4 Unique Properties of NFTs that are Pushing them Mainstream
Non-fungible tokens (NFTs) are the digital asset representation of a particular “thing” — ranging from a digital work product to a real-world asset or property. Though NFTs are an emerging technology, the market size is already huge and becoming bigger and bigger. This article will guide you through top 4 unique properties that are driving the mainstream usage of NFTs and blockchain technology.
First and foremost, NFTs can represent real-world or digital assets. Any digital work or physical goods which can be represented in digital form, such as a photo, video or a scan, can be turned into a non-fungible token. For example, a painting hanging on an art gallery wall can be presented through an NFT:
Or,or a set of pixelated images of characters named Crypto Punks were released in 2017 as the first use of the NFT standard in the Ethereum environment:
Secondly, NFTs can be transacted — bought, sold, leveraged, etc. In the blockchain space, NFTs are bought and sold online, frequently with cryptocurrency. They are often sold through an auction system where users put a bid for the NFT. In fact, an anonymous borrower just took out an $8 million loan collateralized by their collection of 101 CryptoPunks; or Jack Dorsey, CEO of Twitter sold an NFT of his first tweet for the equivalent of USD 2.5 million:
Thirdly, NFTs record the artists’ creation and ownership history. It is clearly seen that ownership history is such a critical factor in creating the value of an asset. In fact, every time the NFT transfers ownership, it is then recorded and then forms a historical record of ownership. Furthermore, NFTs contain core elements including tokenID, contract address, creator’s wallet address, which marks the creation of the token and identifies the NFT with its creator.
Last but not least, NFTs allow for the royalty structure for creators. NFTs royalties, which are executed by the creator during minting, allow the creator to receive a royalty on subsequent sales on secondary markets. This means NFTs and blockchain technology provide artists with an opportunity to monetize their work.
Mainstream Adoption Use Cases
Recently, various industries have driven the adoption and taken advantage of the NFT properties. The art world, especially digital artists, are those who pioneer the NFT space. According to The Guardian, NFTs market hits $22B as craze turns digital images into assets. Drawn by NFT tech to bring the real world art capabilities to digital platforms, artists are able to assetize their digital artwork. That NFTs’ unique characteristics relate to ownership, provenance and royalty structures, artists have adopted the mantra “We can finally get PAID”. This means artists are not only enabled to generate their income without the middle men of existing art world economies, they can also be compensated for secondary market sales, of which they were previously excluded from receiving.
Music NFTs also keep pushing mainstream as they are adjusting the way fans connect with their favorite artists. Music NFTs offer the ability to remove the third-parties from the industry, meaning fans can participate in investing in music and earn from the copyright revenues. NFTs also allow artists and fans to remix one another’s music and facilitate cross-industry collaboration between musical artists and visual artists, as evidenced by popular DJ Steve Aoki’s NFT collaboration with digital artist Maciej Kuciara. These novel concepts enhance the scarcity factor that makes NFTs so appealing, contributing further to their benefits for artists and fans alike.
Gaming platforms have jumped in on the NFT bandwagon as well. While gamers are finding a purpose in their hobby, NFT games enable players to build and customize their own in-game characters, giving them more freedom in the game-world and granting them the control of their earned and acquired assets. This allows players to monetize their time, effort and skill invested. In addition, from the game owners’ perspective, they are provided with an opportunity to earn from both users’ transaction fees and app store/play store earnings.
NFTs are a more distinct asset class that could change more use cases than native blockchain tokens or other fungible tokens. With the popularity of NFTs growing, there’s a good chance that we’ll see even more ideas and use cases in the future other than art, music, or gaming.
Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such.
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