What Are NFTS For, And What Types Are Three?
Since the term NFT began to echo in our society, we have encountered a sea of doubts. What are NFTs, and what are they for? Why are they worth so much? Is it a good idea to buy one?
If this still sounds Chinese to you, we leave you a post to another previous article on our blog where we explain what non-fungible tokens or NFTs are, what makes them so special, and why they are here to revolutionize the world. And, what the hell, why are some valued at millions of euros?
If, on the other hand, you continue here, it is that you have some idea about these digital assets, although a great question arises: what is the use of having or creating an NFT? We know that when something is scarce and wanted by society, it is more expensive. This approach applies to absolutely everything, and how could it be otherwise? It also applies to an NFT.
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Non-Fungible Tokens: the NFT ecosystem
Before Non-Fungible Tokens, creating a digital scarcity of assets was virtually impossible. Although copyright protections exist, it is relatively easy for consumers to copy or pirate digital works of art. But thanks to the protocols behind the NFTs (the so-called chain of blocks or “blockchain”), they have managed to end this and, finally, anyone who creates digital art, collectible products, or even files to demonstrate the authenticity of certain elements or services, can be turned into something very valuable.
Although the NFT ecosystem is still very young, many interesting projects exist to explore, and some are already generating great value for creators and consumers.
Types and what are NFTs that we can find for
NFT as art
These types of assets are the best known, and we have been able to hear the most because they have managed to solve the problem of the scarcity of digital art. How? Crypto art gets most of its value by digitally verifying its authenticity and ownership. That means that out of all those who might have a CryptoKittie image on their profile picture, only one has the original asset. Thus, regarding NFTs, value is not necessarily about the accompanying artwork but about proving ownership of that particular asset.
Although the first group of these non-fungible tokens was one of the few we knew about, we found the other large part representing a significant proportion of sales in the NFT markets: Opensea, BakerySwap, or Treasureland. There are many crossovers with crypto art; sometimes, an NFT can be both a piece of art and a collector’s item. An example of this may be the first tweet from Jack Dorsey, an asset with a merely collectible value, and a Cryptokittie, which is also a collectible, but with some initial artistic roots.
NFT as a financial object
After these two large groups, we detach ourselves from the NFTs with values ”forever,” and we delve into digital assets, which value comes from their utility. In this modality, the NFT can act, for example, as a gateway to a site. When you enter, this token is destroyed.
NFTs in video games
Have you ever heard of skin? If you consider yourself a gamer, you do, but if not, surely you know the great demand for video games concerning the unique items we can buy in them. Microtransactions and in-game purchases have created a multi-billion dollar gaming industry that could utilize NFTs and blockchain technology.
If we can create graphic files, we can do the same with a piece of music. And we would not be wrong. In addition, this type of NFT can be one of the great solutions that affect artists: obtaining a fair share of their royalties (considerations that must be made in exchange for using the intellectual property that belongs to someone else). Combining music with NFTs is a very good idea, but you might have difficulty succeeding without the support of record labels.
NFTs for the real world
Even if you think we have lost our heads, explaining what real NFTs are for is easier to explain than it seems. Think of a real estate agency: purchase-sale papers, deeds, cadastres… Now imagine that all these documents are tokenized digital assets that can be moved to the blockchain while preserving all their validity and even protecting them with greater security protocols and, on top of that, that they can be accessed more easily. This model is still in development, but it is something to keep in mind in the future.
As we know, immutability and transparency are the main characteristics of the “blockchain”
network. So why not use this supply chain data? Thus, we could use an NFT to track a product that contains metadata about its origins, journey, and warehouse location.
The future of NFTs
As we can see, NFTs already have various features that make them present and future technology. But so far, we have only seen the most “commercial” part of them, and we also have to say that there is already a variation of these digital assets created for charitable and humanitarian purposes. And how is an NFT of these characteristics made?
We have encountered some of these non-fungible tokens used in philanthropy to get donations. An example of this was provided by UNICEF, which at the end of 2021, within the framework of its 75th anniversary, launched a collection of NFTs. This consisted of more than 1,000 pieces that were put up for sale through the Ethereum blockchain to finance various projects.
The specialization program in blockchain and digital innovation at the Institute of Stock Market Studies. She says, “any place where a digital element is needed to certify ownership, it will be a niche where NFTs will demonstrate their full potential.”
And it is that, although to many of us, they still seem unknown, complicated to understand, or even dangerous, NFTs have come to stay, and the large number of resources for which they are used is being demonstrated.