Non-fungible tokens (NFTs) have been present for a while now. However, the crypto space has been slow to recognize the possibilities of the enormous potential offered by NFTs. An NFT is a digital token that differs from cryptocurrencies in that each NFT token holds at least one unique property, such as identity, location, or unique features.
Before NFTs, it was significantly challenging to create scarcity for digital assets. Despite copyright laws, replicating or stealing digital artwork was easy. It was also difficult to confirm a digital item’s authenticity. Since NFTs employ blockchain technology, it made item authenticity verification easy.
A significant spike in NFT interest has opened the door for various applications. Such includes digital art, gaming, finance, and more.
Here are the top five NFT applications:
Gaming NFTs
The gaming industry is one of those that stand to benefit the most from NFTs.
Gamers have a high demand for one-of-a-kind purchasable items. Microtransactions and in-game purchases have given rise to a multibillion-dollar gaming economy that benefits NFTs and blockchain technology. In gaming, the rarity of an item directly impacts its worth, and gamers are well-versed in the concept of valuable digital objects.
Blockchain technology has been actively integrated into gaming projects. Both Axie Infinity and Battle Pets are Pokémon-style games that feature tradable pets and items. Tokens in computer games can offer mixed elements of beauty, collectability, and player utility. Players can also buy and sell these tokens on third-party marketplaces. Gaming NFTs can be purely decorative, but many also have a functional purpose. For example, every Axie has a unique set of fighting abilities. These talents also have an impact on the pet’s value when traded.
NFTs in digital art and music
NFTs help create unique digital art pieces with special features. They have provided the solution for long-standing scarcity issues in digital art. While anyone can look at a CryptoPunk on the Ethereum blockchain and download or save the image, no one can claim ownership unless the NFT is linked to a wallet.
One can also use audio to create a collectible piece of music by attaching it to an NFT. It can be considered a digital “first edition” of a record. Getting fair royalties portion is a major concern for musicians. Today, there are at least two options for achieving a balanced result: blockchain-based streaming networks and blockchain royalty tracking.
Furthermore, NFTs allow artists to profit from the secondary sale of their digital work. Artists can embed a code into the NFT that sends a percentage of the sale back to them.
DeFi NFTs
NFTs bring distinct benefits in decentralized finance (DeFi). Many will have some artistic features, but the utility determines their worth.
BakerySwap, for example, is a decentralized exchange powered by Binance Smart Chain. It offers NFT-based food pairings with additional staking rewards to holders. They will receive an NFT combo with variable staking power if the holder contributes BAKE. Users speculate on these combinations, sell them on the secondary market, or stake them.
This mix of non-fungible tokens, gamification, and DeFi presents another intriguing use case for non-fungible tokens. You can also obtain loans on NFTs through platforms such as Hoard Marketplace.
Real-world items as NFTs
Connecting real-world assets to NFTs has the potential to digitize the way we authenticate ownership. In real estate, for example, we usually deal with physical property rights. Owners can use tokenized digital assets of these documents to place precious items (such as a house or land) onto the blockchain. This concept is still in the works, but it’s something to watch for in the future.
Similarly, when it comes to smaller items, an NFT might assist in proving rightful ownership upon reselling. A natural diamond, for example, usually comes with a certificate of authenticity. This certificate serves as ownership proof. Anyone attempting to sell the item without the certificate will not guarantee its authenticity. They may also have difficulties convincing buyers that they are the rightful owner of the diamond.
Domain Name Ownership
Owners of blockchain domain systems can use private keys to control their domains. These NFTs allow quick trading and customizable domain names.
Blockchain domain names are permanently registered in a public registry and cannot be erased or changed by a third party. Since these domains use blockchain technology, their history of ownership is also traceable.
The bottom line
With the growing popularity of NFTs, we will see many more concepts and use cases soon. Currently, not every NFT application has had enough time to progress beyond an idea or a small experiment. Some may turn out to be ineffective or unpopular.
NFTs, on the other hand, are unquestionably here to stay. They will prove helpful on more fundamental and straightforward issues, such as digital art and collectibles.
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