A non fungible token, or NFT for short, is a type of cryptocurrency token much like any of the other types of cryptocurrency coins that are available to buy on exchanges. The coins available for purchase on exchanges are however, fungible, meaning that they can be traded for other versions of the same coin and there is effectively no difference between the tokens that the owner holds, in much the same manner as fiat currencies. A non fungible token, is not readily interchangeable with another similar token, therefore each token is unique, and this uniqueness is what is so special about NFTs. The uniqueness of the token means that NFTs can be used to represent ownership of pretty much anything, from pieces of artwork to the deeds of ownership for a car or a house (if the law agrees). Additional to this uniqueness, an NFT is indivisible, which stands in contrast to fiat currencies and most crypto coins available on the market, which can be chopped up into smaller units, Satoshis being an example in case of BTC. Interestingly, there are places in the web3 ecosystem where coins can be obtained which are representative of fractionalised NFTs. These fractionalisation services allow collectors to buy a piece of an NFT, which cannot itself be divided into smaller units.
“So what’s the big deal about a unique token that must remain intact?”, I hear you ask…
Art
The big deal is that NFTs have a wide range of use cases that we have only just begun to explore, and the possibilities with this new technology are huge. If you have heard of NFTs before then you know that in 2021 they exploded in popularity, primarily as a medium for creators to make and sell their artworks. As NFTs can be made to represent an image, they are perfect for capturing digital art and transferring ownership of that art piece to the holder of the token.
And of course, when talking about “art” I am not simply talking about a static image, although static images have been tremendously successful and can be created in any number of inventive ways, from 10k generative projects, to procedural art made by coding, 3d digital artworks, photographs or even physical paintings. I am also talking about music and video NFTs, which look set to change the landscape of how we market and sell music and short videos. A number of marketplaces exist for music NFTs such as Audius and others, and this sector of the NFT market looks poised to grow considerably over the next decade. Opensea also has a music section which can be viewed here.
Many artworks sold as NFTs already make use of the video feature, with many 10k collections such as Killabears and Fluf World using animations to make their art more interesting (Fluf World uses music too.)
What is really exciting about the versatility of art in NFTs, is the innovation that is possible using the technology. The music industry could change drastically, as could the way that we consume short video clips that we would normally view on Youtube. On top of this NFTs have the potential to change how we see film and television, as well as how we buy books.
Furthermore, many 10k NFT projects to date have attempted (and are currently attempting) to build a character ensemble using their NFTs. This could create an exciting change in the way entertainment brands are built, and it is interesting to consider what the creation a successful TV show/Film/Brand around an NFT set would do for holders. Imagine owning the rights to a huge character from Disney, like Luke Skywalker. That’s the big idea with NFT IP rights (although IP rights are a pretty complex subject!)
Gaming
It appears (to me at least), that NFTs are going to revolutionise gaming. For some reason gamers have a phobia of NFTs, which most crypto people including myself find bewildering. Perhaps this is due to misinformation, perhaps (most likely) this has something to do with graphics cards, who knows. What I do know is that the gaming community does not like NFTs. Yet.
NFTs are on a collision course with gaming and this represents a huge opportunity for those that understand how NFTs work. NFTs are the future of in game items, such as wearables, and represent the possibility of wearables being used across different games, even across different platforms, which in itself will totally revolutionise a large part of the gaming economy. At the moment consumers are paying for a Fortnite skin, and it’s stuck in Fortnite. NFT technology means that a skin could be your pass for a special bonus round in some other partner game, could be a gun in some other game, and could have resale value for potentially extremely high prices on the secondary market.
The way to conceptualise NFTs in gaming is to think of them as being owned by your wallet, but plugging in and out of different games, and working in different ways once they are plugged in.
The global video game market size was estimated at USD 195.65 billion in 2021 and is expected to reach USD 220.79 billion in 2022.
GrandViewResearch
The size of the gaming industry is just incredible, and it is growing. With NFTs poised to become an important part of gaming, I personally believe that they are going to claim a huge part of gaming market share.
Metaverse
Crypto gaming is headed in the direction of the Metaverse. Zuckerberg has bet big on the Metaverse, renaming Facebook to reflect this, but many people say that the future of a successful Metaverse is open source much like the internet, and won’t be built by just one large company like Meta. What is clear is that cryptocurrency tokens (the fungible ones), will play a large part in making Metaverse worlds function by providing the in game currency, and NFTs will also play a gigantic part, not just for things like wearables but also for characters and other bonuses and items.
There are some Metaverse projects that are further along than you would think. Fluf World, mentioned above, is working on a Metaverse and has met some deliverables already. Otherside by Yuga Labs is another metaverse that is in development and has looks like it will be relevant going forward. Troverse Planets, and Treeverse are two more I have my eye on, and there are others, such as @punk6529‘s pet project OnCyber.
It is important to note that while some NFT projects have delivered “useless jpegs” of cartoon animals, better projects such as Fluf World have delivered metaverse compatible avatars, and have gone about the business of building their metaverse. Some NFT projects are built much better than others.
For the sake of completeness Pixelmon gets an honourable mention, as one of the more “special” NFT projects. Read all about it here.
