Our lives in 2021 remained governed by pandemic rules, and so we immersed ourselves deeper into the digital world. One of the things that gained much popularity during that period were NFTs.
We watched Jack Dorsey – a former Twitter CEO – selling his first tweet for 2,9 million dollars. We saw a meme known as Nyan Cat being sold for $600,00. NFTs seem to have plenty of money floating around but much less understanding of what they are and how they work.
So let’s get a handle on what NFTs are and how you can use them for your next innovative project!
Precisely What is NFT?
NFT stands for non-fungible token. This is a form of cryptographic asset encrypted in blockchain technology. Most NFTs operate with the help of Ethereum – one of the many types of blockchain cryptocurrencies. Tokens have their unique identification code (hash) and metadata that distinguish one NFT from another. Unlike cryptocurrencies, NFTs are not identical to each other, which makes them ineligible for trading or exchanging at equivalent value. Accordingly, they are not suitable for commercial transactions.
To gain a deeper understanding of NFTs, let’s compare them with other asset types:
- The $100 bill in your wallet is a fungible asset: it can be used to buy goods, or exchanged for other bills. The value of the hundred-dollar bill is not unique; there are many other similar bills in many wallets, pockets, and banks worldwide. People can see and touch $100 bills – so they are tangible.
- A car you own is also tangible: you can sit in it or drive to the nearest store. Nevertheless, it’s non-fungible: differentiating from other cars by the brand, color, and assembly.
- Bitcoin is also fungible: you can use it to buy pizza or exchange it for dollars. Nevertheless, it is intangible: you will not be able to touch it.
- And finally, NFTs are both intangible (not physical) and non-fungible (unique assets not suitable for commercial transactions). It’s a rare trading card: if you trade it for another, you will get something entirely different. But there is no similar in value NFT – not like with a 100% bill.
Anything converted to digital can become NFT: art, memes, videos, music, gifs, texts, etc. Currently, however, visual collectibles, avatars, and artworks are the most popular NFT types.
NFT is an excellent way for collecting tokens, selling/buying artworks, and marketing brands, goods, and services. It was not surprising that their popularity increased in 2021. For example, by the end of this August, NFT sales reached 1 billion dollars.
What are the Reasons Behind the Popularity of NFTs?
The idea behind NFTs is exciting and relates well to the Internet society we live in today.
But they have a downside: though NFTs are designed to give you something unique, the tokens you get can be copied by Internet users.
So why do people buy memes, pictures, and music if they cannot restrict other users from resharing them? Think of it this way: replicas of the Mona Lisa are available to everyone. You can download it from the Internet, reprint it, or draw something similar. But only the Louvre has the original. And being the original owner of something rocks! But there are many other reasons why NFT is so talked about.
1) NFTs are one more way of demonstrating status
NFTs can be digital indicators of your social standing. The more rare, unique, and interesting they are – the more expensive they would be. The more you pay for it, the greater the value it holds in terms of collecting them.
Can you live without NFTs? Surely! Like you can live without a Lamborghini. It is perfectly possible to drive a previously used vehicle of a less expensive brand. And you shouldn’t feel bad about it.
However, people who can afford a Lamborghini would buy it for reasons other than its outstanding driving qualities. They buy status. They buy the image of them owning a Lamborghini. And some NFTs have the potential to become a digital version of that.
2) NFTs have created a sense of community
Do you remember the Pokemon cards we all collected years ago? When we were children, we would gather around with friends and discuss, exchange, and boast about them. We would come up with games to make this process even more fun. In this way, these Pokemon cards became more than just cards. They united us.
The same goes with NFTs. People buy avatars, artwork, and pictures related to the same theme. By exchanging tokens and discussing them, they get to know one another and create a themed community. People have a shared sense of togetherness (which is a pretty pleasant feeling, tbh).
For example, there are the following exciting communities out there:
- The Dodge Fight Club: allows like-minded people to discuss their NFTs and meet with other like-minded people. In addition, users can vote on the community’s autonomous decentralized organization.
- Cryptopunks: a community, featuring 10,000 unique collectible characters verified via the Ethereum blockchain.
- Art Blocks: A platform for generating programmable content on demand.
- Pudgy Penguins: a community built around collecting the NFTs with custom-drawn penguins.
- Bored Ape Yacht: a community owning a collection of over 10 thousand NFTs, depicting apes with different visual traits. By the way, the news spread about someone accidentally selling Bored Ape NFT worth $300K for $3000.
3) NFT allow artists, designers, musicians to sell their work
Essentially, NFTs represent the digital rights to an asset such as an audio, video, or image available for sale, purchase, and verification publicly. And with it, content creators now have another platform to showcase their results of their work while earning great money. From this perspective, NFT technology provides an incentive to people to create more valuable things that can be digitized.
Custom illustrations and original artworks are some of the most satisfying aspects of working with NFTs. For example, we at SapientPro have designed special characters for the tokens:
4) NFT lets you support content creators you like while also owning NFTs they created
The Patreon platform allows creators to gain monetary support from their fans and spend most of their time working on their creative projects. Now NFT lets you do the same thing, and it’s a much more interesting way of supporting your favs.
What are the Potential Use Cases of NFTs?
Here are some ideas of projects you can create to develop, support, or use NFT technology.
1) Gaming NFTs. If you are planning to initiate some computer games, NFT can provide you with additional income (in addition to licensing). You can, for example, sell unique skins, avatars, or sounds. This will allow your players to create communities around the NFTs of your production and immerse them even more into the game’s atmosphere.
2) NFT for brand marketing. Brands are constantly looking for new ways to promote their products and find destinations where their customers are most interested. For example, Marvel launched their own NFTs on the VeVe platform. This allows their fans to purchase even more of their products (and become even bigger fans :). This way, Marvel gets even more recognition and a bigger audience, while maintaining their status of a top player in industry’s trends.
3) NFT selling marketplace. NFT creators and collectors need platforms to sell and purchase tokens. Although many applications are available, this niche has much room for improvement. So you will find something new to offer to NFT-lovers: from new features to advertise tokens to a faster way of converting the files.
4) Platforms for NFT communities. Develop your own custom NFT tokens and gather a fanbase around them! A team of designers can create original characters for you and developers can bring them into the blockchain!
5) Drag-and-drop solution for creating NFT illustrations. Content creators aren’t the only ones who can benefit from NFTs. Internet users will likely want to create their own characters and sell them for a small fee. With your token generator, users will be able to easily produce these characters by using ready-made designs. If you decide to develop such a solution, of course.
The NFT is an exciting tech novelty that has caught the attention of many blockchain users. Although NFTs’ usability is still being improved and refined, they already have value for users: whether monetary or by digital status. This presents excellent opportunities for developing business ideas!
If you already have an NFT idea and are looking for a team to do all the tech work – we are here! SapientPro has much experience working with blockchain, cryptocurrencies, and NFT projects. Contact us to find out more!