For most of the current crypto bull run, decentralized finance (DeFi) was the hot subject, sparking a new alt season with many claiming that DeFi will carry crypto to mainstream acceptance in the next few years. The next frontier for crypto, at least in the past few months, has been NFTs.
What precisely are NFTs?
A non-fungible token (NFT) digital representation of a tokenized commodity.
They’re identical to stablecoins, except instead of representing fiat money, they’re used to display non-fungible assets like artwork, real estate, and collectibles.
CryptoKitties and Decentraland are two well-known interactive games that utilize these tokens. In addition, Crypto Punks and Hashmasks have gain a significant amount of popularity on the Ethereum blockchain.
How do NFTs work?
Non-fungible tokens are used to maintain asset interoperability across all networks and to create verifiable digital scarcity and possession.
NFTs are used to make one-of-a-kind digital items like crypto jewelry, crypto-collectibles, and crypto games.
The first use case for gaming-related NFTs was crypto-collectible playing card play. As early as 2016, projects including Age of Chains and Rare Pepes used the Counterparty protocol to issue Bitcoin-based blockchain trading cards.
NFTs are often used to ensure the accuracy and possession of digital art. CryptoPunks, which launched in June 2017 on the Ethereum Blockchain, paved the way for “rare” art.
The Ethereum blockchain’s non-fungible tokens were later used in famous blockchain games including CryptoKitties. NFTs are used to describe in-game properties, and they belong to the player rather than the game’s author.
This allows properties to be traded on third-party platforms without the consent of the developer. Markets for NFT art art include Nifty Gateway, Super Rare, Recognized Origin, and MakersPlace. Furthermore, OpenSea is a marketplace dedicated to NFTs.
Clear token specifications have been developed to promote the usage of blockchain in gaming. The CryptoKitties ERC-721 norm, as well as the more recent ERC-1155 standard, are examples of these.
Custom ERC-721 holding Fungible Tokens (FT), which may hold bitcoins, digital data, and other NFTs that can be shared, is a new use case for NFTs.
The Future of NFTs
In addition to art, NFTs have become very common in a number of other fields. NFT technology, for example, is being used to create tokenized copies of athletes and celebrities, augmented rooms, and more.
In the first week of October, the fantasy soccer game Sorare made over $220,000 in sales. Plays will collect “internet collectibles in a limited edition” while still leading a team on the decentralized network.
OpenSea, an NFT marketplace, is currently processing about $1.8 million in value, with the figure appearing to be increasing. The NFT room has a bright future ahead of it, but there are still some unknowns, such as blockchain scaling and universal acceptance.