Most of the hype around NFTs these days is centred around digital artworks being sold across online marketplaces like Opensea. Some popular names dominating in this space include CryptoPunks, Doodles, and even CryptoKitties. But NFTs can be much more than just pieces of digital artwork, and there are a number of different properties that factor into their value.
NFT stands for non-fungible token, meaning that it is a unique asset that cannot be replicated or exchanged. Fungible assets like Bitcoin and fiat money are interchangeable – if you trade one for another, you’ll have the same thing. NFTs, on the other hand, serve as evidence of ownership for a physical or digital asset, and there can only be one of each. To get a bit more technical, NFTs are units of data stored on a blockchain that contain all the information about an asset’s properties and all relevant data about its ownership. They are powered using smart contracts to confirm their ownership and help with their transferability.
While it may seem that NFTs emerged fairly recently, they’ve actually existed since 2014. Ethereum was the first blockchain to support NFTs, but they have since become compatible with Solana, Polygon, EOS, Cardano, and a number of other blockchains. With this in mind, NFTs have been able to evolve over the years to serve many purposes, far beyond the digital art space. Let’s take a look at some main ones…
If you’ve been keeping up with crypto news on social media, you’ve likely come across some headlines announcing different celebrities dropping hundreds of thousands of dollars on Bored Ape NFTs. If you’ve found yourself wondering why, there are a few different factors that make up their value. One attractive perk of having a Bored Ape is access to an exclusive membership called the “Yacht Club” – a private discord server where owners can hang out and interact with one another. Yacht Club members are also granted privileges such as access to “The Bathroom,” a collaborative graffiti board, and earlier this month they were given the opportunity to claim thousands of Ape Coins upon their release.
There are a number of memberships NFTs on the market, building exclusive communities for their owners. Other examples include a collection called Bonsai by ZENFT that unlocks access to the ZENFT Garden Society or even the World of Women NFTs that put owners on the list for their annual gala and other in-person events. Essentially, membership NFTs can be thought of as keys that open the gate to a private community with unique advantages that help increase their value.
If you’re already familiar with Pokémon or sports trading cards, this concept isn’t anything new. These NFTs are sold as part of different collections, with some cards being considered more valuable than others. The most popular collectible NFT collection would be NBA Top Shot, a partnership between the NBA and the creators of CryptoKitties capturing some top NBA highlights in the form of digital trading cards. Some cards have their value tied in the hundreds of thousands of dollars, depending on the popularity and importance of the moment captured. One of the most expensive NBA Top Shot trading cards sold to date was part of the Series 1 “From The Top” Dunk collection with LeBron James emulating a famous Kobe Bryant dunk, sold shortly after he had passed away last year. The trading card was bought at an auction for almost $400,000, and it is only considered the third most valuable card of its collection.
Rather than just buying the right to listen to a song on iTunes, Spotify, or even Amazon Music, you can become the owner of the song itself with NFTs! Much like artwork NFTs, music NFTs give artists the opportunity to monetize their work without the need of a third party like a record label. Currently, music NFTs don’t give owners any more rights beyond simply having their name tied to the asset that can appreciate in value over time. However, an increasing number of platforms like Royal and Opulous are working to give music NFT owners right to royalties.
This time last year, the American rock band Kings of Leon became the first band to release their album in the form of an NFT. The project that they called NFT Yourself resulted in about $2.5 million in revenue from the sale of their latest album in the form of an NFT that came with an exclusive digital artwork and vinyl record. Since then, other artists like Grimes and the 3LAU have been using blockchain to digitally curate their work.
With blockchain-based games, the online gaming space has never been more profitable. These NFTs are virtual games that allow users to earn money by buying and selling in-game items. Collectibles such as weapons, skins, and more can be traded and sold as NFTs so that users don’t lose the value of the items that they have collected when they stop playing. Generally, players don’t have the rights to trade the items won or bought in video games, but NFTs have solved this problem by giving users full ownership over their virtual assets.
Decentraland, an NFT gaming metaverse based on Ethereum, allows users to build, sell, and own virtual reality NFT assets using their native token MANA. In this space, users can buy and sell virtual land parcels, clothing for their avatars, and even names which are registered on the blockchain. Users holding MANA also have voting rights in the Decentraland DAO to directly contribute to the space and its operations. This virtual space, along with many others, are putting users in control of their own gaming experience while giving them the opportunity to earn real money from their efforts and contributions.
Because of the contract-based nature of NFTS, and their practicality in facilitating transactions, NFTs have even been used to represent ownership of real-life physical assets. In February of this year, a woman put her house in Florida up for auction as an NFT to encourage others to embrace this new technology. The house was transferred for 210 Ethereum, or roughly $920,000 CAD, marking the first property sale as an NFT. The use of NFTs has helped streamline the process of transferring property ownership, which is otherwise a very tedious job on paper. Commercial real estate is just one real-life industry that has benefitted from the use of NFTs. With all of their current applications, only time will tell where NFTs will be adopted next!