Enter the World of Non-Fungible Tokens
With new features come new possibilities — and that’s exactly what non-fungible tokens bring to blockchain. Don’t let the somewhat strange name throw you off: Non-fungible tokens (NFTs) are basically the opposite of cryptocurrencies like Ethereum and Bitcoin. Fungibility is an economics term, meaning that goods or currencies are interchangeable and indistinguishable. For example, one dollar holds the value of another dollar — and this holds true for Ethereum and Bitcoin. While the kings of cryptocurrency trading are interchangeable, the appeal of NFTs is that they are a special type of one-of-a-kind cryptographic code. They are unique, individual pieces — and it is this important distinction which gives them their value case.
Think about them like baseball cards. Every NFT contains unique information and levels of rarity, giving them different valuations. Similar to baseball cards, and differing from traditional cryptocurrencies, users must also remember that NFTs are not divisible. For example, Bitcoin users can buy and sell fractions of one coin if they so desire. Since NFTs are unique pieces intended to be kept whole, this cannot be the case.
The concept of NFTs grabbed headlines with CryptoKitties in 2017, and it is probably one of the better examples to explain just what they offer. The blockchain-driven platform allows players to collect and breed digital cats. Digital cats, much like their real-life counterparts, are one-of-a-kind and therefore require tokens which are unique. Importantly, one cannot split cats into different parts and expect them to function. While this analogy is kind of falling apart, the point remains: NFTs are best to be considered whole, representing whatever value the user wants to keep and store on the blockchain. This is about creating digital scarcity, and scarcity often translates to value.
These token types are already in use to represent unique digital items like crypto-collectibles. CryptoKitties is the perfect example of this, merging the internet, cats and blockchain. The gaming platform allowed users to breed and collect digital, unique cats on the blockchain. It is a novel concept — one which unlocked NFT technology to make every cat unique. Further this concept to unique ownership and the value case of NFTs come into focus: the storage of IDs, certificates, digital art, real estate data and other important information of real-world assets in an immutable format.
Also consider this alongside ‘Know Your Customer’ (KYC) procedures, for academic degrees and other educational certificates, badges, voting & elections, loyalty programs, in-game items, copyright, supply chain tracking, medical data, software licenses and warranties. This allows for a digital representation of something rare, valuable or unique. NFTs could potentially be pegged to a document that only belongs to you. It’s verifiable because it’s recorded on the blockchain and it’s easily shareable for the same reason. This is where the future of NFTs start to look bright — and now that functionality is coming to DCore.
Truth be told, we live in a digital age where people want to migrate their tangible goods to the digital world. For instance, people want to replace paper documents with digital documents. Technology like this enables one-of-a-kind tangible goods, like diplomas or certificates, to become authentic digital copies, while maintaining their valuable uniqueness.
