mainly NFTs- within their ecosystems while focusing solely on mission-driven projects that make a positive impact IRL.

IncubateX Official Links

Official Linktree | Discord | Whitelist