A Peek into the World of NFTs
Non-Fungible Tokens have been around for a while and have seen major buzz since 2020 during the covid pandemic and have gained even more popularity in 2021. Non-Fungible Token is a technology that leverages the blockchain to create a transparent digital ledger that documents an asset’s actual digital ownership. Simply put, they prove digital ownership. Many NFTs of the most popular NFTs collections such as crypto kitties, crypto punks, lands in decentraland have been sold for crazy amounts in 2021. DappRadar, a website that tracks the buying and selling of NFTs, announced that NFTs’ trading volume hit $22 billion as of 2021. DappRadar attributed this success to mainstream businesses entering into the NFT market.
They have a unique identity
What makes NFTs different from fungible tokens is their uniqueness. This identity gives individual NFTs their separate digital ownership on the blockchain. Each NFT is stored on the blockchain with an identification code and metadata that makes it as unique as a fingerprint. Metadata describes what an NFT does and is usually stored beside it on the blockchain.
Trustless and Authentic
NFTs, just like most blockchain technologies, do not need the end-user to trust each other before performing a transaction. NFTs can be used as a certificate of authenticity because the details about a particular utility and what it represents are available and can be confirmed publicly.
Basis of ownership
NFTs can be used as a means of identity in all sectors that deal with assets, and they are already being used in many now. Talk about gaming, sports, music, lifestyle, real estate, etc. It can be used to represent just about anything, a deed of ownership of a house, a ticket to a concert, an artwork, etc. The brand uses NFTs to represent different physical items into digital collectibles.
How can the value of an NFT be assessed?
There are various indicators that can be used to measure the value of an NFT. Most NFT collections having huge success today tick some or all of these factors:
- The first idea of an NFT rules the market
Bitcoin is so popular because it was the first cryptocurrency. The first NFTs of specific creators or businesses will also have value. For example, Pokémon cards are quickly gaining popularity, and the most expensive cards are those produced in the first edition. So, let’s say if you have the first United States NFT, it will likely have some perceived value
There are real benefits cases of NFTs. Imagine if Elvis Presley was still alive and he sold 50 NFTs. Owning one of them gives you lifestyle access to any of the shows he participated in. This NFT will quickly become popular and very expensive due to its real-world benefits. It is projected that most NFTs will evolve to have utilities. Creators would sell NFT for income and, in return, confer huge benefits to the buyers of such NFTs
- Uniqueness or Rareness
Another thing that makes an NFT valuable if it’s unique or rare. For instance, anyone can have a copy of the Mona Lisa in a room, but only one person or a museum can hang up the real painting by Leonardo Da Vinci for everyone to view. The same goes for the original constitution of any country; they are rare, and the value attached to them will be massive. Now let us bring the analogy to the NFT world. Imagine if Stephen Hawkings only minted three NFTs. They would be very valuable because there are only three originals, even if they are just pictures of the universe. Other people can have that picture, but that won’t have the original one minted by Stephen Hawkins.
- Ownership History
Let’s say Cristiano Ronaldo is your favorite football star and he decided to sell his leather jacket and buy a new one. If he initially bought the jacket for $200, some fans might be willing to buy the same jacket for way higher than that. Like it is in the real world, it also applies in the NFT world. Some might be willing to pay a million-dollar for the image of a duck that Barrack Obama owned at one point.
NFTs’ utility at a glance
The most obvious benefit of NFTs is that they establish a trustless, safe and immutable system and allow people to interact with one another without the need for intermediaries or agents. They are an upgrade from the simple concept of Fungible tokens used in cryptocurrencies, although their values are traded in crypto tokens, especially Ethereum.
NFTs allow for a physical representation of a digital asset, and in doing so, they create a path towards digitalization and modernization. They can be used to issue tickets for flights, as a mean
Another recent buzzword in the blockchain is Metaverse, representing a 3D virtual world where users can interact almost like reality. NFTs find application in this 3D world as they can be used to represent assets in Metaverse. Dencentraland, a virtual reality platform on Ethereum’s blockchain, has already implemented such a concept.
Are NFTs here to stay?
The true measure of blockchain success is in its global adoption. What made Bitcoin successful is the increasing number of end-users that use the technology. A surge in popularity of NFTs in 2020 resulted from its increased adoption. If NFTs continue to enjoy such success, they will be ready for global adoption within a short time.
The biggest utility of NFTs will probably be in their use as a social currency, and they appear to be trending in that direction already. With more people getting aware of blockchain and smart contracts, they will be more people tending towards the use cases of these technologies.
NFTs can be used as a means of identity in all sectors that deal with assets, and its already being used in many now. Talk about gaming, sports, music, lifestyle, real estate, etc. It can be used to represent just about anything, a deed of ownership of a house, a ticket to a concert, an artwork