NFTs came into existence in 2014, but it was not until February 2021 NFTs took off. Beeple sold the NFT project “Everydays: The First 5000 Days” for $69 million at Christie’s Auction House, and immediately NFTs went mainstream. Since then, NFTs have gone from strength to strength.
Non-Fungible Tokens (NFTs) represent digital assets containing non-interchangeable unique data stored on a digital ledger using blockchain technology to determine proof of ownership. They use the same technology as crypto coins, but unlike crypto coins, each NFT is unique and cannot be exchanged for one another.
The vast majority of the NFTs utilize the blockchain Ethereum to carry out transactions as it is one of the earliest and the most advanced blockchains. It uses smart contacts to complete the transaction where the agreements between the buyer and the seller are completed without external parties. Ethereum is also a very secure and safe blockchain; transactions carried are more likely to be recorded. There are also the Solana and Polygon networks which are becoming more widely used. These have emerged and become popular in recent months due to the widespread use of the Ethereum blockchain and the high transaction costs (gas fees) associated with the Ethereum blockchain.
What Items Can Be NFTs?
Art laid the foundation for NFTs to begin their emergence, and art continues to be the leading use in NFTs. Art can be divided into two distinct areas:
Physical Art. These NFTs are where the digital form of art is associated with physical art. This type of NFT provides greater control of property belonging to the artists. It becomes possible to prove ownership, and that way, no counterfeits can exist as the owner has a digital representation to prove they own the art. Physical art is sold through third parties such as galleries, but such a mechanism eliminates the need for intermediaries.
Digital Art NFTs.
Digital Art NFTs are where the art exists only in its digital form, and there is no physical version. It is the biggest NFT market, and most NFTs are digital art. The expansion has begun with NFT projects offering utilities that go with digital art in membership events, metaverse activities, and so on.
Music NFTs are one of the emerging trends we’ll see in 2022. Traditionally musicians released their work through labels and record companies who sold it on behalf of the artist. And the labels and record companies took the larger share of the profits. NFTs eliminate third parties, and the artists can release their work directly. Numerous musicians have released their music as NFTs, including Grimes and Kings Of Leon. There will be a more significant acceleration in this area as we move forward in 2022.
Video Game NFTs
After art, NFT video games have been the most popular NFTs. Some NFT based games include Axie Infinity. Gods Unchained and Sorare. Most NFT based video games deal with the in-game effects based on player interaction, rules, etc. For example, items gained during the game could become NFTs, or the characters could be an NFT. There are models where players could earn an income from playing NFT based video games. During the Covid pandemic, many people in countries such as the Philippines made an income by playing NFT based games. As the NFT world develops, we will see further expansion and developments in this area.
Land and Real-World Items.
Land tokenization has made it feasible to convert land and real estate into tokens on the blockchain and allow sales through the blockchain ecosystem. Numerous scenarios are possible, such as raising capital to develop property with the owners of the tokens becoming investors in the scheme. This scenario could apply not just to land but a whole series of real-world items such as cars. Such a system would cut down on “paperwork” and make the transaction easier and quicker. One exciting development is the availability of virtual land through sandbox and Decentraland, where people can buy and sell land in the Metaverse.
Tickets To Events.
Something preparing to become prominent is the sale of event tickets. Potential customers wishing to attend festivals, concerts, or sporting events can purchase tickets on the blockchain with the event organizers allocating the numbers. The tickets are moved into the NFT wallet, and the owner can use them through a mobile phone device when attending the event.
NFTs are impacting the world and how it operates. Many people associate NFTs with JPEGs, but as activities like music and video games, NFTs begin to move, we will start to see the evolution and the actual real-world emergence and use of NFTs.