New and useful content will be added to our network, and may even end up on the Learn Crypto feed.
The idea of non-fungible tokens or NFTs came along long before the term was actually coined and took the crypto community by storm. The new token standard emerged out of a number of experiments with blockchain technology and Bitcoin.
To be precise, it all started with a project called BitDNS that wanted to extend Bitcoin’s technology to domain name services. The idea was embodied in 2014 when Kevin McCoy and Anil Dash created the first non-fungible token. On 3 May 2014, McCoy minted his non-fungible token, known as ‘Quantum’, a pixelated image of an octagon filled with circles, arcs, and similar shapes which share the same centre, pulsing hypnotically in fluorescent shades.
It would not be until several years later that this new type of crypto token would enter mainstream consciousness.
Before talking about the future of NFTs, we should get to know what the recent past and present look like. The notion of blockchain and non-fungible tokens was much bigger than just having digital assets in the form of interesting pictures. Blockchain technology was invented to deliver transparency, accountability, and a novel and decentralized monetary system that intended to put the power back in the hands of the users. Or so the popular catchphrases would claim, as decentralisation advocates took to the NFT banner.
The next phase of the NFT evolution can be associated with Ethereum, a cryptocurrency network and ecosystem with an all-round platform that allowed developers to implement smart contracts linked to digital assets confirming that such assets are genuine, verifiable, and traceable.
The main use cases of non-fungible tokens nowadays are through collectibles, art, gaming, and even licenses and certificates. Most NFTs today are built on the Ethereum blockchain using the ERC-721 token standard, namely a standard that identifies something in a unique manner. These types of NFTs are used to identify and verify ownership of digital assets, and that’s why a broad number of businesses clambered onto the bandwagon of NFTs. It’s fair to say that the majority of crypto users see NFTs as closely associated with entertainment and all types of commercial purposes in the same vein.
From Nike entering the collectibles market and gaming NFTs to luxury brands embracing the culture, many future uses of non-fungible tokens are bursting out. We are already witnessing restaurant NFTs or DNA NFTs so the future opportunities seem endless. There is a plethora of interesting ways NFTs can serve their multiple purposes.
When asking what the future holds for NFTs, we probably want to know what will happen when the hype ends and if these tokens are here to stay. Taking into account that non-fungible tokens introduced a new form of ownership over digital assets, their outlook appears bright and might stretch way beyond art, entertainment, and gaming uses.
Without getting too much into the technicality of NFTs, the question of what a non-fungible token really is and, indeed, what may qualify as a non-fungible token arises. A non-fungible token (NFT) can be defined as a digital asset that can be identified through its genuine features held within its metadata. The expression non-fungible in non-fungible tokens means simply that they cannot be altered, replaced, or changed in any possible way. Once an NFT is created and embedded on the blockchain, it is there to stay.
Even though it is generally created using the same sort of programming using cryptocurrencies such as Bitcoin or Ethereum, any similarities end here. Cryptocurrencies, along with physical money are considered fungible, meaning that they can be exchanged or traded for another.
For instance, if you exchange a $1 bill for another $1 bill, you won’t lose anything. Hence, their value is equal. One dollar will always be equal to one dollar just as one Bitcoin equals another Bitcoin. Non-fungible tokens are different since each one of them has a digital signature that makes it impossible to alter, exchange or make them equal to one another.
Hence, a token may qualify as a non-fungible token if it encompasses four distinct features of uniqueness such as:
When someone creates a non-fungible token, he or she signs it, similar to a painter signing on a canvas. The only difference is that the NFT creator interacts through a smart contract to initiate an event on the blockchain allowing time stamping and making the token non-fungible.
The unalterable identifier refers to a specific sequence of letters or numbers that identify a particular non-fungible token on the blockchain. It can be simply explained as a unique serial number that cannot be altered or changed in any way.
The formats of the content are divergent. Namely, it can be an image, a document, a video, or something else. It is essential to draw a distinction from the unalterable identifier because content, even though not editable in most cases, can be changed under certain circumstances. The unique value of an NFT is not determined by the content itself, but by the identifier.
Ownership over digital assets brings up a plethora of rights and obligations. Just as is the case with physical objects, ownership can be transferred. The current owner will be transparently known through the transfer between two wallets on the blockchain.
One of the most interesting expressions associated with these tokens is smart contracts. While the notion may be extra appealing to legal practitioners worldwide, every possible NFT user should be able to understand how NFT ownership is being transferred.
To read more about how to buy an NFT at NFT marketplaces, read this Learn Crypto article: “What is an NFT marketplace?”
Step zero for buying and selling NFTs is finding the right marketplace and obtaining an NFT wallet. Back to smart contracts; every sale contract needs three crucial elements to be legally valid, namely the seller and the buyer as the parties to the contract, the goods being sold, and the price. Smart contracts fulfill this requirement as there are two parties, an object being sold (the NFT), and the price.
While holding many similarities to traditional contracts, a smart contract can be actually defined as a bit of code that is stored on a blockchain and executed automatically when particular requirements have been met. Smart contracts serve to authenticate the transaction between the seller and the buyer, and thereby provide secure proof of the agreement between the parties. Such contracts verify and validate ownership, and handle the transferability by self-executing when arranged conditions have been met. In other words, when one buys an NFT, a genuine token is issued which has the information and the details of the smart contract. This information gets registered on a blockchain and becomes public, encompassing a record of purchase and proof of ownership.
The use of NFTs to verify ownership over virtual goods in the art world is widespread. After all, NFTs made their first official appearance in the world of art, and before all other uses, non-fungible tokens were frequently linked to art. While it has often been mentioned that NFTs are the next stage of evolution for art, it is also important to discuss how the future of these tokens will impact this sector.
The future that lies ahead of non-fungible tokens has a massive potential to empower artists, mainly in the light of how a typical artist can be paid and take ownership of his or her virtual goods. The use of NFTs provides access to novel revenue streams and the opportunity to decentralize wealth on a whole new level. Namely, NFTs can foster trade and the price of art through the manner in which they empower artists. Now each individual artist has the opportunity to directly access a global market of customers and earn royalty payments for resales on secondary markets.
Apart from current digital arts NFTs such as photography, illustrations, and paintings, new markets seem to be opening in relation to future uses of these tokens. For example, NFT art has the potential to upgrade and revolutionize the VFX industry and provide future opportunities when combined with the Metaverse.
From the starting point when NFTs entered the market, companies have been using non-fungible tokens in a number of ways. Companies operating in divergent sectors, such as publishing, real estate, travel, retail, and others have found a way to benefit from NFTs. Many of them readily jumped on the NFT hype train to expand their businesses. Even though the NFT market is still young, it is estimated that its size will grow by 700 % in 2022. Currently, four main NFT business models are altering our economy – collectibles, communities, the security of personal information, and the manner in which we document experiences.
Therefore, there are current and future possibilities for businesses, and the economy overall, to prosper due to the opening of new markets. Products are no longer sold only in the physical world as a new generation of buyers is splitting their time and money between the physical and virtual world. A seller can sell his or her products on three different levels, namely in the physical world and familiar websites such as Amazon (Web1), promote these products at the same time on social media (Web2), and finally in marketplaces such as the metaverse (Web3).
Non-fungible tokens are changing the entertainment industry as well. At the moment these tokens are a hot commodity in the entertainment industry. Countless celebrities such as Reese Witherspoon, Mila Kunis, and former Disney CEO Bob Iger have staked their claim to the novel crypto innovation. Even though NFTs have spread over the art, gaming, and business environment rapidly, most people in the show business industry are still wrapping their heads around blockchain-based technology. NFTs provide a relatively simple way to gain their first exposure.
Nevertheless, these tokens are already producing an impact on the music industry with the potential to spread rapidly over the movie and television industry. This is evidenced by the number of investors in the entertainment industry who have started to pay special attention to such crypto novelty. Artists and investors will inevitably accept non-fungible tokens due to accessing new markets, revenue streams, and the overall globalization of society. It certainly appears as if NFTs are about to be ready for their close-up in the entertainment industry.
If there is one thing we’ve learned from NFTs, it’s that it has a unique ability to foster communities. If anything, the NFT culture embraces the fact that markets are buoyed by sentiment from these communities of collectors, creators, and speculators.
NFT communities are groups involving like-minded token collectors and investors that have joined forces to build their own culture. Some of the most popular NFT communities include:
The importance behind these bases of fans is that they foster NFT projects since the true power of such communities lies in their marketing power that has a direct impact on the success of NFT-related projects.
Integrated digital structures, both current and future, centered on virtual reality are referred to as the Metaverse. The mere definition of the Metaverse may differ if we take into account the opinions of divergent tech futurists, yet it has been widely regarded as the next frontier of the Internet with tremendous economic potential. The Metaverse can be understood as a series of enveloping experiences in virtual reality that will be accessible to the general population in the future and enable them to engage in a plethora of interesting activities in an entirely virtual environment. Hence, Metaverse cannot be easily bound to a single form of experience.
The question of the role of NFTs and their uses in the Metaverse naturally arises. Since NFTs have generally been linked to transactions and websites, there might be confusion about what the common ground is with a virtual reality-based Metaverse, or if there is any at all.
Nevertheless, businesses are finding ways to bring these two together and reassure a joint prosperous future. Primarily, the common ground between these two would encompass virtual marketplaces, a future use that would appeal to a number of brands in divergent industries. Secondly, virtual reality is a good platform for viewing art as it may be seen in detail and from every possible angle. Already many museums started placing NFT art in Metaverses such as Cryptovoxels.
There are many potentials and examples of future uses in the light of the NFT Metaverse combo. Joining a novel virtual reality with the main perks associated with NFTs such as uniqueness and digital ownership could inevitably add new paths forwards for the economy.
One popular theme for attack brought up by NFT proponents is the decentralisation of the web.
In the past, artists, businesses, and many others have had to deal with middlemen that profited from their work in the long run. Playing by the rules of those few in control means a lack of transparency, possible censorship, and even loss of potential revenue.
Many believe that the decentralized environment of Web3 provides a decent alternative. The term Web3 has been coined to represent a third iteration of the internet after Web 2.0, namely the World Wide Web. There is an ongoing debate about what this Web3 actually includes, yet it mainly refers to an open and 3D-immersive internet and there is growing consensus that it will be crypto-enabled. At the very least, Web3 is based on blockchain technology, enriched with NFTs and decentralized products.
A strong technical link can be established between NFTs and Web3. It is considered that this future web could provide users with options to truly own their data with a number of marketplaces to empower businesses and artists.
The decentralization of the internet is considered to add an extra layer of security in the future as well. Speaking of future and possible predictions, Web3 could provide users with a totally divergent platform to develop creativity and business activities. We may think of the metaverse, Web3, and NFTs as the new foundational blocks of the internet. Without the metaverse and NFTs, we couldn’t be talking about Web3 in a complete form, as these technologies, with their unique characteristics, enable the notion of a new web era.
From art and gaming to real estate, non-fungible tokens have disrupted almost every industry. NFTs are trending more than ever as new projects are being launched on a daily basis, whether by new start-ups, investors, on Twitter, or Meta. The predictions are that the future uses of NFTs could be virtually endless – whether or not utility is achieved remains to be seen.
NFTs represent something genuine with provable ownership over a digital asset without the meddling of any possible intermediary. It is not just about art and gaming; you can purchase concert tickets, passes to sports events, and even use it for restaurant reservations. In that sense, NFTs have the opportunity to affect livelihoods in real life society, and not just among crypto fans.
The tokens’ interactive form of utility provides their owners to use virtual goods in other virtual spaces as well, taking on the subject of a true form of the metaverse.
What are exactly future predictions for NFTs? Current opportunities are still in their infancy and we are seeing just a fraction of the options that will be available a few years from now. While making predictions based on rapidly evolving technologies may seem like a gamble, it is worth stating that we are presently witnessing a phase where the NFT market is massively increasing in value – of course, making allowances for the general condition of markets in a creaking global economy.
Next step: How to use the Lightning NetworkGo to next step
New and useful content will be added to our network, and may even end up on the Learn Crypto feed.
Well done! You help us make the awesome product. You help us make the awesome product
The application request form has been successfully sent. Our team will review your application as soon as possible and contact you.
Meanwhile you can join our Discord server .