Chances are pretty slim that you haven’t heard about NFTs yet. These unique tokens even conquer the news, then you know that something big is happening.
We often think that these non-fungible tokens equate to digital art. Nothing is less true. The technology behind these unique tokens is a revolution that can impact different aspects of life.
What are NFTs?
NFTs are not all just digital collectibles or digital art. NFT is a technology that offers opportunities for the further development of blockchain technology. Before looking at the different types of NFTs and their impact, let’s go back to the basics: what is an NFT?
In short, an NFT is a non-fungible token with digital proof of ownership. Non-fungible here means non-exchangeable. When you sell Bitcoin and buy it again a long time later, the chances are very small that this is the same token. There is no certificate of ownership that can prove who this token belonged to before. NFTs are unique tokens, where you as the owner have a certificate. This way the entire blockchain that you own this NFT.
Different Types of NFTs
Typically, we know NFTs solely as digital art that trades at monster amounts, but thankfully the technology of these NFTs offers much more and could positively change the future of crypto.
Check out this 2min types of NFTs video below:
Are you new to the world of NFTs? Then you probably immediately think of digital art. This is also not surprising since these digital objects are traded at record prices and several 18-year-olds become millionaires in one fell swoop. NFT collections are often created with a fixed number, the Bored Ape Yacht Club has exactly 10,000 items, just like CryptoPunks. This scarcity and rock-solid community drive the price, with even well-known Hollywood stars such as Justin Bieber, Jimmy Fallon, and Paris Hilton all having their own Bored Ape.
Just like physical art, there is little to no application possibilities with this digital art. This is purely about the aesthetic aspect and the value is determined by supply and demand. Some NFT collections do offer extras, such as access to a closed community.
Are you from the era when Pokémon cards were very popular? These popular but scarce NFTs are also why enthusiasts want to collect them. An NFT can come in all forms. As long as something is unique with proof of ownership, it is a non-fungible token. One such sport NFT is NBA Top Shot, where the most legendary basketball moments are traded in the form of NFTs. Fans can collect videos of their favorite basketball team.
This is of course closely related to social tokens that sports clubs launch to build a community with their fans. However, the technology here is different. They use a governance function of the token to help determine the future of a team. But these social tokens are not NFT, because they do not have digital proof of ownership.
The gaming industry is a multi-billion dollar industry in which technology is central. In ‘traditional’ gaming, players are subject to the game’s rules. For example, the maker determines which weapons are available and which clothes you can give your avatar. By using NFTs, players can determine the game themselves. How?
By trading weapons and/or other attributes such as NFTs, players can get rewards faster through the game or earn money faster thanks to play-to-earn. These attributes are owned by the player. Thanks to blockchain technology and the applications of decentralized applications (dApps), you can also use these items in different games on the same blockchain.
Besides the fact that these NFTs provide faster and/or better rewards in the game, this is also an additional source of income. Gamers can also start trading these NFTs on various NFT marketplaces such as OpenSea or Rarible and thereby generate additional income. Suppose players need a certain weapon to unlock a level, players who have already done so can trade their weapon at interesting prices. This is an example of how in-game assets are used as NFT applications.
A popular play-to-earn game at the time of writing is Axie Infinity. In the example above you can see that there are no fewer than 283,000 items for sale that every player can use in the game.
The use of NFTs in the music industry offers many possibilities for the artist. Currently, artists are growing because their music is available on major streaming platforms, such as Youtube and Spotify. What people often don’t know is that the artist gets only a small portion of these revenues. The largest part goes to the platform itself, but also to other intermediaries. These large parties, therefore, earn money almost day and night, thanks to these artists.
In addition, these artists have also built up a large community through these platforms. Let’s not forget that Youtube can take an account offline at any time, with all the necessary (monetary) consequences that entail. As a result, there is a need in the music industry for this decentralized development, so that musicians can monetize their own work again, whereby they themselves have the right to make decisions.
Thanks to NFTs, tracks and video games can also be recorded on the blockchain, including this proof of ownership. This allows artists not only to monetize their work themselves but also to build a community in a decentralized way. It is reported that artists earn up to 85% of their revenue, with this being only 15% when using streaming platforms.
The great thing about NFTs is the possibility of royalties. Artists can sell tracks, receiving a percentage on each subsequent sale. Not only do big artists now have complete freedom, also smaller artists now get a fair chance to be discovered and determine their income stream!
Every year many tickets end up on the black market. Think of tickets for exclusive exhibitions, concerts, and events. Such tickets are bought for a certain amount and sold again for double or even more. Thanks to blockchain technology and the world of NFT, you can buy tickets that are exclusively in your name. No one else can use your ticket as an entrance ticket.
None other than Coachella, the largest music festival in America, has launched its own NFT collection, where you can initially purchase NFTs that give you access to the festival. But also where you can buy unique on-site experiences.
The metaverse is developing rapidly and just like in the physical world, in the virtual world we also want to impress with our wardrobe choices. Do you want those exclusive shoes or do you want that extraordinary jacket? Clothing, better known as digital wearables, are also NFTs.previously launched Dolce & Gabbana their Genesis Collection for over $6 million. Each unique copy was accompanied by a digital version for the metaverse. The Decentraland Wearables on OpenSea has more than 71,000 items for sale, with which you can dress up your personal avatar.
Besides the aesthetic aspect, these digital wearables can also have some in-game utility. Thanks to Decentral Games you can now participate in Poker Tournaments in Decentraland, where you receive extra rewards if you wear a certain jacket. With this jacket, you earn rewards 3x as fast, whereby the principle of play-to-earn becomes very interesting, just based on your choice of wardrobe.
With the rise of the metaverse, we see that many people are making an investment through real estate. Instead of buying a physical house, they own a virtual plot of land and/or house. Depending on the location, you pay more or less per surface area of land or for your house. Just as a house in Amsterdam is much more expensive than in Brabant, in the metaverse you also pay more for a piece of land in the center.
Many enthusiasts believe that within x number of years we will move en masse to the metaverse and that the demand for real estate will also increase. For that reason, real-estate NFT trading as an investment has also increased. In December 2021, someone paid a whopping $450,000 for a virtual plot of land, to be the digital neighbor of rapper Snoop Dogg.
The world of NFT is often the wild west of the internet, where we are regularly surprised by the activities. In addition to trading digital art or other uses, it also happens that various, apparently meaningless, digital items are sold. Twitter co-founder Jack Dorsey previously sold his first-ever tweet as an NFT for a whopping $2.0 million. Why? Just because it’s possible.
From this ideology and mindset, really anything can be traded as NFT. Think of Facebook statuses, Snapchat stories, and TikToks, but also blog posts. In theory, we can create this article as an NFT on the blockchain and also trade it. In this case, NFThotShot.com retains ownership of the article, but an external company can use our article. Crazy idea? It is possible!
This includes the intellectual property of everything we find online. Chances are you see the same video or image on social media, each time from different sources. But who now owns this resource? All too often images are used illegally, plagiarism is committed by copying existing texts. If we were to transfer all these properties on the blockchain as NFT, we can immediately add a certificate of ownership to this. Plagiarism is a thing of the past. Think also about what this could mean in the medical world and the business world when patents are granted as property rights through NFTs.
The future of NFTs
Non-fungible tokens are conquering the world. Even in the news, we hear more and more NFTs and despite the explosive increase in trading in 2021, it looks like this trend will continue into 2022. Thanks to the unique technology, the possibilities are endless. In early January 2022, even a physical house in Miami was sold using NFT technology. Really everything that has a unique character and exists on the blockchain is an NFT. This technology is also a true revolution.
We are currently seeing that, despite the continued success, many people are still not trading NFTs. This can have several causes. One of these reasons is that investing in NFTs, and in particular in digital art, is expensive. Paying a few thousand dollars for a digital picture is no exception. This excludes part of the market and makes this technology only for the richer.
allow Fractionalized NFTs you to buy some of this art along with others. Hopefully, this will help more investors find their way to NFTs. Currently, the use of this F-NFT is only possible with certain digital art.
The development of NFT is only just beginning, or NFT 2.0 is just around the corner. This application allows your unique NFT to contain multiple NFTs. It’s a kind of compound principle, that you build on from your first NFT. How can this take shape?
Suppose you have invested in a lifetime pass for Coachella, in the form of an NFT. Only after purchasing this NFT will you be given the opportunity to purchase additional NFTs. Think of meet & greets with artists or backstage tours. This makes it all the more interesting to invest in the basic NFT, because you have even more options afterward.
This also applies to the gaming industry, as well as in the metaverse. For example, you really want the latest new exclusive sneakers. For example, you may only be able to purchase this NFT wearable if you have another item from a previous limited-edition collection. It builds on each other, making these NFTs even more exclusive, which will also translate into higher pricing.
The question is often asked about NFT being a hype or a bubble. In principle, the focus is, incorrectly, always-on digital art, while these unique tokens have many more facets and applications than many think. The downside of this digital art is that its value is quite speculative. It is determined by vagueness and supply and the popularity of this NFT collection at a particular point in time.
In addition to collectibles and art, we see that the NFTs offer many advantages and opportunities in the music industry. Beginning artists are hardly discovered, because they are snowed under by major artists, partly due to the streaming services. By using blockchain technology and NFTs, artists and musicians can determine their own income again, while building a community themselves in a decentralized way.