In case you hadn’t noticed, NFTs have been blowing up this year, attracting mainstream attention and causing mind-blowing sums of money to be transacted online. But despite the funds that are moving around not everyone is up to speed on exactly what NFTs are, and how they fit into the often turbulent cryptocurrency ecosystem. Bitcoin is the big-hitter that can no longer be ignored, but in what ways are NFTs likely to affect our lives, and should we be buying in?
What is an NFT?
NFT stands for non-fungible token. That makes it different from bitcoin, other cryptocurrencies, and fiat currencies, which are fungible tokens. Just to be clear on that, a fungible item means something that can be exchanged with any other identical item, because they’re all the same. So, for example, one US dollar is the same as any other US dollar, and one bitcoin can be interchanged with any other bitcoin.
An NFT, then, is a unique asset, that can be traded or collected, but not interchanged seamlessly with other, identical assets. They fit into the cryptocurrency world because they run on the same technology. They’re digital, secured on a blockchain, and are traded using cryptocurrencies.
NFTs as Art
When you learn that NFTs are unique, tradable, and sometimes highly desirable, your mind might turn to the art world. And you’d be correct to think that way. NFTs have opened up tremendous opportunities for artists and designers to put their work on the blockchain, gain exposure and direct connections with patrons and collectors, and sometimes reap substantial rewards.
Take a look at NFT auction house ART HAUS to get a sense of the direction in which the online art world is heading. And don’t be fooled into thinking this is all too niche or esoteric to garner much interest. In March of this year, an NFT by digital artist Beeple sold at Christie’s for $69 million, and that’s by no means the only transaction hitting a tremendous price.
NFTs as Collectibles
Another NFT use is in the creation of collectibles. Trading cards have been around for decades, so it makes sense that as we move increasingly online, such items would become online too. To a digital native, why would we not own a digital collection relating to our interests? Blockchain technology makes this possible, and we are already seeing bold and successful moves in the world of sports.
In September, golf superstar Tiger Woods released a 10,000 piece NFT collection through a company called Autograph. He follows in the blockchain-footsteps of other huge athletic names such as Naomi Osaka, Wayne Gretzky, and Tony Hawk, all of whom are on the Autograph advisory board, and have released their own NFTs.
NFTs are also making inroads into the comic book industry, where publishing giants Marvel and DC have both been releasing digital collections, including virtual figures and full comic books. Again, there is huge interest among fans, and sales to match.
NFTs in Gaming
The use of NFTs and cryptocurrencies in the gaming world is expanding very quickly. Unique in-game items can be minted as NFTs, and traded for real-world, transferrable value. The play-to-earn model is already allowing gamers to make an income from their in-game activities, and this is an area that looks almost certain to increase in popularity in the coming years. NFTs are set to become an integral part of the gaming experience, and native tokens are a booming, profitable economy.
You don’t even have to play the games themselves to have an interest in this, as in-game tokens are speculative crypto assets, that can be invested in and traded for profit. It’s risky, but there are significant potential gains.
Other NFT Uses
Besides art, collectibles, and gaming, NFTs have many other use cases, and significant transformative potential. One practical value is in the issuing of licenses and certification. In academia, professional training, or anything else where a personal record is necessary, blockchain technology can be utilized. This allows for a cleaner system, in which records are easily accessed, personally controlled, and secure, without the need for paper documents.
Another application is in logistics and product tracking. When manufacturing and distributing items, they can be assigned a unique NFT, with stamped metadata, allowing for the product to be tracked smoothly through the supply line on a single, highly secure tech platform, with additional timestamped data added along the way. NFTs can be used in this way to represent real-life objects, tying in with the concept of the Internet-of-Things.
Cryptocurrencies, blockchain technology, and NFTs represent an emerging technological field, that is being taken up and applied before many people have fully figured out what they are, or how they work. They will be disruptive and, for some people, highly profitable and a lot of fun. Whether your interest is in art, sports, gaming, finance, manufacturing, or something else entirely, there may be changes ahead.