Will Non-Fungible Tokens (NFT) Set a Trend?
What is NFT and its best practices? Let’s discuss NFTs in the blockchain market and where NFTS are being used.
Table of Contents:
- Non-fungible tokens (NFTs) as the most popular and unique blockchain assets, what is it and its best practices
- Selling NFTs in the blockchain market and where NFTS are being used
- Do NFTs have a future? Transferring assets from one market to the other
NFT is a promising sector for the development of the crypto market with millions of potential users, including sport, pop culture, computer games and art lovers who are ready to pay for their interests. Most likely, the market will soon be witnessing intense competition.
It’s important to note that the areas are moving into digitalization. At the same time, you can see how new technologies radically increase the flow of new people into the cryptocurrency industry. There have been a lot of questions lately about NFT and what it is. Well we are here to answer your questions and put it simply. So what exactly is NFT? Why should you pay attention to it in 2021?
What is NFT?
Before we can answer the main question at hand, let’s try to understand what NFTs really are. A Non-Fungible Token is a fixed unit of data representing a particular product or item. The term “non-fungible” denotes rarity or uniqueness, meaning these tokens cannot be exchanged for others, this distinguishes it from a token like bitcoin.
The Non-Fungible Token is simply a unique digital asset. Assets such as Bitcoin or Ether are fungible, which means that all coins are “equal” and can be completely substituted for one another.
In order for NFTs to run, they require large virtual registries known as blockchains. In general, these are cryptocurrency platforms with the largest being Ethereum. Bitcoin and Flow have also established blockchains for NFTs. The use of Non-Fungible Tokens has been effectively used to identify different types of data, such as visual and audio. As such, it has been used in art, the gaming industry, and other industries that we will highlight below.
How Are NFTs Being Used Today?
Although a fairly young practice, the use of NFTs is expected to gradually increase in the coming months to years. The main idea is to simplify certain activities or systems that would be otherwise difficult to do or involve tedious work. Also, they are also practical for creatives who want to get their work out there without any restrictions. Let's look at the practicality of NFTs in more detail.
Fig.1: The number of industries who use NFT has expanded significantly
The video game industry is a whopping market. As of 2020, this industry was valued at almost $160 billion with the numbers expected to get above $200 billion by 2023. So it’s not a surprise that NFTs have become popular in this industry.
Online players have access to a wide range of games they play to win points. As they constantly play, they accumulate assets that could further be traded with other players thanks to NFTs. The best players have the ability to accumulate as many tokens as possible. As a result, they will be able to buy better tools to improve their gaming skills. The byproduct of this is more earnings and making online gaming very lucrative.
Digital artists go through a lot of trouble getting their work to potential buyers. Nowadays many of them have seen the simplicity NFTs have brought to their profession. With the use of tokens, artists can now showcase their work to potential clients on blockchain platforms.
Tokens play a descriptive function. Important data such as the artist’s description, the list of owners of the piece as well as its cost will be featured on the token. The future of the art
industry will look different if this trend gains more traction. This would signify the redundancy of a middleman to help sell art.
Real Estate Industry
It goes without saying that the real estate industry comes with a lot of responsibility. A lot of data has to be kept track of at any given moment and this requires a lot of filing and paperwork.
The aim of Non-Fungible Tokens is to take this process into the next generation.
NFTs will represent different types of properties that can be traded on blockchain platforms. Like their effect on the art industry, NFTs will also wipe out the need for secondary representation or any third-party business to acquire or lease property.
The Entertainment Sector
One of the biggest issues facing the entertainment industry is copyright infringement. Many laws have been put in place to reduce this issue but it still continues to affect content creators today.
NFTs on blockchain platforms have managed to make plagiarism virtually impossible. Content can be stored with the use of tokens and this should be enough to ensure the entertainment industry continues to expand with the times.
Unhackable Data Storage
The world we live in runs on data and all of the major industries require some form of it to properly function. For example, hospitals keep medical records of their patients to track their health, banks require their clients’ data, and so on.
With so much data being stored all over, there is always a chance of it being hacked or stolen and this is where NFTs come in. Tokens can contain specific information and provide both easy retrieval and safe storage.
Best NFT Practices
Blockchain development has enabled more NFTs to be created. Blockchain is not just strictly for cryptocurrencies as we can see. We love how the technology has been used for different fields,
including gaming. The rise of NFTs is also made possible by blockchain technology. Many developers are very excited to learn more about blockchain development and NFT solutions.
In fact, the largest NFT marketplace is accessible to anyone who is interested in using this technology. With so many NFTs available, let's look at a few of the best in the industry.
Binance is a popular cryptocurrency provider that is based in Malta. It is continuing to develop its blockchain and this has created a good platform to set up NFTs.
The tokens will be primarily targeting Non-profit or charity organizations. Anyone who is interested in supporting a cause can buy a token from the blockchain. Additionally, users have the chance to get holiday tokens and also tokens for virtual real estate.
Tron was founded in 2017 and since then it has gradually grown to great heights. It runs its operations based on a decentralized system and recently it has been able to add a new NFT to its blockchain.
The token goes by the title TRC721 and has been developed to be able to represent any kind of data imaginable. This means users from various industries can trade virtual products without having to go through a third-party establishment.
Another good example of a good NFT practice is Beeple. It was initially created with the aim to enable visual artists to make more money with their craft.
Due to the regular shifts in the art industry, it is very difficult to guarantee that digital artists will have a platform that will continue to support them. This is the role Beeple will play, artists will be able to use tokens to represent their work and eventually make direct sales.
Will NFTs Continue to Gain Popularity?
The total amount of money spent on blockchain solutions is expected to rise to $15.9 billion by 2023. This means more people are starting to focus on such platforms especially with the current attention it's been getting from some of the world’s billionaires.
If these blockchains continue to get the attention they’re currently receiving, NFTs will surely follow the pattern as well. The use of tokens is already becoming popular, but in order to fully gain traction, a few issues have to be corrected.
Main sets backs:
- All NFTs run based on a decentralized system. This is the total opposite of the norm and a lot of skepticism exists and many individuals aren’t ready to make that transition yet.
- For the most part, NFTs are backed by technology that is still in its infancy. As such, the foundations aren’t fully set and most of the decisions made in favor of it are based on predictions and assurance from the blockchains themselves.
- The fear of the cost to move back to a centralized system in the event that NFTs cannot be readily supported by the blockchains.
- Non-Fungible tokens are designed to be distributed amongst a multitude of people. The major drawback to this is that the user experience might be affected. This could lead to a dissatisfied audience and a drop in popularity.
Non-Fungible Tokens work with ETL (Extract, Transform, Load procedure) to represent different types of data that will not only be easy to access but safely stored. The potential of NFTs is immense, from reducing the level of unnecessary paperwork in numerous businesses to creating a platform for creatives like digital artists and musicians.
Like any new technology, there are some speed bumps along the way but the future seems to be bright and you should be looking at NFTs. You can hire a Ukrainian developers for the best in IT solutions that are brought by this new technology and witness how your business improves.
Starnavi team offers powerful and flexible development solutions for the needs of real-world enterprises, startups and global organizations. Get in touch to learn more!