NON FUNGIBLE TOKEN!!!
Do you know?
Jack Dorsey’s first tweet has a high value because it is the first ever tweet on Twitter by its founder; another tweet may not have the same value.
LET’S SEE THE SECOND EXAMPLE OF THE MUSIC INDUSTRY:
Kings of Leon were the first band to release their album as an NFT.
The song was created by Kings of Leon, which in March released its latest album, When You See Yourself, as an NFT, marking the first time fans were able to purchase an album on the blockchain (through the band’s “NFT Yourself” collection of non-fungible tokens) on the same day it arrived on streaming platforms.
Along with the album, they sold some art and auctioned six “golden tickets” that gave buyers the right to four front-row tickets for each tour for life.
Let’s dive deeper into that statement and uncover what NFTs are?
and what they have to offer?
NFTs have opened the door for the broad adoption of crypto assets.
As bitcoin solved the problem of double-spending of money without a centralized authority, NFTs solve this problem for unique assets.
Sports enthusiasts, collectors, hobbyists, gamers, artists can all find a project that excites them in a world that was previously mostly consisted of finance and technology enthusiasts. The ecosystem is still in its infancy, and the leaders are yet to emerge. Even as market interest waxes and wanes, future leaders will keep building and innovating and those that can capture and maintain user attention should do well.
What are NFTs or Non-Fungible Tokens
To understand them, we must first discuss why there is a need for non-fungible tokens?
However, it covers unique assets as NFT like a plot of land, a piece of art, fungibility does not work as each asset is unique with different properties and consequently values.
With blockchain ecosystems having broadened to include more use cases than just medium of exchange or store of value, non-fungible tokens or NFTs bring scarce and unique assets on-chain to serve this growing need.
Provable “deeds” of ownership.
with verifiable authenticity of an asset.
A trustless verification of ownership and authenticity is established:
NFT entire holding and transaction history of an asset from the original author to the current holder ensuring a trustless verification of ownership and authenticity. So here you get the complete audit trail or sequence of holders of NFT!
Standardised formats allow interoperability and composability between projects.
The owner of any digital art can display it on other platforms like the virtual worlds of CryptoVoxels and Decentraland.
Let's see the tech part of NFT:
The standard for NFTs on Ethereum is given by ERC-721, and there are other implementations like ERC-1155 which allow for both fungible and non-fungible tokens within a single token contract. Dapper Labs, the founder of CryptoKitties, have developed their own blockchain for NFTs and gaming called Flow.
Forks of Ethereum like Binance Smart Chain (BSC) and Tron have token standards similar to those of Ethereum.
NFTs are deeds or proof-of-ownership and authenticity
For a piece of digital art, the NFT is not the jpeg file; it is the ownership title to the art.
The buyer has bought a collectible item that is verifiably limited and authenticated by the person in the meme picture itself. Storage on a blockchain like Ethereum is extremely costly as all nodes have to store it independently, and the blockchain can get very bloated extremely fast.
As per an estimate, storing 1 GB of data on Ethereum might cost more than 60,000 ETH in transaction cost for a gas price of 100 gwei.
Therefore, instead of being stored on-chain, NFTs contain an off-chain link to the art, and it can be loaded by the platform being used to browse the NFT.
Use Cases: In various fields:
1. Art / Collectibles
3. Domain Names
4. Music / Streaming
Games already have a thriving in-game economy with cosmetic items like knives in Counter-Strike or usable items like player cards in FIFA Ultimate team. Having these items on the blockchain gives users verifiable data about supply and supports trade where the developer can continue to earn fees. Axie Infinity, a blockchain game similar to Pokémon, has more than 19,000+ monthly active users where players can raise and battle creatures called Axies. Similar to CryptoKitties, Axies can be bred and passed on their “genes” and traded with other players.
With NFT the gamers can be in various games and their assets can become part of a multi-game universe, with other projects building off a game’s established assets.
Ethereum Name Service (ENS) uses ERC-721 to register the blockchain domain on the Ethereum blockchain.
STEPS AND BENEFITS:
Register wallets: ENS allows users to register their wallets with a .eth domain, Reason: Personalization and intuitiveness in transactions.
BENEFIT: yourname.eth domain can point to an individual’s wallet.
Music / Streaming
NFTs can be programmed to share a percentage of the revenue with the original artist. This is important in the music industry, where there may be a lot of red tape and distance between the consumer paying for the art and the artist receiving it.
FACT: Kings of Leon were the first band to release their album as an NFT. Along with the album, they sold some art and auctioned six “golden tickets” that gave buyers the right to four front-row tickets for each tour for life.
NFTs have a use case for ticketing, where the number of tickets sold and used can be capped, eliminating counterfeits.
To control scalping, the contract can also include instructions so that if they are sold above a certain price, the surplus is transferred to the original artist or a charity.
EXAMPLE: A pilot program for FIFA World Cup 2018 sold NFT VIP tickets. These can also serve as proof of attendance or ownership of an exclusive event similar to ticket stubs.
Interoperability & Variety of uses:
There is overlap between use cases. An art piece may be displayed in a game, or trading cards can be collected as well as used in a game to battle.
A ticket might become a collectible and a collectible may work as a ticket.
This interoperability across various applications on the blockchain makes NFTs an exciting space with a broad and developing use case.
- NFTs are not the art itself and merely link to a server that hosts the file, there exists a possibility that the hosted server may go offline at a point in the future, and the NFT will forever forward to a dead link.
Mitigation strategy: Through using decentralized solutions like Filecoin, Arweave, or IPFS.
However, some NFTs still point to a centralized server and in case of loss of support, while it does not invalidate the proof of ownership, it would mean that the NFT would not be viewable from just the data it contains.
2. In this case, the original author or issuing platform may need to reissue a new NFT to replace the old one. If they are not available, the owner may be able to do it themselves by destroying the old dead NFT and reissuing a new one.
Problem: It is unclear if NFT will retain its full value after such a transaction as some part of the history of the token may be lost.
3. NFTS impact of blockchain mining on the environment. NFTs, like any other blockchain transaction, consume a certain amount of energy per transaction, and with growing interest, the amount of transaction space that it takes on Ethereum blocks has also become considerable.
Challenge: OpenSea, Axie Infinity smart contracts feature in the top 50 gas guzzlers for Ethereum transactions.
Solution: However, with scaling solutions like ImmutableX and Polygon, these costs should come down in the future. As platform blockchains like Ethereum move away from proof-of-work, the environmental impact should be further reduced.
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