The popularity of NFT tokens in the digital asset market continues to grow
Many popular companies started using NFT tokens in their work
The gaming industry remains the main industry for NFT tokens
International consortium of news organizations developing transparency standards.
Blockchain technology and tokenization capabilities enable the creation of various digital assets. Almost every year new, different instruments appear. These digital assets include NFT.
In order to understand the features of a financial instrument, the editorial staff of BeInCrypto has collected all the information about it in one material.
What is NFT
The abbreviation NFT comes from the English non-fungible tokens, which can be translated as “non-fungible tokens”. Their peculiarity lies in the name – each such coin is unique.
You can understand the essence of the phenomenon thanks to a simple example. Citizen N borrowed 100 rubles from a friend. One of the conditions of the contract – the return must be made with the same bill. At the moment when the time comes to repay debts, he will be able to pay off with any banknote of the same denomination. The borrower will not see the difference, because the transferred N 100 rubles and the debt received from him are equivalent. It turns out that currency is a fungible asset.
In this case, if N borrows a baseball autographed by his favorite player from a friend, and returns a regular new ball instead, the owner of the little thing will be extremely unhappy. The reason is that the object is unique – exactly the same second is not on Earth. This is where its value lies. Accordingly, it is not interchangeable..
Illustration of an example with non-fungible assets
The same qualities can be transferred to digital assets. NFT tokens differ from cryptocurrency, in its classical sense, in 3 nuances:
The last point needs clarification. Most NFT tokens cannot be divided into parts in any way, shares cannot be separated – they can only be stored as a whole.
Why are NFT tokens needed?
With the help of NFT tokens, the developers solved the problem of ensuring the ownership of digital objects. Take a game, for example. When buying a new weapon for a character, the user could not be 100% sure that the new attribute will remain with him forever, unchanged.
The fact is that developers, taking advantage of their position, can make adjustments, change, replace, and even withdraw in-game items. Moreover, if the weapon was tokenized in NFT format, the player can be sure that his ownership is confirmed, and nothing threatens the item.
All information about the owner and his tokens is fixed in the blockchain. It is impossible to replace the data or erase the information. This became real thanks to the peculiarities of the technology. Learn more about the blockchain and its properties from our material.
Where are NFT tokens used
The main field of application of such tokens has become the gaming industry. However, NFT can also be used in other areas. For example, in real estate, or in art (to confirm the unique ownership of the original object).
As of September 1, 2020, according to the Nonfungible platform, all NFT tokens on the market are distributed as follows:
- 41% – the gaming industry;
- 29% – collectibles;
- 13% – real estate;
- 7% – collectible card games;
- 6% – domain names (yes, some are ready to retain ownership of unique domain names by all means);
- 4% – art (images, music and even videos can also be protected with copyright on NFT).
NFT token distribution schedule as of September 1, 2020. Data: Nonfungible
The graph shows how NFT collectibles increased their market share in the spring of 2020. The indicators of tokens of collectible card games and real estate – on the contrary, went into decline.
How to make money on NFT tokens
The uniqueness of NFT tokens has opened up opportunities for their owners to earn extra money. For example, let’s take the popular Ethereum game Cryptokitties (Cryptokitties, or Cryptokitties).
Its essence is as follows:
- There are kittens in the game. Everyone is unique.
- Players can buy kittens. To solve the problem of proving the uniqueness of cats, the developers used the NFT format. One cat is equal to one token. The chosen format confirms the uniqueness of the kitten and all rights of ownership by the player. Also, a game participant can be sure that neither the developers nor anyone else can change his tokenized virtual asset (cat).
- Depending on demand, the price of one or another kitten may rise or fall. When pets are crossed, the player receives offspring. Each cat is also unique. At the same time, in some cases, new kittens can significantly exceed their parents in price..
For example, Cryptokitties’ most expensive cat, as of November 15, 2020, was sold in September 2018. It cost the buyer 600 Ethereum (about $ 172 thousand at the time of purchase, and over $ 277 thousand at the time of writing).
However, a survey of analysts from Weiss Crypto Ratings showed that there are not so many people willing to spend that kind of money on crypto-cats.
The most expensive CryptoKitty ever was sold for $ 172,000. How much would you spend on a similar virtual item?
– Weiss Crypto Ratings (@WeissCrypto) September 5, 2018
Despite this, there are tons of high-priced virtual pets on the Cryptokitties site..
Offer for the sale of a cat. Data: Cryptokitties
CryptoKitties is not the only game that has the ability to make money with NFT tokens. Other examples include CryptoCelebrities (the same principle as with cats, only celebrities instead of animals), and others. For example, in the blockchain game Gods Unchained, NFT tokens help verify ownership of virtual in-game items. The latter can be sold or exchanged.
Get In EARLY With These 5 NFT Picks!! 💎
You can learn more about Cryptokitties and other blockchain games that you can earn from our material.
Companies using NFT capabilities
The possibilities of the technical solution found a response among the participants of the crypto community. As a result, there was a need for tools for working with NFT. Many well-known companies have gone further and used non-fungible tokens in their projects. A few examples:
- Samsung. The developers of the company have created a cryptocurrency wallet The popularity of cryptocurrencies throughout the world continues to grow, so the topic of safe storage of their digital assets is becoming increasingly important. Editors BeInCrypto … More Enjin for their smartphones, which has functionality for storing NFT.
- Formula 1. Representatives of the brand have entered into an agreement with the developer of video games Animoca Brands to create a blockchain game F1® Delta Time, within which users can create an NFT collection. Tokens, among other things, can be used to confirm ownership of cars and other game items.
- Nike. The company has tokenized the sneaker collection using NFT. Token holders can exchange them, sell them on the market and exchange them for real shoes.
Also, at one time, the capabilities of NFT were used by the teams of Louis Vuitton, NBA, Vodafone and other large companies.
The future of NFT tokens
There is a trend towards digitalization in the world. Against this background, it can be assumed that NFT tokens will continue to gain popularity not only among members of the crypto community, but also in business..
Many investors are confident that the hype around the non-fungible token market will grow in the future. As a result, NFTs could become DeFiDecentralized finance (DeFi) is financial services built on blockchain technology that offer users access to an open, efficient and … More 2.0.
Read also: Whether the NFT industry can squeeze out DeFi – expert opinion
NFT technology has found a response among crypto community members and representatives of the business sector. As of the end of 2020, the market for non-fungible tokens has broad development prospects.
The presence of successful examples of the practical application of NFT suggests that the popularity of the tool will continue to grow in 2021 and beyond..
All information contained on our website is published in good faith and objectivity, and for informational purposes only. The reader is solely responsible for any actions he takes based on the information received on our website..
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