Since the onset of Covid, cryptocurrencies have grown in popularity. There are plenty of new tokens every new day.
Fungible vs Non-fungible
Crypto tokens can either be fungible or non-fungible. Fungible assets are what most of us are already familiar with. They’re tokens that you can interchange with something else. By fungibility, it means that you can equate its value with something else. Fiat money is fungible in the sense that $20 is equal to two $10 bills.
Many regular cryptocurrencies are fungible. For instance, one Bitcoin will always have the same basic value as any other Bitcoin.
Non-fungible tokens are the opposite of fungible tokens. They are unique and special. You cannot interchange their value with something else. You cannot compare its unique properties with something else. A good example is a work of art. Even though there can be a replica of art, it can never be the same as the original form.
NFTs are digital assets that you can trade like any other property, only that they have no tangible form. The tokens can act as a representation of a certificate of ownership for the assets.
How NFTs Work
As much as the work of art may be unique, you can always replicate it when it is digital. Through an NFT, you can tokenize it by creating a certificate of ownership. You can use this as a basis of trade for buying or selling.
Like other cryptocurrencies, you can store the certificate in the blockchain. The blockchain platform has a record of the certificate owners, and no one can change that.
Smart contracts govern NFTs, and that means an artist will always know what is going on with the piece of art. For instance, if an artist decides to sell their creation, a smart contract ensures they get their pay.
Even though you can buy or sell an NFT, you cannot divide it into simpler parts or trade for other NFTs. You cannot assemble NFTs to form a new creation.
Can you Copy NFTs?
Although NFT might act as a “certificate of ownership,” you can duplicate the original art. Many people are producing and selling copies of the original work.
With NFT in the blockchain, the artist has the actual copyright ownership of their work. That proves they are the original owners of the work. This means one NFT can’t be copied from another NFT.
What is the Big Deal with NFTs?
2021 is a year where NFT broke history. In the first quarter of the year, NFTs grew by about 1785%. We can tell there is still continuous growth by checking platforms such as Beeple. As such, the NFTs sell out in a flash. There is also an increasing number of celebrities joining the bandwagon. It means that growth will be explosive by the end of the year. With so much enthusiasm for NFTs, what is the big deal about them?
For fungible tokens, people use them for the storage of value. People use NFTs for the storage of information. It shows you can use it to store sensitive data. The good thing is you can be confident no one will tamper with that information. It is ideal for storing birth certificates, property ownership deeds, and academic credentials. The non-fungibility concept can apply in voting to encourage democracy and cut fraud.
As expected, creatives are the ones that make up the majority of the NFT community. Celebrities, graphic designers, and different artists have optimized digital platforms for art. NFT exchanges are mushrooming every day. This attracts the attention of both collectors and investors. This has helped artists to earn from selling their NFT. Content creators also have more ownership of their work and can earn well. Beeple is encouraging artists to use NFTs to make transactions. This has contributed to the growth in the adoption of NFTs.
NFTs growth in the gaming industry is not something we can ignore. Players in the gaming industry can exchange assets in the form of NFTs. Their experience and skills can help them gather more assets to trade in the form of NFTs. We are all aware that the gaming industry is set to the sky. It is estimated to grow to $200 million by 2023.
The gaming industry has considerable potential in adopting the use of NFTs. Moreso, you can use NFT in identity management. The identity of individual certificates is unique and secure. This ensures easy proof of ownership.
There is a significant potential for NFTs, which is why there is growth in the NFT marketplace. That explains why platforms such as Opensea and Rarible have grown up to 100 times more in the last quarter. There is no doubt that NFT is an unexplored territory that is set for explosive growth. With time there will be even more applications, which will make it better.