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Before non-fungible tokens (NFT), creating digital scarcity for assets was incredibly difficult. While there are copyright protections in place, it’s relatively easy for consumers to copy or pirate digital art.
The development of NFTs has brought us cryptoart and digital collectibles, but it doesn’t stop there. From real estate to logistics, you can use NFTs to prove the authenticity of many unique and collectible goods.
While the NFT ecosystem is still young, there are many exciting projects to explore, and some are already generating great value for creators and consumers alike.
Non-fungible tokens have helped solve long-standing scarcity issues in digital art. How do you keep rare virtual art when you can copy it digitally? While there is also fake art in the real world, we are usually able to authenticate it.
Cryptoart derives most of its value from verifying its authenticity and ownership digitally. While anyone can look at a CryptoPunk on the Ethereum blockchain and download or save the image, we cannot prove that we own the original.
For example, anonymous digital artist Pak created a series of NFTs, each identical except for the name. With the likes of The Cheap, The Expensive, and The Unsold, Pak has given each piece a different value based on the title. The collection makes us think about what values a work of art.
When it comes to NFTs, value isn’t necessarily about the attached art. Sometimes what’s most important is proving ownership of that particular asset. This aspect is what makes cryptographic art one of the most popular NFT use cases out there.
There is a huge demand for digital collectibles. This use case has even reached the mainstream with the NBA NFT Top Shot Trading Cards.
Along with NFT digital artwork, these non-fungible tokens make up a significant proportion of sales on NFT marketplaces such as Opensea, BakerySwap and Treasureland.
There are many crossovers with crypto art, and sometimes an NFT can be as much a collector as an art. These two use cases are the most developed we currently have.
NFT for games
Games have a high demand for unique items that can be traded and acquired. Its rarity directly affects its price, and players are already familiar with the idea of valuable digital items.
Microtransactions and in-game purchases created a multi-billion dollar gaming industry that could exploit NFTs and blockchain technology.
It’s also an exciting area in terms of what an NFT represents. Video game tokens combine aspects of art, collection, and utility for players. However, when it comes to high-budget video games, NFT implementation is still a long way off.
Like an image or video file, you can also attach audio to an NFT to create a collectible piece of music. Think of it as a digital “first edition” of a disc. Attaching a song to an NFT is similar to our art example, but there are other use cases.
A big problem for musicians is getting a fair share of royalties. But there are at least two possible ways to achieve a balanced outcome: blockchain-based streaming platforms and blockchain royalty tracking.
Competing with Amazon Music or Youtube for streaming services is difficult for small blockchain projects. Even when a giant like Spotify bought a blockchain royalty solution called MediaChain in 2017, there were no real benefits for artists.
Whether or not this model becomes more popular will depend on its adoption by larger streaming services. Combining music with NFTs is a great idea for a use case, but it might struggle to succeed without the backing of the record companies.
With the growth in popularity of NFTs, there’s a good chance we’ll see even more ideas and use cases in the future. Currently, not every NFT application has had enough time to go beyond an idea or a small project.
Some may end up not being practical or popular. However, for more fundamental and straightforward issues like the shortage of art and collectibles, NFTs are certainly here to stay.
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