NFTs Speed-Run by RareCandy3D
As the NFT scene is undergoing a phase of mainstream adoption, there are currently more newcomers than ever willing to join this digital collectible revolution. Although many NFT beginners might be familiar with basic terminology and definitions, the present article is meant to address those seeking a more detailed and thorough examination of the amazing world of non-fungible products.
Here, we provide the reader with educated definitions and background information, while we explore current and potential use-cases, discuss NFT novelties, and speculate on what the future is holding for us all NFT enthusiasts. Let’s get started.
How Did It All Begin
Before jumping right into the NFT rabbithole, let’s take a look at a brief chronicle of how everything started.
Soon after its public launch back in the summer of 2015, Ethereum established itself as a big player in the DLT (Distributed Ledger Technology) scene by introducing smart contract functionality.
In simple words, Ethereum offered the public the possibility of creating and interacting with automated pieces of code (aka smart contracts) that once deployed on its blockchain would operate as programmed eternally.
Ethereum Improvement Proposals (EIPs) is the unit around which most governance occurs within Ethereum, acting essentially as a public list of pull requests where anyone is eligible to propose changes in the ecosystem; from core protocol specifications to smart contract standards.
After a request has been proposed, reviewed, and accepted, it becomes a standard. Undoubtedly, the most widely used EIP has been the ERC-20 token standard, which basically standardized the interface for tokens allowing for token transferability and usability by other on-chain third parties (e.g. wallets, decentralized exchanges, etc.). Other notable EIPs include but are not limited to the ERC-137 ENS standard (Ethereum Name Service) and, of course, the ERC-721 standard for non-fungible tokens (NFTs).
Despite the ERC-20 token standard being the most commercial with regards to utility, it is not as accessible to newcomers as the ERC-721 standard. That’s because, in contrast to the former, ERC-721 standardized NFTs as unique tokens with track and transfer functions, and, thus, allowed for widespread interaction with digital crypto-collectibles rather than tokens directly pegged to monetary value.
One of the first decentralized applications (dapps) that utilized the ERC-721 standard was CryptoKitties; an online game of two-dimensional cats that were bred and sold for tens of thousands of dollars worth of ETH. This marked the beginning of an era of unprecedented growth for the NFT scene that amounted to the current craze of today and all-time sales volume of more than $500 million USD.
NFTs In A Nutshell
As you might have figured already, NFT stands for non-fungible token. Borrowed from the terminology of Economics, fungibility of an asset simply refers to the interchangeability of an asset. That is, an asset can be fungible, such that 1 ETH is exchangeable for another 1 ETH, or non-fungible. Your favorite painting is not interchangeable with my favorite painting.
In other words, fungible tokens are defined by their value, whereas non-fungible tokens by their unique properties. Powered by smart contracts, NFTs are essentially a novel way to represent anything unique as an Ethereum-based asset.
Why Shall We Care About Nifties
Non-fungible tokens are essentially simulating the conditions of a scarce physical asset, such as a painting, a sculpture or you name it.
Without getting into technical explanations, the key point is that NFTs live on the blockchain and this sole fact expands in an array of associated NFT properties, with the most fundamental being transferability, authenticity, and proof-of ownership.
In other words, the transparency of the distributed ledger publicly ensures the token is verifiably owned by an owner, who is exclusively able to transfer/auction/sell/gift it to another user. Importantly enough, the ledger’s immutability ensures that nobody is able to forge or modify the token in any way.
Despite these traits being fundamental NFT properties independently of the industry they might be disrupting, we shall emphasize the increased significance from the perspective of creators, artists, product designers, and, generally, all folks out there looking to get involved.
Firstly, living online, NFTs interact with liquid 24/7 markets, hence, offering greater accessibility to collectors, art-enthusiasts, and unaware potential buyers.
Secondly, artists can opt to release their creations on a new type of freelance basis, that is, via NFT marketplaces. Some marketplaces are already offering a quick guide that is outlining all steps needed for one to upload their creation as an NFT. Other marketplaces handle this process internally and the artist/creator only needs to deliver the artwork and wait for the royalties. Either way, creators are emancipated from the once draining process of releasing an artwork through a traditional publishing house, as managers and middlemen are no longer a necessity.
In addition , royalties are blockchain-stamped, which means that once an NFT art-piece is uploaded, the associated metadata (e.g. creation date, artist name, album name, engines/materials used, etc.) will always go hand in hand, thus, no matter how many token owners the asset will change over time, the credits will always remain to the respective creator.
Lastly, in terms of pricing, artists can determine prices on their own, and, in some cases, marketplaces offer the possibility for artists to get a life-long commission for every time one of their creations is getting resold to another user.
Active NFT Use-Cases
Considering NFTs are used to represent and timestamp the uniqueness of an item, an endless potential unfolds, which has already manifested itself in various use-cases.
To begin with, probably one of the first functions of an NFT was as an authentication method. More than two years ago, NIKE filed a 25-paragraph patent describing the use of Ethereum’s ERC-721 smart-contracts to register, distribute, and authenticate scarce NIKE products. Along these lines, H&M, Microsoft, NewBalance, Louis Vitton, and several other giants, have trusted in NFTs, long before they became mainstream, for tracking, and authenticating their products.
In addition, event tickets is another ingenious yet simple NFT use-case, where more sophisticated types of digital redeemable tickets have emerged that could be used at a specific location, date, time, or for a specific number of times. Similarly, proof-of-attendance tickets can be represented via NFTs to verify and prove that an individual/an audience was present at a certain event or location at a specific given time.
Undoubtedly, the most popular NFT use-case is crypto-art, coming in a variety of forms, such as GIF-art, animations, 3D sculptures, and more. Needless to go into details, we have all stumbled upon the craze that NFTs have created in the art industry. Nevertheless, there are even newly emerging digital art sub-genres, such as programmable art or unlockable music and audiovisual files.
Last but not least, physical asset tokenization is another distinct use-case on its own, acting more as an umbrella term to describe the interaction between the physical and digital realms. By virtue of NFTs, the traditional e-commerce industry can be transformed to a d-commerce (decentralized commerce) industry, where physical assets can be registered, distributed, and traded via the functionality of non-fungible tokens.
For example, it will be soon the case that one could browse their favorite NFT marketplace, come across a limited-edition puffer jacket or a bottle of an awarded Greek olive oil, buy it with crypto, and have it sent at home. In this way, NFTs will take the revolution one step further and lay the foundations for a new paradigm of commercial transactions.
Despite being still at the embryonic stage of the Nifty uprise, there are several great ideas originating from pioneering projects and/or individuals that could constitute the next-generation of NFT use-cases.
For example, contrary to the usual fundraising methods that most crypto-projects opt for (e.g. ICO, IEO, etc.), RareCandy3D’s approach was to create a novel NFT use-case, the NCO (NFT Coin Offering), where an NFT containing a link for claimable tokens act as the investment slot, proof-of-investment, the receipt, and the undeniable/unrestricted right to the invested asset.
Another niche NFT use-case, comes from the combination of DeFi and NFTs. One can find already various platforms that merge staking with NFTs, offer lotteries with NFT rewards, and even allow for NFT swapping between individuals in the same manner that two ERC-20 tokens can be swapped.
Multi-chain NFTs could be another game-changer in the (near) future, as projects in the likes of Enjin are working hard on realizing such a scenario. As of the time this article is being written, NFTs are smart contracts deployed on a certain blockchain (usually, Ethereum) that can’t be transferred to other blockchains; the novelty of multi-chain NFTs envisions full NFT interoperability between different chains. Take a look on Note 1 below for more information.
Finally, there are some next-gen NFT use-cases that are currently pertaining solely to the theoretical realm, yet it is a matter of time until we witness some first practical attempts. Examples of such use-cases include but are not limited to IDs, NTTs (Non-Transferrable Tokens), as well as the tokenization of industries such as real estate and tourism.
The potential of tokenization is rather endless; it can only be limited by people’s imagination and energy. Sure, it is self-evident that as time is passing and more people are hopping onto the NFT/DLT train, more ideas will come to life, hopefully, with fruitful implementations.
Nevertheless, we are a stone’s throw away before we can witness mainstream NFT adoption by traditional brands, sectors, and industries. It is rather likely that NFTs are on track towards becoming a new standard in our commercial transactions, transforming our current (e-)commerce paradigm and unlocking new possibilities with far-reaching consequences in economical, societal, and political realities.
1) NFTs Beyond Ethereum
Ethereum innovated NFTs, but given this is a decentralized space, any blockchain can issue an NFT as long as they go for it. So, despite NFTs being silently considered as Ethereum-based assets, recently other chains have attempted to issue their own NFTs, e.g. TRC-721 or EOS NFts. Presumably, the ultimate driving force behind such initiatives is Ethereum’s gas fees problem. In other words, Ethereum requires a fee, aka gas, for every transaction that occurs on its platform, whether that is token swapping, NFT minting, or anything. Gas fees are determined by the miners, who are favoring more expensive transactions over smaller ones, and thus have created this “gas fees problem”, where it’s not rare the case that one might want to simply gift $10 worth of ETH to a friend, and the gas required for this transaction could amount to $40 on a chill day. That’s why other blockchains have attempted to support non-fungible tokens on their own chains, however, this does not really solve the problem. A decentralized future would see NFTs as being interoperable in all blockchains; that is, compatibility between non-fungible tokens regardless of the blockchain they have been created and deployed on.
2) Environmental Concerns
It might be the case that you ‘ve stumbled upon discussions/tweets about how NFTs are particularly bad to the environment due to their excessive carbon footprint. To help you understand this topic better, Ethereum foundation explains it in its own words here.
We are a virtual publishing house of scarce NFT originals as well as a distribution channel for traditional indie artists, brands, record labels, and products that want to tap into the $2T crypto market without tackling the learning curve that sustains the gap between the two commerce fields.
RareCandy3D is committed to pleasing your audiovisual and emotional sensors since 2020.
Subscribe to our Medium channel for community updates, development announcements, industry research, and educational content. 🦄