Tokenizing the World: Non-Fungible Tokens and their Potential in Metaverse
Non-fungible tokens (NFTs) are a hot topic in the blockchain community these days. They are an asset to represent any digital or physical object. People have used them to tokenize everything from CryptoKitties to real estate. Some believe that NFTs can revolutionize how we think about virtual worlds, providing a potential revenue model for the metaverse.
What Exactly Are NFTs?
NFTs are one of three types of tokens on the Ethereum network: fungible, non-fungible, and semi-fungible tokens. NFTs differ from regular “coins” because they can represent anything from physical objects to digital goods. These tokens are unique because they act as an identifier for the object but not necessarily a representation of that specific object itself. They are also unlike regular tokens because they aren’t intended to be used as currency; instead, their value is derived from the unique identity of the token itself.
The first example of NFTs was sold by CryptoKitties in 2017 when users could purchase and trade one-of-a-kind cats with other users on the Ethereum blockchain. Each cat was tokenized, meaning that it represented a unique asset on the network. Since then, NFTs have evolved into much more than simply digital cats. Prominent athletes from Lionel Messi to Floyd Mayweather have tokenized their brands, selling them to fans and investors on secondary markets.
NFTs in Gaming
But perhaps more than anything, NFTs have the potential to change how we play games, making them more immersive. In games, players can earn items that aren’t fungible and will never be duplicated, which means they have a unique value for each player. NFTs allow gamers to own their in-game assets without restrictions from the developers or other companies involved with the game’s production.
This is not some imaginary future. It’s already happening. Axie Infinity’s “Play-to-earn” game, for example, is used by players around the world to earn cryptocurrency within the game itself. It reportedly provides a living for a community of players in an impoverished area of the Philippines. Earlier this month, the game’s developer Sky Mavis announced that it had raised $152 million from venture capitalists such as Andreessen Horowitz and Mark Cuban to help grow the game.
The potential for NFTs in gaming is only limited by the creativity of developers who are willing to incorporate them into their games. We can only imagine what will be possible with this technology moving forward.
A New Revenue Model?
In a recent interview with Bloomberg, William Quigley, a cryptocurrency pioneer and co-founder of stablecoin Tether, projects that NFTs provide a revenue model for metaverse that is more sustainable than the current one.
“I’m betting that the revenue model for the metaverse is going to be NFTs,” he said.
“In video gaming, the revenue model now is virtual items, and that’s a $175 billion business annually. I think the metaverse should be orders of magnitude more than that because it’s everything, it’s not just gaming,” he added.
To conclude, NFTs might now be viewed as nothing more than a novelty, but the potential for this technology is enormous. From gaming to virtual reality and even digital real estate, NFTs can tokenize anything from physical objects to abstract concepts such as intellectual property or voting rights.
What do you think? Will NFTs revolutionize the world of video games and beyond?