Isn’t it hilarious that a virtual sneaker designed by a Chinese start-up company has sold for around $30000? What does this virtual Nyan cat has made in the crypto space that it has earned around half a million dollars? Everything seems crazy! But these are unique digital art forms that have the sole ownership with indivisible characteristics and limited supply. To get it more precise, it may be depicted as a patent right of an artwork!
NFTs are gaining immense popularity due to the underlying blockchain technology and unique smart contracts. They are becoming a mainstream adoption in the gaming sector and collectibles. But, in recent days, the boom for NFT is reaching heights with the kick-start of digital art forms such as video, music, artworks, GIFs, even real houses entering into the NFT marketplace.
In this blog post, let’s have a look at NFTs and their applications in various realms!
What are Non-Fungible Tokens(NFTs)? – A look around!
Non-Fungible Tokens(NFTs) are Ethereum tokens with unique contract values that can not be interchanged or used as a medium of exchange. These are individual virtual or physical assets that are tokenized with the sole purpose of preserving ownership rights. NFTs are indivisible, unique, and limited in supply!
For instance, a piece of artwork can be tokenized as NFT. This unique artwork ownership can be transferred but not divided. As the ownership transfers are recorded on the Ethereum blockchain ledger, the NFTs are immutable and completely secure.
Now, to make the ideology behind NFT more clear, we should understand fungible tokens!
Fungible tokens are the ones that can be exchanged with the same kind of equivalent asset. In the Ethereum blockchain network, the fungible tokens are built on ERC-20 standard. Our fiat or cryptocurrencies such as BTC, ETH, XRP, USDT can be used as a medium of exchange for the same kind of asset. You can purchase a BTC for equivalent fiat or fiat for BTC, whereas the NFT’s are not these types of assets.
NFTs are one-of-a-kind digital or physical assets that are immutable and not interchangeable. NFTs can be completely owned only by a single person or authority at a time. These tokens are built with ERC-721 token standards. Let’s dive into the basic token variation of FTs and NFTs to get a clear perspective!
Token standards behind Fungible(FTs) and Non-Fungible Tokens(NFTs)
Fungible crypto assets are built on the ERC-20 token standard, whereas the Non-Fungible Tokens(NFTs) are based on ERC-721 standards. Ethereum token standard is a set of consensus protocols declared by the community peers for various projects to be compatible and interoperable with Ethereum blockchain goals.
Now, let’s understand more about the token standards!
ERC-20 is a regular token standard for cryptocurrencies, crypto tokens. More than 350000 tokens are listed by the end of 2020 for around 829 Ethereum-based blockchain projects. ERC-20 tokens can be utilized to pay for financial transactions and merchants for purchasing goods. In addition, these tokens can be utilized for crowdfunding, collecting transaction fees, voting decisions, and much more transaction purposes.
ERC-721 is a token standard that is indivisible, unique, and inconvertible. Every ERC-721 token is an identifiable asset holding distinct contract values with a patented pair of contract address and token ID. The virtual or real assets that are complete and unbreakable can be tokenized as ERC-721 to leverage and secure the ownership rights. A certificate, artwork, identity, or even our physical house, properties can be converted into NFT and can be displayed in the auction to earn profits! ERC-721 transactions are recorded on the Ethereum blockchain platform; hence the ownership data inherits the properties of immutability, transparency, security, and legitimacy. ERC-721 token standard preserves the incredible asset, and the underlying Ethereum blockchain infrastructure contributes to the unique ownership of the asset at a time. Hence, these ERC-721 tokens are addressed as non-fungible tokens based on their characteristics by the community peers.
Another exciting token standard that would be soon in crypto and blockchain news would be ERC-1155. Ethereum community members popped up with an ERC-1155 token standard which enables the batch transfer of multiple NFT’s. ERC-1155 are addressed as “semi-fungible tokens,” and it offers the flexibility to batch transfer NFTs. ERC-1155 is a combination of ERC-20 and ERC-721 token standard.
ERC-1155 can be explained with instances of issuing loyalty coupons to the consumers of the service. The enterprise builds all the coupons with ERC-20 standard, but when the consumer resells the coupon to another person, the coupon value differs based on the age, reward points earned so far, premium membership subscription, and much more criteria. Hence, it shifts to the ERC-721 token standard and becomes an NFT.
ERC-1155 is often called our “next-generation multi-token standard” by the crypto community audience, and this ideology is to support the multi-token approach.
Ufff!! We’re done and dusted with token standards and technical aspects of NFTs! Let’s now dive into the real-time applications of NFT in various sectors!
How are NFTs used in real-time applications?- Let’s get to a unified ecosystem!
NFTs’ value proposition is around fake facts and myths in the crypto space. Many people are amused about why the grimes video has been sold to $6 million when it can be viewed or downloaded as many times over the web. As the video is converted into a non-fungible token, the digital asset’s sole ownership is recorded in the blockchain ledger, which is immutable. Every NFT’s are developed with limited supply to create scarcity in order to increase the value proposition. Hence, these NFT’s are displayed in the auction to earn a lucrative profit. This is where Grimes video stands out from the crowd and it transfers the sole copyrights of the content to the buyer.
Every artform or masterpiece of a digital or physical asset can be converted into NFTs in our daily life. The art form proposition would be based on its potential to be unique, rare, and market trends. Let’s delve into the real-time implementation of NFTs!
The most popular NFTs that are recently being sold are mainly the artforms that couple up creativity and technology. The common artforms that are tokenized as NFTs are moving artworks(GIFs), video, paintings, music, fashion art, unique costumes, and much more. We would have noticed that depending on the poll or average answer, the Instagram smiley’s striker background color changes. This can be converted as NFT and sold in the marketplace. The artists can embed the IoT sensors in their art forms and display them in the auction as NFTs in the marketplace. Similarly, any art form such as video, GIFs, music albums can be converted into NFTs.
The hard part of outreaching the domain names can now be made easier with the ERC-721 token standard. NFTs can be leveraged to have whole rights over brand domain names for a lifetime. Instead of renewing the domain names every year or periodically, the brands can easily purchase valid & distinct domain names throughout a lifetime by converting them to NFTs. With the renewal of domain names, there are chances of missing out on the businesses’ high domain authority sites, which is a great threat when it comes to big brands and domains having huge subscribers or communities.
With domain names as NFT, the businesses can lay back with leisure, and they can sell their high authority sites to millions to generate revenue.
The first-ever use of NFTs was kick-started as collectibles in the gaming sector since the inception of CryptoKitties. CryptoKitties is a video game that enables users to collect, sell, and breed virtual cats on the platform. Following CryptoKitties, there popped many crypto collectible games such as Decentraland, My Crypto Heroes, Axie Infinity, Sorare, and much more. Depending on the game strategies, you can build unique collectibles in the market space with ERC-721 token standards. Let’s imagine that you’re playing a virtual game. You have completed a gaming level and earned a collectible. This collectible would not hold the same value proposition as any other NFT in the market space. In this case, the collectible asset worth varies based on the timeframe utilized to complete the level, intelligent strategies, the appearance of the collectible, add-ons earned, and much more.
There are many popular collectibles such as crypto crystal, hyper dragons, crypto jingles, crypto titties in the marketplace. NFT Non-fungible Token technology was first unveiled as collectibles, and it’s going places in various sectors right now.
Certifications & Patents
Isn’t it mandated to own our unique skills and degree solely with exclusive rights? Yes! Another significant use-case of NFTs would be tokenized digital certificates and copyrights. Every employer, educational or research institution, and federation require copies of certificates and thesis of the invention. There are numerous possibilities of scams with these certification copies. Tokenizing these assets as non-fungible tokens can enhance the asset’s sole ownership and could potentially prevent the scam and fraudulent acts happening around.
In addition to exclusive ownership, the NFTs built for certifications can avoid hours and workforce employed on verifying the records and documents. Also, this can help people who have lost their hard copies with easily accessible online certificates.
Have you built your dream home with details in the exterior and interior space with unique architecture? You can tokenize your house or piece of land as NFT and display it in the auction to earn millions! Or, to avoid misuse of properties, you can leverage the NFT technology. By tokenizing the real-estate property, you own exclusive ownership and could efficiently prevent fraudulent acts happening in the market space.
The token standard laid on real-estate property prevents other people from leveraging the asset and availing loans or other fraudulent acts.
Last shot on NFTs kick-start!
It’s evident from the buzz that NFTs are hitting the marketspace harder with exciting opportunities in various sectors. Gaming, artworks, music, video, 4D movable arts, certification, votes, patent rights, property ownership, and much more can be converted into NFTs to preserve the ownership rights in a transparent network.