Non-Fungible Tokens, NFTs for short, are unique and immutable digital assets based on Blockchain Technology. For example, 1 Bitcoin is equal to another 1 Bitcoin in terms of use value, and you can trade it as you wish. An NFT, on the other hand, is like a kind of digital authenticity certificate, and each NFT is different. That is why they cannot be replaced. They can represent photos, videos, audio, or other digital files, as well as artworks, collectibles, and real estate. The value of an NFT depends on how rare and unique it is.
“Colored Coins”, which launched in 2012, are considered a starting point for NFTs. Like NFTs, almost any asset, contract, and digital signature can be represented by Colored Coins and digitally stored without the need for a third party. They can be used for secure storage methods such as Multisig and can be transferred to a new owner without the need for centralized authorization.
Each NFT serves different use cases because each has a different structure. For example, an NFT is an ideal tool for representing physical assets such as artworks and real estate in digital form. Since the technology of these digital assets are based on blockchain, they can be used to eliminate the need for the intermediary mechanisms of centralized structures, simplify transactions, and bring artists together with audiences. They can be used in many areas such as identity management, gaming, logistics, and real estate. An important feature of NFTs is that they create new markets.
Games
Since the gaming industry actively uses Blockchain Technology (GameFi), NFTs have attracted a lot of attention from game developers. With NFTs, players can create, buy, exchange, or sell in-game items and generate income. With transactions and in-game purchases, there is a multi-billion dollar gaming industry that could benefit NFTs and Blockchain Technology.
Axie Infinity is a good example of NFT use cases in the field of video games. Axie Infinity is a blockchain-based video game similar to Pokémon and CryptoKitties. There are NFTs in Axie Infinity, and you can hold these NFTs in your wallet or transfer them to an Ethereum address. You can also trade with other players in a blockchain-based marketplace. Most importantly, you can earn income as a player thanks to Axie Infinity’s play-to-earn system.
Works of Art
Works of art have been bought and sold for high sums of money for centuries. What makes a piece of art significant is that it is unique and original, apart from the artistic value it carries. Various methods are used to prove the authenticity of an artwork, but mistakes can still be made. NFTs, on the other hand, make it possible to preserve the authenticity of works of art in the digital world. Works of art converted into digital media assets as NFTs can be sold on digital marketplaces. Markets differ in style, format, and subject matter, and appeal to a variety of audiences, including artists, musicians, sports fans, gaming enthusiasts, pop culture followers, and collectors. For example, Axie Infinity Market is a marketplace where NFTs related to Axie Infinity are traded.
Some NFT marketplaces are:
- OpenSea
- Rarible
- Babylons
- Mintable
- Foundation
- Nifty Gateway
- SuperRare
- Known Origin
- NBA Top Shot
- DraftKings Marketplace
- Axie Infinity Market
The most expensive NFT in the world is "The Merge," created by digital artist Pak and sold for $91.8M on NFT marketplace Nifty Gateway. It was distributed to 28,983 buyers and divided into 312,686 pieces.
An NFT collection created by digital artist Beeple was auctioned off at Christie's. One piece in this NFT collection, “Everdays: the First 5000 Days,” sold for more than $69M. It is the second most expensive NFT ever sold. “Everdays: the First 5000 Days” is a collage of Beeple’s first 5,000 days of work. This artwork is significant because it has increased the NFT awareness in the mainstream.
NFT Collections
NFTs are also collectibles. NFT collections are available on marketplaces such as OpenSea, Rarible, and SuperRare. The first collectible item was Jack Dorsey’s first tweet as an NFT. Jack Dorsey sold this NFT on Valuables, where tweets can be converted into NFTs. Many tweets were later sold as NFTs. This new trend has attracted great attention all over the world.
Some of the most popular NFT collections are as follows:
- CryptoPunk,
- Doodles,
- The Sandbox,
- Bored Ape Yacht Club
- Decentraland
- CryptoKitties
LaMelo Ball, Stephen Curry, Tyrese Haliburton, Dez Bryant, and Von Miller are famous athletes who own Bored Ape Yacht Club NFTs. DJ Marshmello, Lil Baby, KSI, Timbaland, Mike Shinoda from Linkin Park, Post Malone, DJ Khaled, Steve Aoki, and Eminem are celebrities in the music industry with BAYC NFTs. Jimmy Fallon from show business is also among the celebrities with BAYC NFTs.
There are many characters, including humans, zombies, aliens, and apes in the CryptoPunk collection. The more unique the combination of distinctive features, the rarer a CryptoPunk NFT is. These mainstream NFTs have also attracted the attention of conglomerates. Payments giant Visa bought the NFT “CryptoPunk #7610” for $160,000. Celebrities with CryptoPunk NFTs include Jay-Z, Serena Williams, Heidi Klum, Snoop Dogg, Jason Derulo, Steve Aoki, and DJ Marshmello.
Finance
NFTs play an active role in finance, as in many other areas, and offer opportunities, especially in decentralized finance (DeFi). JustLiquidity's NFT staking model is an example of this. A user stakes an NFT for a certain period and buys another NFT to proceed to the next stage. In this system, NFTs are a kind of pass. Therefore, the user needs to use the NFT purchased and after use, this NFT disappears.
Music
Artists have faced copyright issues in the music industry over the years. NFTs offer a solution to this problem. You can turn your song into an NFT, list it on blockchain-based platforms, and track it for a secure sales strategy.
Clarian’s album “Whale Shark” was released in NFT format. Mike Shinoda, co-founder and member of Linkin Park, followed this trend and auctioned off his song "One Hundredth Stream" on a website in NFT format. Kings of Leon also released an album in NFT format in March 2021.
Logistics
Among the most notable features of Blockchain Technology is that it is open source and transparent. In many fields, it is possible to integrate Blockchain Technology and create a secure environment. Thus, NFTs generated on blockchain provide a transparent, secure, and orderly environment. With all these features, NFTs can be used in the supply chain field. Physical products such as food, textile, and medicine, which are imported or exported, can be easily tracked and controlled. With NFTs, you can find out where a product should be stored and for how long, how many products are in a package, the origin and travel route of the product, how many units are in which warehouse. It is possible to have this system in the supply chain.
Healthcare
NFTs generated by leveraging Blockchain Technology can also be used by healthcare providers in the field of healthcare with digital contracts. Healthcare facilities and doctors may have more control over patients' personal health information. NFTs can offer patients the ability to determine who has access to their personal health information and monitor how that information is shared. Scientists at Baylor College of Medicine in Texas, USA, who conducted research on this subject, stated that NFTs could be applied to the health sector.
NFTs, products with a wide range of use cases, are part of an ecosystem that has been growing in popularity since 2020. Although NFTs offer practical solutions, there is still time for sufficient global implementation. In the near future, NFTs will likely offer alternative solutions and become even more popular.
