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What is Digital Asset Model?

You’ve probably heard of the news that a series of artworks with NFT were sold at enormous prices recently. For example, Tesla CEO Elon Musk’s wife and singer Grimes auctioned off War Nymph, a digital painting with NFT, and in 20 minutes it was sold for 6.5 billion won. Pictures are not the only ones sold through NFT. Twitter co-founder Jack Patrick Dorsey sold his first tweet, ’just setting up my twttr’, which he wrote 15 years ago for $2.9 million. NFT is in the spotlight as a virtual asset, with Kings of Leon releasing their latest album, ‘When You See Yourself’, on NFT.

NFT is shortened for Non-Fungible Token, which is a cryptocurrency that cannot be replaced by another token, and a famous example of this is Ethereum’s ERC-721 token. It’s hard to understand what NFT is by its dictionary definition, so let me give you a more familiar example, such as Bitcoin.

Non-Fungible Token VS. Fungible Token

First of all, Bitcoin is not an NFT. Assuming that A and B each have 1 Bitcoin, the 1 Bitcoin these two have is of the same value. Because it has the same value, 1 Bitcoin A has can be traded to 1 Bitcoin that B has. Tokens that usually serve as currency are called Fungible Tokens. Then this time, let me explain with Grimes’ painting as an example. Say perhaps person A has an NFT for Grimes’ painting. Person B has an NFT of a well-known American digital artist, Beeple’s painting. These two NFTs do not have the same value so NFT of person A and NFT of person B are incompatible. As you can see from this example, each NFT has its own value and this scarcity acts as a big feature of NFT.

Now that you understand what the NFT is, one question might arise. Why do people pay huge amounts of money to have original ownership when digital data can be viewed and copied by anyone? Some say that the reason why NFT is sold is due to people’s desire to own data and the pride they feel when they gain ownership of it. We can easily find Da Vinci’s ‘Mona Lisa’ replica, but just as the original and replica are distinguished, we want to differentiate original data and replicated data by giving scarcity to the original. The other point of view is that people buy NFT for investment in the hope that the future value of it will rise rather than to buy the art for its artistic value. NFTs are preferred by investors with a lot of blockchain assets than traditional art collectors because after the artwork’s price rises, they can trade it and gain a big profit.

The size of the NFT market is growing day by day by day. The NFT market grew 28 times in the three months from December to March 2020, and according to a CoinMetrics report on March 23, 2021, the number of ERC-721 smart contracts used to issue NFT soared to 19,000 due to the recent NFT collection frenzy. Since the launch of the ERC-721 service in January 2018, it has increased dramatically from about 1,100 in December 2018 to 7,000 in December 2019 and 17.8K in December 2020. In addition, the chart below shows the NFT market capitalization from 2018 to 2020. As you can see from the graph, NFT is growing rapidly over the years. The use of NFT is not just for art. It is used in many different fields and its use is endless.

NFT Market Capitalization 2018~2020

In the blockchain, Non-Fungible Tokens (NFTs) can be used for a variety of purposes, including tickets, real estate, income rights, games, coupons, art, convenience, exercise, and metabuses. If you look at the NFT transaction volume in 2020, the first place is game, the second place is collected, the third place is meta-bus, the fourth place is exercise, the fifth place is art, and the sixth place is convenience. Among these various fields, the use of NFT especially in the game industry is drawing much attention.

Number of transactions involving NFT in 2020

Because ownership of data is based on data without physical entities, it means that you are entitled to “accessibility” of it rather than interpreting it as “owning” in modern society. To ensure these rights, the Protocon Network is introducing a Digital Asset Model. This model supports the creation of unique digital assets based on real-world assets and the management of existing digital assets. It will also be applied as a protective device for items, land and game assets acquired by individuals in the survival RPG game Blockcity, one of the protocon network’s dApp services.

If you’re curious about Blockcity, which is about to be released in the fourth quarter of 2021, please keep an eye on future posts!

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Protocon is a combination of “protocol” and “Economy." Protocon Network is a blockchain project that aims to provide the infrastructure needed in the digital transformation era.

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