If you are reading this line, you have been probably wondering what is NFT. Fear not, we will explain everything you need to know about the fastest growing section in the Crypto industry. Ladies and Gentlemen, Non-Fungible Tokens Explained.
The NFT transaction volume is increasing rapidly within decentralized platforms and is one of the fastest-growing sections in the crypto sphere, along with the DeFi craze. A critical aspect in the NFT space is true item ownership, which grants you total control over your assets.
What is NFT
NFT, or Non-Fungible Token is a digital asset on the blockchain with a unique identifier number and other meta-data. NFTs are the most secure and transparent method to distribute, trade, store, and track digital and physical assets.
Blockchain technology provides countless usabilities and aims to change the world as we know it. Just like Cryptocurrencies, you can store NFTs in your Crypto wallet using your “public address,” where no one can intervene. Every transaction takes place on the blockchain through smart contracts, so both parties’ safety during a trade is guaranteed.
At the moment, many blockchains support NFTs, including Ethereum, Enjin, Tron, WAX, and more. Industries, companies, or individuals can use their services to mint NFT’s for their products and define their usability.
What is the difference between a Non-Fungible Token and a Fungible Token?
A Fungible token is an asset that is similar to another. For example, Bitcoin is a Fungible token because every Bitcoin is identical. When it comes to NFTs, even identical items differ and have unique stats and values.
NFT Trading Data
Without a doubt, NFTs are gaining attention and thankfully, blockchain technology allows us to track what’s going on in real-time. Below you can find the transaction volume of 20 well-known projects in the NFT space.
As you can see, NBA Top Shot users have traded near half a billion US Dollars. Below we find CryptoPunks with 183 Million. Of course, the above list does not track all projects, so the total number is actually much higher.
From gaming assets to digital art and authenticity tokens, let’s see some NFT use cases.
NFT Use Cases
Here are some example use-cases for Non-Fungible Tokens. Keep in mind that there are hundreds of suitable applications, below we explain some of the most popular ones.
Gaming NFTs are digital assets in the form of blockchain-based tokens that you can use inside a game ( or multiple games), store them in your wallet, and sell them to others.
In regular games, every item you purchase doesn’t truly belong to you. There is no way to sell it to other players for the money. Your items are useless.
Think of it for a moment. You are paying money to Gaming Companies that sell you assets you don’t possess.
For many years gamers all over the world are asking the same question.
Why am I not allowed to sell my gaming assets?
Blockchain Games solved this problem by implementing NFT tokens to buy, sell or trade them without visiting black markets. The best part is that while playing, you loot NFTs and Crypto, and just like this, the “play to earn” experience begins.
Most blockchain games provide a marketplace where you can trade your assets. Even more, you can visit other decentralized NFT exchanges that provide peer-to-peer trading.
Examples of Gaming NFT’s
In-game assets: Guns, Swords, Weapons, Cars, Resources, etc
NFTs & DeFi
DeFi is the acronym of Decentralized Finance, an emerging sector that will surely replace banking products in the future.
By combining NFTs and DeFi, many blockchain games offer to the players extra rewards.
Users can stake Crypto to earn in-game tokens or valuable NFTs. In some cases, it is even possible to stake NFTs and earn both Crypto and NFTs.
At the moment, gaming is the most common section that combines NFTs and DeFi. The possibilities are countless, and more industries are adopting both technologies. NFTs are digital assets that have value in the real world, just like physical resources such as gold.
Some examples of games implementing NFTs and DeFi are:
- Axie Infinity: Stake AXS tokens for weekly rewards.
- The SandBox: Stake SAND tokens in the Uniswap Pool.
- The Six Dragons: Governance NFT includes yield farming of on-chain mechanics.
- Blockchain Cuties: BCUG Governance Token will share profits with the players.
- F1 Delta Time: Stake your F1 Delta Time NFT Cards to earn REVV Tokens.
- MegaCryptoPolis: There is a Uniswap liquidity pool to stake MEGA Tokens.
Each of these games provides a sort of Decentralized Finance elements where you can stake tokens and claim a portion of the dividend pool.
For more info, read our DeFi Games page.
The most popular use case for NFTs is Art. Digital artists started embracing the new form of ownership with thousands of NFTs created and sold every day in marketplaces.
You might be wondering why someone should buy a piece of image or video for so much. The answer is simple. We are walking towards the digital era. A screen will soon replace the 30-years old painting in your living room with a showcase of NFTs.
Examples of NFT Art.
Beeple, a digital artist known in the real world as Mike Winkelman, made history in March by auctioning his collage NFT titled “Everydays: The First 5000 Days” for $69 million at Christie’s digital auction platform.
The particular sale is not the first for Beeple. He also sold other creations for millions that shaked the art world and brought even more attention to the NFT industry and its use cases.
Another example of NFT-based art is CryptoPunks, a digital collection of humanoid portraits that sparked digital art and collectibles back in the summer of 2017. CryptoPunks were initially distributed for free, currently, the average price is $20,000, with some of them priced over $500.000.
What About NFT Art Copies?
Just like with real-world art, anyone can copy a Digital NFT piece of art and put it on sale. The only difference here is that NFTs comes with a unique identifier number. Tracking their stats and value can be done by anyone without being an Art appraiser.
In 2020, counterfeit products across all industries estimated to be worth $55 billion. That’s a huge loss, especially from clothing brands. Are you sure your expensive Fred Perry shirt is original? Because the local “Fred Perry dealer” in my town surely does not sell original products.
An authenticity token is the only way to end counterfeit products that led to bad brand reputation and fraudulent practices against the consumers. Every year, millions of buyers are victims of fake products like clothes or watches without knowing it.
How do authenticity tokens work?
By purchasing a product, you will also receive an NFT based authenticity token in your crypto wallet, which proves the specific product is original. This is either achieved with an NFC card seamed inside the fabric, or a QR code is the clothes label.
The first ever Authenticity Token?
Did you know that we were the first to issue an Authenticity Token? In 2019, we released a series of limited-edition T-shirts to celebrate our worldwide gamified contest for the promotion of NFTs & Enjin’s gaming multiverse.
All of the T-shirts came with an Authenticity token that was delivered manually by us after the owner received the T-shirt. Learn more about the “Global Guerillas” project.
Tokenized Real Estate
The real estate market is one more section estimated to adopt NFTs soon. Already LABS Group has announced to use Enjin’s platform to offer tokenized real estate properties. LABS Group will allow real estate investments for as low as $100 starting with US customers.
The tokenization of Real Estate around the world involves multiple laws and governmental entities, the vast majority of Countries are not in place to support “Estates Tokens” right now. It will take some years until we see a broader adoption.
If you have a sea-side land plot, you might want to tokenize it, who knows, this could be a one-of-a-kind opportunity as there will be a surge and hype in the particular sector once everything is settled.
How To Store NFTs
NFTs operate on the blockchain, just like Cryptocurrencies, they follow the same rules.
To store an Ethereum based NFT token, you must use your “public address” from your Ethereum wallet. For a Tron-based NFT you need a TRX address, etc.
Using your crypto wallet, you can receive, withdraw, use, and store NFTs, but you must be sure that your assets are compatible with this particular wallet before proceeding.
Like we said above, NFTs follow the same rules as Cryptocurrencies, if you send an NFT token to a different network, you will lose it forever, and no one can retrieve it.
Some of the most used Crypto Wallets are Metamask (Ethereum, BSC & L2), Tron Link for Tron, Enjin Wallet for ERC-1155, and Arkane Wallet, which is a universal solution that we advise newbies to use because it supports different platforms and a single account creation.
How To Buy & Sell NFTs
Now that you understand how it works, let’s see the most popular Marketplaces for NFTs.
The go-to solution is OpenSea, the oldest marketplace and most trusted entity in the NFT market.
Recently, Marc Cuban launched his own NFT marketplace, called Lazy.com.
You can find more marketplaces.
If you are a beginner at NFT and Cryptocurrencies, we highly recommend reading the following articles.
- Beginner’s Guide to Crypto Games.
- Protecting Your Blockchain Assets & Cryptos – Tips & Tricks To Follow.
George has a native interest in emerging technologies and he’s a strong advocate of decentralization. He is the founder and manager of egamers.io as well as an IT student.