What are NFTs, what are they for, and what do you need to know about them.
To quickly cut through the hype and jargon, non-fungible tokens (NFTs) are digital assets.
They are based around smart contracts which govern the rights to the assets, the information is stored on a blockchain which makes the record unique.
Blockchain, the same technology that underlies cryptocurrencies, make it practically impossible to create counterfeits of the assets. The record is decentralized, immutable and preserves ownership rights.
NFTs function similarly to cryptographic tokens, but, unlike cryptos they are not mutually interchangeable – or in slightly more esoteric terms, they are not fungible.
What exactly are they?
The most common NFTs are based on Ethereum blockchain, and the Ethereum ERC-721 standard.
They first become popular in 2017 with the CryptoKitty game – a virtual cat ownership and breading game in which cat is an NFT – which was the first mainstream use of NFTs.
Later, trading card games become a natural fit for NFTs, the best example of which is ‘Gods Unchained’, which allows cards to be sold in secondary marketplaces.
Many NFTs are collectibles sports cards and other rarities – for example, NBA TopShot collects epic NBA moments on cards ‘minted’ on the blockchain in limited supply.
Domain names have also become a popular type of NFT. The Ethereum Name Service (ENS), which become a popular way to store addresses.
ENS is the most widely integrated blockchain naming standard. You can launch censorship-resistant decentralized websites with ENS.
Other examples of NFT use in gaming include tokens such as REVV, which is designed to enable true digital ownership of game assets, giving players freedom and control over their NFT-based in-game items.
What else can NFTs be used for?
An NFT’s unique identity and ownership is verifiable via blockchain ledger, and NFTs are generally associated with licensing for the use of the digital assets, but it does not confer copyright.
This unique property makes it easier for the users to apply NFTs in many areas.
Digital Art: Because the unique signature and ownership of NFT are assured with the usage of blockchain technology.
Collectibles: NFTs can represent digital collectibles like physical card collections, however in a completely digital format.
Games: Gaming virtual assets, such as digital plots of land, which are controlled by the user instead of the game developer.
Music: Blockchain technology has allowed musicians to tokenize and publish their work as non-fungible tokens.
Film and entertainment: The technology enables the creation to print digital posters and other promotional materials can be created using NFTs.
Sports: In the sports segment, NFTs have opened a new channel to monetise the game by issuing unique cards representing athletes and sports stars and also produce a unique set of limited-edition collectables to commemorate the special occasion.
A passing fad, or here to stay?
NFTs aren’t a passing fad, not according to industry captains at least, who say they are here to stay and likely to become more and more popular in the future.
Experts in the crypto business are predicting that NFTs will be the entrance point for 40% of new crypto users in future.
Many investors are willing to pay high rates to secure and promote NFTs and continue to do so because they anticipate NFTs will become the biggest and most profitable form of collectibles in the future.
There are concerns about higher energy usage of blockchain technologies and its impact on greenhouse gases but experts don’t expect it to hamper the growth as the tech evolves.
