Introduction

An NFT is a sort of digital asset or token that can be proven to be one-of-a-kind and not interchangeable with other digital assets or tokens (i.e., fungible). It’s for this reason that it’s referred to as a “non-fungible token.” The record of the NFT’s uniqueness is usually kept as a cryptographic record on a blockchain, or distributed ledger, which anybody can access. While this isn’t always the case, NFTs are more than simply digitized data about an asset; they’re also a digital asset. This is similar to how the blockchain is used to create the internet of value. To better grasp the notion, consider the difference between an NFT and a fungible token or asset. Fungible tokens, which are the most common in the blockchain world, are tokens that have the same properties as any other and can thus be readily substituted by another token with the same features. Cash is the most common example of a “fungible” asset, as each 10 Euro note can be exchanged for another 10 Euro note. Non-fungible assets, on the other hand, include event tickets, legal documents of asset ownership such as property titles, as well as artworks or collectibles. NFTs are generated and deployed on-chain in compliance with specified frameworks or standards. The most popular blockchain for NFTs at the present is Ethereum, and the most common Ethereum is ERC-721, which defines certain criteria for NFTs. NFTs can then be managed, traded, and owned in line with the framework or protocol’s properties, which have been defined based on their issuance properties.

The NFT space has expanded significantly since its start, from raising digital cats to programming asset ownership. The so-called “hued coins” on the Bitcoin network were the widely acknowledged crypto-world precursors to NFTs. They were first proposed in late 2012 as a mechanism to “label” ordinarily fungible bitcoins with extra code to identify them for certain purposes or use cases, so increasing their utility while potentially limiting their fungibility.

CryptoPunks, which consisted of 10,000 unique collectible digital punks, each with a set of algorithmically determined features, was the first widespread NFT experimentation on Ethereum in mid-2017. Cryptopunks were created by the creators and supplied for free at first. They are now recognised as one of the most significant and extremely valued NFTs due to their limited quantity and strong brand within the early adopter community. Many view the release of the popular CryptoKitties in 2017 to be the tipping moment for NFTs into the mainstream. CryptoKitties included a basic on-chain game that allowed players to “breed” digital cats and “create” new cats of various rarities. This was a significant step toward allowing anyone to generate an NFT, not only insiders or programmers. CryptoKitties grew in popularity to the point where they caused major Ethereum network congestion in 2018. A short-lived hype cycle of spin-offs followed CryptoKitties. Following this phase, other projects progressed with less visibility until they reached the point where they are now. Popular artists are currently experimenting with non-fungible tokens, as digital art has emerged as a perfect fit for the non-fungible tokens’ proof of ownership, immutability, and provenance tracking features. There have also been the emergence of digital art platforms. SuperRare, Known Origin, MakersPlace, OpenSea, Wax, and Rare Art Labs are just a few of the companies that have created platforms for publishing and discovering digital art and collectibles. As it became easier for non-developers to “mint” new NFTs, 2021 saw a boom in interest from inventors, investors, and fans. NFTs are now used in the sports, art, and music industries for a variety of purposes, including record sales, event tickets, record crowdfunding, and collectibles auctioning.

Indicative NFT use cases

Some of the prominent use cases that have been explored thus far are as follows: a. Digital art: As it became easier for non-developers to “mint” new NFTs, 2021 saw a boom in interest from inventors, investors, and fans. NFTs are now used in the sports, art, and music industries for a variety of purposes, including record sales, event tickets, record crowdfunding, and collectibles auctioning.

1. In-game assets: The gaming business has a market cap of over 100 billion dollars, so monetizing collectibles is obviously appealing. Apart from provenance monitoring and transaction recording on the blockchain, major gaming companies such as EA Sports and Ubisoft have already begun experimenting with tokens in their platforms. NFTs provide gamers with an additional revenue stream by allowing them to buy and sell collectibles, in-game “skins,” and other assets.
2. Content ownership: Artists have recently auctioned off videos/audio content in the art and music space using NFTs to raise funds for new albums and sell out old records, with the NFTs representing a fractional right of ownership of the content and any proceeds earned from the resale of underlying assets being distributed proportionally to the NFT token holders.
3. Tickets: Tickets to events in the form of NFT can be kept as mementos and added to a collection.
4. Certificates: NFTs are used for record authentication and verification, as well as for transparency and provenance monitoring.
5. Metaverse: NFTs are steadily emerging as the building block for the metaverse, a future state of the internet, made up of all-encompassing virtual spaces and assets that replicates or even iterates upon the physical world.