NFTs (Non-Fungible Tokens) have become one of the main topics in recent months, and the pace at which they develop is very impressive compared to the rise of other, previous crypto coins. This situation has led many to discuss the future of NFTs.
People are curious to know what exactly can an NFT be used for, or what are the true limits of the NFT. Let’s cover these aspects part by part, so you have a better idea of where the NFT market is going in the near future.
Overview of NFTs
As mentioned above, NFT stands for Non-Fungible Token, and it is a cryptocurrency token that is unique from any other one. The NFTs can exist on any blockchain, but most notably, they are popular on the Ethereum blockchain as an ERC-721 token.
The most fascinating thing about them is that they can have smart contracts attached to them, and they add to the potential uses for these tokens.
How Do NFTs Work?
The “Non-fungible” part of the name suggests that the token is unique and cannot be replaced, which is the main difference between NFTs and other cryptocurrencies, such as Bitcoin. A Bitcoin can be traded for another bitcoin for the same value.
NFTs are stored on a blockchain, which is a decentralized digital ledger of transactions, and they have data records that are immutable to show their authentication and any potential change of ownership.
You can create any digital asset as an NFT on a certain NFT marketplace, using a digital wallet and a cryptocurrency. The most popular and widely used crypto is Ethereum. Some of the marketplaces include OpenSea, Mintable, Rarible, and so on.
When you purchase an NFT you have sort of a certificate of authenticity of the item you have just bought. Essentially, it means that you will own the property rights to the digital asset, and even if thousands of copies are made of the asset, none of them will be the original one — signed and authenticated by the creator.
NFTs are used in different fields, from artwork to music, gaming and so on, so let’s take a closer look at what the future holds for NFTs in the particular fields it is being used in.
The Future of NFTs
As mentioned above, NFTs have tons of potential uses, and we can only scratch the surface of it in this article. The near to long-term future is likely to bring even more interested people to NFTs, and it will automatically open new fields in which we will be able to use NFTs.
NFTs and DeFi
This is the first major use for the NFTs and it represents a fusion between it and decentralized finance. This is one field that you are best advised to keep an eye on in the near future. This fusion will allow NFT holders to put up their NFT as collateral for loans.
There is one challenge that lies with this usage — the appraising of the NFT, but it will probably be determined on a more individual basis on a certain platform, not as an automated method.
NFTs and Gaming
Gaming is one aspect of everyday life that will remain popular whatsoever, but imagine if you combine blockchain gaming with NFTs. The gaming industry will be on another level in the next few years, and the most common use for NFTs will be turning certain in-game items into it.
The rarer the item, the more the worth, so people will be able to earn significant sums in the industry. NFTs are sure to become a big part of blockchain gaming in the near future.
NFTs and Music
Music is the one industry that will likely see the most significant changes due to the rise of NFTs, and the entire sector will be unrecognizable with the adoption of NFTs for the general public. Songs can be turned into NFTs, and song rights will be attached to NFTs.
There are endless possibilities when it comes to combining music and NFTs, and one interesting aspect involves using NFTs as a kind of venture capital opportunity. So, an artist will release the rights to the album as an NFT before it is being released, helping it with the promotion of it.
This will cut the middlemen — the record company, so the artist will have more income and the prices for the end consumer will be better.
NFTs and Hyperrealistic VR
The final form of NFT that we cannot miss mentioning is the fusion of NFTs with hyper-realistic virtual reality (VR). This aspect has widely been discussed ad nauseum in sci-fi in previous decades, and the most notable example of it in the book and movie “Ready Player One”
With the fusion of VR and NFTs people will be able to battle, create skins, weapons, and other things to earn in-game currencies. Skins, weapons and artwork can be seen as an NFT here. The great news here is that the Ethereum team can build their own VR system that will interact with the ETH blockchain and it will allow people to have their NFTs in the virtual world.