Digital assets come in many shapes and forms – digital securities, utility tokens, cryptocurrencies, and more. One subset that is rapidly growing in popularity are Non-Fungible Tokens, or ‘NFTs’. The creators of these assets have taken blockchain technology, and implemented it in such a way that holds great appeal to collectors by changing the way we validate asset ownership and scarcity.
What Are NFTs?
For an asset to be fungible, it needs to be interchangeable and indistinguishable from others of the same type. An example of a fungible digital asset is Bitcoin – each BTC is identical, with no way to differentiate one from another.
A NON-Fungible asset boasts a unique, identifying factor, which makes it unable to be interchanged with others of its kind. These assets are typically indivisible, verifiable, and appreciate/depreciate in value independently. Tokens which are non-fungible in nature are created through the use of smart-contracts. Creators can assign NFTs to items of value both tangible and intangible in nature.
Network of Choice
While NFTs are not restricted to a single platform, the most commonly used offering to date is Ethereum. Most NFTs utilizing the Ethereum network are built on either the ERC-721 or ERC-1155 token standards.
Although Ethereum is by and large the most popular platform for NFT issuance, there are others which are attempting to replicate its success. A few examples of these include the following networks.
Although at first glance NFTs might appear slightly novel in nature, they are anything but. Despite having only been popular for a short period of time, investors are rapidly coming to the realization that they can hold great value, as use cases are not restricted to assets like digital card games.
Rather, NFTs are being used in conjunction with many forms of collectibles, ranging from digital real estate, to art, and more. The following are a few examples of the more high profile examples of NFT purchases in recent years.
- Sold through venerated auction house ‘Christies’, Block 21 was one of the first high-profile sales artwork accompanied by an NFT, bringing in $131,250 USD.
- A project comprised of digital collectible cards has sold over 15,000 to date, bringing in over 10 million USD.
- This is a virtual world in which investors can purchase ‘digital real-estate’ – with ownership represented by NFTs. Property owners in Decentraland can then profit from virtual businesses build on their ‘land’.
Here to Stay?
While it may be early to definitively state that NFTs are here to stay, this is definitely shaping up to be the case. With over 220 million spent on various forms of NFTs to date, the future is increasingly promising.
NFTs are rapidly moving beyond a means of verifying the ownership and scarcity of solely digital items. Companies and individuals alike are beginning to take note of the potential for NFTs to change the way we identify and interact with items of value in both the real and digital world.