Non-fungible tokens (NFTs) are one of the fastest growing assets in the crypto industry. In this article, we are going to introduce you to some of the applications of NFTs, how NFTs work, and why they matter.
But first of all, let’s find out what NFTs actually are.
What Are Non-Fungible Tokens?
Non-fungible tokens are tradable digital assets that contain information that essentially says, “the person in control of this crypto wallet address is the owner of a computer file, stored in this location.”
Non-fungible tokens (NFTs) are a special type of crypto asset that allows holders to prove their ownership of real or digital items — but most importantly, the latter.
These non-fungible items can include things like plots of virtual real estate in games like The Sandbox and Decentraland, to digital artwork like Beeple’s Everydays — The 2020 collection, and even images of cartoon apes.
What’s interesting about NFTs is even if you create 1,000 copies of the same image or file and mint the same number of NFTs to represent ownership of them, each copy of the image will be uniquely identifiable from the other 999 pieces based on the special type of information (called metadata) that each NFT token contains.
This means that while 1,000 investors might all have the same looking image in their wallets, they can each say “I specifically own copy number XX.”
How Do NFTs Work?
NFTs are created through a process called minting in which the information of the NFT is published on a blockchain.
This is where blockchain technology comes in. By leveraging the publicly distributed, immutable nature of blockchains, all NFTs can be stored in a transparent way, allowing anyone to check the authenticity of any NFT at any time.
Each time an NFT is transferred or created, the action is permanently recorded on the blockchain. This means that it is possible to trace any single NFT right back to its genesis — something that’s pretty handy if you want to make sure your cartoon ape is genuine or not.
It is important to note that it is not just the fungibility of NFTs that sets them aside from other types of cryptocurrencies. The infrastructure that supports NFTs is also different.
Unlike all other cryptocurrencies, NFTs cannot be listed, bought or sold on centralized or decentralized exchanges. Instead, users must use tailor-made NFT marketplaces to participate in the listing and trading of these assets.
OpenSea and Rarible are among the most popular, but there are countless other options available depending on which NFT collection you’re interested in.
Major Applications of NFTs
Because NFTs are one-of-a-kind, they can be used to value and authenticate the ownership of digital assets, including virtual land parcels, artwork, etc.
Take a look at how NFTs are being used to create merchandise in the following spaces:
1.) Art — There are two types of CryptoArt. The term mainly refers to crypto-themed pieces that tie blockchain into their cultural, political, economic, or philosophical subjects. However, CryptoArt can also be understood to mean digital artworks that are published directly to the blockchain as NFTs.
2.) Music –The music industry is another industry that is ripe for disruption by NFTs. NFTs can be used to represent ownership of digital music files. This would help reduce piracy and ensure that musicians are properly compensated for their work.
3.) Sports — Major league teams in American football, basketball, and hockey have created digital memorabilia in the form of one-off videos for their fans. Plus, the sports card company Topps has produced NFT packs that contain rare cards e-signed by famous players.
4.) Gaming — Video game companies are using NFTs to allow players to create and own unique game skins. In some games (such as Alien Worlds, Mist, and Minecraft), players can earn NFTs which can then be traded in for cryptocurrency.
5.) Collectibles — Pokémon, Magic: The Gathering, and Marvel are just some of the franchises that are offering fans NFT collectibles.
Why NFTs Are Important
Non-fungible tokens (NFT) have become hugely popular with crypto users and companies alike because of the way they revolutionized the gaming and collectibles space.
Since June 2017 there has been a total of $25 billion spent on NFTs, including a further $21 billion in secondary sales.
For gamers and collectors, NFTs provide an opportunity for them to become the immutable owners of in-game items and other unique assets, as well as create and monetize structures like casinos and theme parks in virtual worlds.
They can also sell individual digitals items they accrue during gameplay such as costumes, avatars and in-game currency on a secondary market.
For artists, being able to sell artwork in digital form directly to a global audience of buyers without using an auction house or gallery allows them to keep a significantly greater portion of the profits they make from sales.
Royalties can also be programmed into digital artwork so that the creator receives a percentage of sale profits each time the artwork is sold to a new owner.
The Future of NFTs
Currently, many applications of NFTs are focused on the entertainment industry and popular culture. We’ve already seen how they have been merchandized by sports teams, game franchises, and musicians. However, they also have huge potential to transform the worlds of copyright, intellectual property, and software licensing.
Certificates for all kinds of things — including birth and death certificates — could be produced as NFTs. The information could be used to prove the identity of the owner. By storing these documents in a digital ledger, they are far less likely to be lost.
For more contents, follow us across our social media channels:
Contact us
Email | Twitter | Website| Telegram | Whitepaper | Buy BRAINS | YouTube |
