Future Applications of NFT Technology
The Rise of NFTs: What You Need to Know About Non-Fungible Tokens Over the past year, there has been explosive growth in the world of non-fungible tokens (NFTs). NFTs allow people to buy and sell ownership of unique digital items and collectibles like drawings, music, videos, and more. Here’s a breakdown of what NFTs are and why they are becoming so popular: What is an NFT? An NFT, or non-fungible token, is a digital asset that represents real-world objects like art, music, in-game items, and videos. They are bought and sold online, usually with cryptocurrency, and each NFT is encoded with the same underlying software and linked to the same item. Unlike currencies, NFTs are unique and not interchangeable. They have provenance, scarcity and ownership tracked on blockchain. Blockchain and Smart Contracts NFTs are built on blockchain technology, most commonly the Ethereum blockchain. Blockchain allows the tokens to be publicly authenticated and tracked on a digital ledger. « Smart contracts » are also implemented, which automatically enforce agreements made between buyer and seller. Digital Collectibles and Artwork Some of the most popular early NFTs were unique digital collectibles and artworks. Artists create and sell limited editions of digital paintings, photos, videos, GIFs, and audio as NFTs. Prices range from a few dollars to hundreds of thousands depending on the artist and rarity. Cryptopunks and NBA Top Shot Moments are examples of desirable NFT collectibles. Game Assets and Virtual Worlds As gaming continues to move online and into virtual worlds, many games are incorporating NFTs as in-game items or currencies. Axie Infinity allows players to battle collectible NFT pets and earn crypto. Decentraland is a virtual world platform where users can build using and buy LAND parcels as NFTs. Proof of Authenticity and Ownership Because each NFT has a verified owner and transaction history stored on blockchain, they provide a way to prove the authenticity and retain resale value of digital creations and possessions. This ability to verify scarcity and ownership has major implications for digital art, collectibles and creator economies. Investing and speculation\ As the NFT market has grown rapidly, many now buy, sell and trade NFTs as investments, speculating on which projects or specific tokens could appreciate in value over time. Popular NFTs from new collections can « flip » for profits almost immediately. However, the market remains highly volatile and risky. Future Applications The rise of NFTs points to future applications for verifiable digital scarcity across ticketing, domain names, personalized audio experiences and more. As blockchain and crypto continue advancing, NFTs will likely play an expanding role in the digital world. For artists, collectors and tech investors, NFTs are certainly here to stay and revolutionizing digital ownership.
