Non-Fungible Tokens Bazaar
A Thriving Economy for Unique Tokens Powered by The DAPP Network
Non-fungible tokens (NFTs) extend the functionality of distributed ledgers beyond currencies and utility tokens, allowing them to document ownership of tokens which are cryptographically unique.
The scalability and interoperability features available on the DAPP Network could be the X-factor that drives the young NFT economy towards a thriving global market.
NFTs are creating vibrant economies for anything that can be represented as a unique token. Digital goods such as in-game items and works of art are being distributed, collected, and traded in greater magnitude within global markets.
For the NFT economy to realize its full potential, however, the bottleneck caused by scarce network resources such as memory and block space must first be alleviated. Furthermore, connecting isolated local marketplaces together into a borderless token economy requires robust interoperability technology. Scaling the market for NFTs from the size of a local jumble sale to a global bazaar demands the features and services provided by DAPP Service Providers (DSPs) on the DAPP Network, such as vRAM, LiquidLink, and LiquidOracles.
For the NFT economy to realize its full potential, the bottleneck caused by scarce network resources such as memory and block space must first be alleviated. (Click to Tweet)
One of A Kind
In contrast to utility tokens and cryptocurrencies, where one token is always equal to another token of the same denomination, non-fungible token standards enable the creation of cryptographically unique digital assets, where no two tokens are identical. NFTs open up a world where collectors can own unique digital goods that are truly theirs, unlike centralized systems whereby the asset they own is simply an address on someone else’s database.
The introduction of NFTs is transforming a handful of key industries, including art and cryptocollectibles.
Art has been around for centuries, serving as both a financial investment and status symbol.
Yet the high unit costs associated with purchasing and caring for a work of art exclude a large proportion of investors from participating in the art market. Tokenizing works as NFTs is well suited to the art world, where provenance and authenticity can be recorded immutably and traced on the blockchain.
As the provenance of works of art increases in size, so do the memory requirements of documenting the entire ownership history associated with the token. An alternative memory solution that is both abundant and fully decentralized, such as vRAM, becomes essential to the future of art NFTs. Tokenization effectively creates a ‘digital watermark’, and can be extended beyond real-life artworks to digital creations such as logos, images, and multimedia files, all of which can now be represented by an NFT and exchanged on open markets.
From an early age, children tend to ascribe value to a range of cards and other collectible items which they accumulate and exchange for others, as if they represented real money. As they transition to adulthood, their focus shifts to collecting more sophisticated items such as stamps, vinyl, and luxury goods. Blockchain-enabled digital scarcity means that, for the first time, both children and adults can collect scarce digital items as well.
Cryptocollectibles represented as NFTs — such as sports cards, game characters, and in-game items — are already trading significant volumes on secondary markets. Fairly generating NFTs requires a source of true randomness, such as the Random Number Generators (RNGs) that can be provided by DSPs on the DAPP Network.
Once generated, these cryptocollectibles are distributed to early adopters through a combination of auctions and airdrops.
Games can incentivize these maverick collectors to assume an active role in community-building by introducing a vesting mechanism into their airdrops in an Air-HODL model introduced by LiquidApps. Unlike regular airdrops, participants must HODL their tokens throughout the vesting period in order to receive their full allocation.
Starting from childhood, human beings enjoy accumulating scarce items over which they can exercise a sense of ownership and control. With the advent of blockchain technology, our propensity to collect can finally extend to digital items documented on a distributed ledger and controlled with our private keys.
Scarce Tokens, Abundant Resources
Late 2017 saw users of Cryptokitties consume the resources of the Ethereum network, as crypto collectors became obsessed with collecting and breeding digital cats. At peak kitty mania, the game was responsible for a quarter of transactions on Ethereum and contributed to a significant slowdown in transaction processing on the network. While scarcity is a desirable property for tokens to have, an abundant supply of network resources, such as memory and block space, is critical for the growth of the NFT economy.
The first iteration of NFT standards on EOS is dGoods, a standardization system initiated by Mythical Games, Scatter, Cypherglass, EOS Lynx, and other partners. dGoods handles all types of virtual items on EOS. In addition to ordinary NFTs, the dGoods team announced the development of semi-fungible tokens, digital assets that combine elements of both NFTs and regular utility tokens. For example, a seat number for a rock concert could be represented as a semi-fungible token — since all the tickets are the same general category of item, but each has a different seat number.
As the fungibility characteristics and ownership structure of token standards get increasingly complex, developers will come to require a larger share of RAM in order to store their users’ tokens. Instead of using precious RAM resources to store their NFTs, developers could have DSPs index them using the vRAM system, which would potentially lower the cost barriers to mass adoption.
Interoperability Connects Markets
What if I want to include a jingle in my video?
Or create a piece of art using the image of a sword earned in a role-player game?
Interblockchain communication unlocks the true value of NFTs by allowing a rich variety of tokenized assets to transition seamlessly across applications. Game developers could enhance their works with unique digital art, or even by incorporating gameplay elements from other titles.
LiquidLink is breaking down the barriers that exist between chains by allowing previously-incompatible networks to communicate value and data with one another. Thanks to this novel interblockchain communication technology, which currently links Ethereum and EOS, niche digital art economies could be fused together to create a global NFT marketplace with plenty of variety and ample liquidity.
Tokens Are Eating Ownership (click to tweet)
In 2011, famed venture capitalist Marc Andresseen observed that “software is eating the world” and transforming a number of key industries in the process.
Fast forward 8 years, and tokens are eating ownership. Entrepreneurs race to represent everything from artwork to virtual swords as entries on a distributed ledger. The scalability and interoperability features available on the DAPP Network could be the X-factor that drives the young NFT economy towards a thriving global market.