In the past few months NFTs have exploded in popularity, with their different use cases — from gaming to art to real estate — hitting the mainstream media and taking the world by storm.
These new forms of blockchain-based unique digital assets contain physical collectible rights or digital media such as art, videos, music, gifs, games, text, memes, or code, and are setting the stage for a new digital economy. Enterprises, entrepreneurs, creators and speculators are beginning to take notice.
When it comes to non-fungible tokens (NFTs), art and collectibles are never too far behind. These unique tokens are making waves with huge sales of graphic designers and visual artists. Artist Beeple is one of the most popular examples. His NFT called “Everydays — The First 5000 Days” was auctioned for roughly $69 million.
NFTs are hugely popular, but the topic goes much deeper than just newspaper headlines. Understanding and exploring the world of NFTs is the next step to take if you want to dig a bit deeper. There are many places to find them, use cases to look at, and even misconceptions to clear up.
What is an NFT?
An NFT is a cryptoasset representing something unique and collectible using blockchain technology. The NFT could be in demand because it has been created by a famous artist or composed by a world-class musician. The token could also be helpful in a game or wanted to complete a collection.
You may have already heard of NBA Top Shot, a digital collectible basketball card game. The cards work just like physical trading cards do, but their authenticity is guaranteed through blockchain technology. Some cards are rarer than others, and each has a different value.
Simply put, a non-fungible token cannot be faked or copied. If we look at the definition of fungibility, we can learn a bit more about what makes an NFT special:
Fungibility is an asset’s ability to be interchangeable with assets of the same type.
One bitcoin is equal and tradeable for another bitcoin. A #1/99 Keldon Johnson Holo Icon Top Shot card, on the other hand, is not interchangeable as only one exists.
Features of NFT
The main features of the NFT (Non-Fungible Token) are:
Rarity is almost the most important value of the NFT. All creators can decide (or produce) an art form as a “resource” at their own discretion, and can decide to limit their number to ensure the scarcity of the work.
Indivisible, unlike other cryptocurrencies, the work of NFT can be cut into many small units. NFT can only be traded in the form of “whole”.
Uniqueness. Each NFT work contains a unique piece of “identifying information”, and this information will be permanent and unchangeable.
At the same time, because NFT is based on the application of Blockchain technology, it also has the following advantages:
Ownership. If you are looking to store and gaze upon the beauty of your NFTs, you can do that in Trust Wallet. Just like other blockchain tokens, your NFT will exist on an address. It’s worth noting that NFTs can’t be replicated or transferred without the owner’s permission — even by the issuer of the NFT.
Tradeable NFTs can be traded in open marketplaces, such as OpenSea. These markets connect buyers with sellers, and the value of each token is unique. Naturally, NFTs are prone to price changes in response to market supply and demand.
How do you verify the authenticity of an NFT?
Proving that your NFT is legitimate can be a bit tricky, depending on what you’re looking for. No doubt people are uploading other artist’s work and pretending to be them. In this case, you would have to get in touch with the artist to confirm they are selling NFTs of their work.
An NFT’s creator should supply you with some kind of identifier for you to check. Most of the work will involve looking at your NFT on a blockchain explorer such as BscScan. When it comes to blockchain, we take a “don’t trust, verify” approach.
Helpful information could include the minting date and the wallet address that minted the NFT. You could also use the transaction history ID to see if your NFT matches up. This method is better than just checking the image or file associated with your collectible. If we look at the digital artist Beeple’s recent sale, Christie’s has given the token ID, token contract, and wallet address for validation.
There is sometimes a URL to the file or an IPFS link to verify its underlying content. Both, however, can be used by someone else when creating a fake token. In most cases, you’re best off checking with the creator first.
Application of NFT
01Game
One of the main application of NFT is GAME.
The NFT based on blockchain technology can record the player’s status and achievements in the game, and save the list of items obtained in the game, such as weapons, power supplies, vehicles, characters, etc.
NFT can ensure the seamless transfer of records that cannot be tampered with, and guarantee the ownership verification and authenticity of game items. At the same time, game items can also be designed to be used across multi-games or to have a certain exchange value! The problem with traditional games is that these items are not allowed to be transferred, and few games allow transactions or sale of collected items.
NFT provides a solution to this problem, allowing in-game assets to be transferred to other games.
Red and Blue is a digital collectible card game where cards are issued as NFTs on the blockchain. Since each digital card is unique, players can own and trade them with the same level of ownership as if they were physical cards.
02 Art
Another increasingly popular case for NFT is art/digital art. In this form, artists can own the copyrights of their artworks, buyers can ensure that the artworks they buy are authentic.Blockchain can solve the problem of proof of ownership.
Artists no longer need to rely on a third party to obtain protection for their works, you don’t need to have a counterparty (another trader), and ensuring that artists receive more income. The tokenization of digital art has gained a new impetus: creation, trading and obtaining royalties from NFT have become easier.
03 Music
The NFT market is expected to open up a world of virtual collectibles for music fans.
In the K-POP field, many fans have accepted the form of NFT collections — — Independent released albums are highly sought after. Musicians can create digital goods for sale without the need for large platforms like Fortnite. Before the work is launched on the market, musicians can decide how many versions they want to provide permanently. The NFT platform can not only bring sales volume to musicians, but also bring better revenue than music platforms such as Spotify and iTunes.
04 Event tickets
Current ticket counterfeiting and a large number of tickets are a big problem that needs to be solved urgently. The records saved by the NFT on the distributed ledger are immutable, so that the bill can be independently verified and authenticated on the blockchain, avoiding cheating methods. In addition, in order to prevent large-scale hoarding, ticket purchases can be tied to a specific identity based on the blockchain to achieve sales restrictions.
05 Real assets
Real assets, such as real estate, stocks, or documents, qualifications, licenses, medical records, birth and death certificates, etc can be tokenized into NFT.
As in the case of Real estate, the traditional real estate industry records all land ownership and property registration documents that are very complicated. Now the entire process can be digitized thanks to NFT, Real estate can be tokenized on the blockchain network and become tradable tokens, which can be easily exchanged in the secondary market. Thus, middlemen such as brokers, banks, agents and lawyers are eliminated.
NFT can also prevent disputes between buyers and sellers over property ownership. Just like NFT can represent plots in various regions in the virtual market-Decentraland. Users can monetize real estate by renting it out to other cooperative players or through advertising.
06 Sport
Another NFT category that will come to fruition is sports. When users trade NFT player cards in the market, the corresponding scenario is the transfer of players in the real world. But as more money has flowed into the game, players have become much more valuable.
07 Identity Verification
NFT can be applied to identity authentication to achieve a complete record of user information, while enhancing network privacy. Non-Fungible Token contains the identity information recorded in its smart contract. A smart contract is a piece of computer software that is designed as an automated self-enforcing contract, which means it triggers certain action after predetermined conditions are met. When certain conditions are met, the contract will perform a series of tasks required by the contract.
NFT can also interact with other smart contracts without manual intervention. Thanks to this, a driver’s license, passport, birth certificate, etc. can all have a provable NFT.
NFT allows us to own digital and physical products eventually, allowing artists to have more control over their own creations, reducing the company’s control over users and increasing users’ control over their own identities.
The future of NFT
The wider application of blockchain will bring more space for development of digital art. Nevertheless, new technologies that are more convenient and practical may also appear in the future to replace blockchain to provide services for artistic creation.
In short, Gen-Z people are enjoying the greatest transfer of wealth in human history. They hold the opposite view from the previous generation. They prefer an inclusive, decentralized and digital narrative experience.
Closing thoughts
When it comes to NFTs, new use cases and developments are constantly coming out. It’s easy to forget that the technology is as recent as 2017 and still in its infancy. Before you start investing money into these tokens, make sure you understand precisely what you’re getting into and how to use them. It’s easy to just think of NFTs as art, but there is a whole world of projects using them in different ways.
🏰 Live in The Castle
At NFTCastle, NFT trading and financial platform developed on Punk.Network on Polkadot.
