Non-Fungible Tokens On The Blockchain
Every day new tokens are added to the crypto space, among these tokens are the non-fungible tokens. The popularity of non-fungible tokens have immensely increased over the past few months. In this edition of Content on the Blockchain we will explain what those tokens are and what the benefits are. For more ‘’Content in the Blockchain’’, please read our previous edition: http://bit.ly/BlockchainAndContentCreatorsMedium
Fungible Vs. Non-Fungible
To understand what makes non-fungible tokens so special, we will have to look at the key differences between non- and fungible tokens. An item, or a token in our case, is fungible if it could be replaced by something identical. Take a €100,- bill: if we would lend it to a relative, it wouldn’t matter whether that person would return me the same €100,- bill or a different €100,- bill. This same concept is applicable with cryptocurrencies: a person could sell 100 SOUL tokens for BTC, to later buy the 100 SOUL tokens back. The 100 SOUL tokens are identical to the initial tokens the person had sold, these tokens are not unique and therefor are fungible. The majority of the cryptocurrency projects have generated fungible tokens. Non-fungible tokens are by definition unique and distinguishable from each other, even if they look extremely similar. The characteristics of a non-fungible token is what makes the token so special.
Why Use Non-Fungible Tokens?
Currently non-fungible tokens are mainly used for collectibles. You could have a game in which you collect items or characters who all have their own personalities & stats or you could distribute your own content in the form of Digital Commerce by using blockchain. Some collectibles or goods are more rare than others, which makes some tokens scarce. But this is already possible without the use of tokens, why should we adopt non-fungible tokens? The answer is rather simple. Ask yourself why you are interested in the blockchain technology? Decentralization and ownership: no middleman or 3rd parties are required for a transfer between two individuals. Non-fungible tokens prove digital ownership of a specific product, which cannot be tampered with. The one who is holding the private key of a wallet is in control of all the tokens on that specific wallet, including non-fungible tokens. Non-fungible tokens create digital scarcity by enabling verification of the authenticity of a specific product.
Real world assets to tokens
There are more benefits of adopting non-fungible tokens into our world. Not every use case has to come from digital goods or assets. Think about the important information we store physically: a birth certificate, academic credentials or warranties. All this information could properly be digitized and stored in a wallet by tokenization.
Imagine if somebody passes away and leaves their physical belongings to their relatives. What is the problem here? You can propose to sell every physical assets and split the money. But what if some belongings have emotional value, how are you supposed to split this if you want to keep it within the family? A solution is to tokenize the item and split the shares of the item with the relatives and everybody benefit from it as the item grows in value while holding on to it. Another example is whenever you want to sell a car or a house, if you wish to sell it in modern age you will have to sign papers etc. By tokenizing your car or house by a non-fungible token, you could easily track, sell or verify ownership. Your token is all what is needed.
Tokenization on Phantasma Chain
We at Phantasma Chain acknowledge the fact that non-fungible tokens could potentially be an important component in digitizing the economy. A token which could represent digital goods makes it convenient to buy, sell or trade these digital goods by using blockchain technology. By developing an eCommerce dApp it will be possible to do all this on the Phantasma Chain. We are building our own blockchain to store, share and access data in the blockchain. Like mentioned before, it will be possible to create non-fungible tokens on Phantasma Chain for gaming purposes. Nacho Men is a good example: Luchadores are the characters whose characteristics & stats are stored in the form of non-fungible tokens. They are tradable for SOUL tokens as if it would be a real marketplace. This might be the start of a new gaming economy.
Non-fungible tokens will be one of the main driving forces of blockchain development and adoption in the coming years. There are a lot of unforeseen possibilities for these tokens. Phantasma Chain aims to be at the forefront of this adoption.
