WHAT IS NFT? AND POPULAR USE CASES OF NFT IN 2022

Welcome to the Metaverse

Unless you live under a rock chances are that you must have heard about NFT. You must have heard how people made their first millions by just buying a few pieces of art(which may be ugly btw) called NFT and just held and flipped it in a short amount of time. Suddenly they are living the life of their dreams. You must have read all you can about NFT but you still don’t get it? This article breaks down what NFT are all about and how to participate in the NFT space in 2022.

So what is NFT?

NFT is short for Non-fungible Tokens. A simple explanation of non-fungible is an item of value or asset that is unique and can’t be replaced.

For instance, a real world example of fungible and non-fungible is having a certain amount of money, say 1000 naira; the 1000 naira you have at hand is equal and can be exchanged for another 1000 naira without any issues.So in this instance, we can say that money is fungible.

On the Blockchain, the popular crypto tokens we interact with daily like ETH, BTC or Sol on the Solana network are fungible. One BTC is always equal and is mutually interchangeable with another BTC of the same value.

Okay, we have a grasp on what fungible is. What about non-fungible?

Non-fungible is the complete opposite of fungible. A real-life example of non-fungible assets is baseball cards, diamonds, land, etc. What makes them non-fungible is that they are unique in their size, color, grades and are not mutually interchangeable.

“when you see people go crazy for NFT, that’s all there is to it: it’s a token and a piece of metadata”.- Farza from Build space

NFT is a token different from the fungible tokens, used to represent distinct and unique goods on the Blockchain. The origins of NFT come from something called the ERC-721 standard.

This standard, just like the HTTP/IP protocols that control how the internet works, defines how NFT operates. We have the ERC-20 standard for Fungible Tokens that governs how tokens created on the Ethereum environment work. What makes NFT different is that they contain a unique tokenId that differentiates one NFT from another.

This tokenId is assigned to the NFT when they are minted(minting is simply creating a unique tokenId and adding it on the Blockchain). Alone the tokenId of an NFT as they are, are just unique random strings of numbers without any value. When it gets interesting is when the NFT is paired with metadata such as jpegs, music, and video during minting.

That’s why we have popular art NFT like CryptoPunk, Bored Ape Yacht Club flying around. People are not buying those NFT because of how beautiful they are; instead, because of the unique ownership and identity on the Blockchain.

COMMON USE CASES OF BLOCKCHAIN IN 2022

One familiar mistake newbies and veterans in the crypto space make is think that NFT is all about jpegs, beautiful arts, and memes, but NFT is much more than that. NFT spans multiple use cases from GameFi; here, we have the popular Blockchain game Axie Infinity and God’s Unchained. We also have the popular Ethereum Name Service(ENS) and many more in Domain names.

ART

Bored Ape Yatcht Club Crypto Art

The most popular use case of NFT is crypto art. Digital artists and creatives can design their own art, mint them, and auction/sell them on NFT marketplace like Opensea for people to bid and purchase.

Ordinarily, jpegs and arts are reproducible and can be easily replicated. This is a common argument against NFT but what makes NFT different is that it gives you a unique idenitity,an ownership over a particular artwork.

Plus, the ownership of the art work can be verified at any time on the Blockchain. Popular NFT art are CryptoPunk, Bored Ape Yacht Club, Genesis Estate NFT, and Hash masks.

GAMES

Axie Infinity- Play 2 Earn Game
Axie Infinity Game Play

In 2020 a popular Blockchain game known as Axie Infinity blew up in the Philippines.

This game and other similar games are based on a rising space in Blockchain known as Play To Earn or GameFi. Using Axie Infinity as an example, players qualify to play the game by buying NFT digital assets called Axie monsters.

Buying the Axies allows the player to play in Player Versus Player Battles or trade In-Game Items. Players are rewarded with NFT or tokens on the Axie Network known as Axie Infinity Shards(AXS) and Smooth Love Potions(SLP).

Combining tokenomics which is the study of the factors that impact the demand and supply of tokens; intuitive game design and a vibrant gaming community, Axie Infinity and other Play To Earn Games are able to extend the capabilities of NFT beyond jpegs.

DOMAIN NAMES SERVICES

ENS

Generally, in the crypto world, once a person creates a wallet, he/she or they are assigned a private key and a public key.

The public key in Blockchain is long encrypted random 32 digits that allows a user to send and receive cryptocurrencies. Public keys usually are too long, and a hassle to remember.So, to solve this problem are solutions known as Domain Names Services.

DNS like Ethereum Name Service uses the same ERC-721 standard for NFT to create a human-readable domain name such as mike.eth, Twitter.eth, Goggle.eth, which is much easier to remember and use, unlike a random long string of too stressful numbers.

The idea of DNS is that a user can buy and use a customizable name of their choice(Alucard.eth). Whenever a person points to or calls the wallet public address using the DNS name, it goes to the user’s wallet address. Popular Domain Name Services include Ethereum Name Services and Unstoppable Domains, with more on the way to come.

In conclusion,beyond these use cases mentioned above, there are other use cases across DeFi, Social tokens, and many more not yet explored, but as more investments come into the NFT space, the possibilities are endless.

N.B: This is a two-part series and in the second part we will go into other use cases of NFT and arguments against NFT.

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Web Developer/Technical Writer, Blockchain Dev

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Anazodo Michael

Anazodo Michael

Web Developer/Technical Writer, Blockchain Dev

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