When people think of NFTs, they usually think of expensive JPEG images that oddly sell for millions of dollars, and that’s a problem. It’s like believing the internet is nothing more than a place to share memes and dismissing it as “probably nothing.“Now that the prices of collectible NFTs have crashed, real innovation can happen, and that stigma can be broken as better uses for NFTs are explored.
NFT, or “non-fungible tokens,” are a type of cryptocurrency where each token is unique from the others and contains an embedded URL referring to its unique content and metadata. NFTs are comparable to deeds of ownership where the URL points to the thing whose the token grants ownership (allegedly, always check the fine print), which provides enormous flexibility in what NFTs can do and represent.Unfortunately, in the 2020-2021 cryptocurrency bull run, investors and retail speculators have dumped millions into collections of NFT profile pictures with no use cases, often paying $100-$1000 to mint each token in hopes of landing the next NFT million dollars, which doesn’t has only prompted more collections and various counterfeits to emerge as blatant cut-and-paste cash grabs, naturally leading to the misunderstanding of NFTs today.
The overexposure of elite JPEG collections like Bored Ape Yacht Club and CryptoPunks has brought the less exciting use case of NFTs to mainstream awareness, leading to utter confusion among the non-crypto. However, anyone visiting OpenSea notice that there are more sections than just collectibles, such as NFT domain names for crypto wallets, music, art and photography, sports, trading card games (for which NFTs are well suited), land plots and avatar gear for virtual worlds, and even “utilityNFTs. NFTs are particularly suitable for blockchain-based games and metaverse items, allowing the existence of virtual properties with real value. For example, virtual metaverse worlds Decentralized and The sandbox both have NFT-based economies, with rare NFT plots costing thousands of dollars. Players can create and sell their own NFT avatar gear on in-game marketplaces. The blockchain game and “GameFi“Sectors also widely use NFTs, as the adorable yield-generating product Aavegotchi pets or mad success Axie Infinite fighting pets. These four examples are much more interesting than the JPEG collectibles, but they receive little attention outside of cryptography.
NFT use cases are vast and innovative
A powerful feature that is generally underestimated is the ability to check a crypto wallet for particular NFTs as part of conditional logic. This feature is widely used for private Discord servers, where a bot is used to automatically approve and kick Discord users based on the NFTs they own. NFT-based DAO governance communities use this capability to assign roles and voting rights. Websites can verify NFTs in a visitor’s crypto wallet, providing hidden areas/content for you to discover. NFTs can even be used to sell professional services online as tokens, using the free market economy to determine the price of that service.
The NFT source code is open-source, allowing developers to experiment with exciting new features for their NFTs. For example, creating non-transferable NFTs sacrifices value for utility, such as filing an NFT lawsuit in a scammer’s wallet, using NFT metadata to verify authenticity and combat counterfeit products, or providing identifiers of member. NFTs can also be used to represent real-world objects and deeds of property, using blockchain to record transactions and ownership data instead of private databases. These examples barely scratch the surface of what NFTs can do, and all of them are more interesting than collectible JPEGs.
NFTs are misunderstood thanks to the hype around JPEG collectibles, which has obscured the best use cases for NFTs under a mountain of speculative trash. However, listing all the uses of NFTs to someone convinced they are just “expensive jpegs” is as desperate as listing the benefits of the internet to someone convinced it’s only for sharing memes. Instead, people need to stop thinking NFT are collectibles and are beginning to view them as a technology where collectibles exist alongside hundreds of more exciting use cases.
Sources: OpenSea, Decentralized, The sandbox, Aavegotchi, Axie Infinite