What are Non-Fungible Tokens?
Non-fungible tokens (NFTs) are cryptographic assets that are stored on the blockchain. Each token has a distinctive identification code, making them unique and completely different from one another. NFTs serve as a representation of ownership and can be linked to any asset - a way of proving ownership that we’ve never come across before.
The difference between non-fungible tokens and fungible tokens is that non-fungible tokens cannot be exchanged one for the other as they are not equal, while fungible tokens (such as bitcoin, or any currency), can be swapped for one another.
3 Key Points on NFTs
Let’s break down the opening description a bit more to broaden our understanding. Here are three key points on NFTs:
1. NFTs are stored on a blockchain
A blockchain is a distributed public ledger that records transactions and tracks the movement of assets. Each NFT is stored on the blockchain with an identification code and metadata that makes it as unique as a fingerprint. In this context, “metadata” means “data about data” and is simply a bit of extra information that describes the NFT and is stored alongside it.
2. NFTs can be linked-to ANY asset
As of right now, NFTs are mostly known to represent digital art. Many think they are limited to this, but in fact, they can be tied to any asset - physical or digital. The benefits NFTs bring are capable of streamlining many key industries and they’re going to slowly start announcing themselves to major markets.
3. Think of them as digital receipts or signatures
If you’re a collector, NFTs can be considered the digital equivalent of the kind of receipt you’d get after you’ve bought something physical (like clothing or food) from your favourite store. As an artist, turning your work into an NFT is a way of adding a digital signature that can never be forged or removed.
The Importance of NFTs
NFTs are dubbed to play a huge role in the new age of the internet - Web 3.0. This new internet is formed around decentralisation and empowering users and creators through ownership of digital assets and data.
With an NFT having a key function of proving ownership, they’re going to play a key role in accelerating the movement to Web 3.0. An NFT can be virtually any file or digital item, whether it’s an artwork or perhaps a software subscription. But they can also be associated with physical assets as well. Here are some of the key areas where NFTs are being leveraged:
This relates to digital assets such as art or musical projects. NFTs really announced themselves here and they’re providing never seen before opportunities for digital creators. Some of the most innovative teams are using digital content like jpeg files to raise funds for projects that aim to solve problems. These teams are also rewarding their jpeg holders handsomely.
Perhaps the most exciting sector of the NFT world is the prospect of blockchain gaming. Introducing NFTs as in-game items gives players full ownership of their items as well the possibility of trading these assets for other real-value cryptocurrencies. Gamers are now earning for their time and effort within a game.
NFTs have the potential to streamline the real estate industry. Property deeds can be wrapped up as NFTs and transfers of ownership can be done swiftly and with a great reduction in cost and admin. We’re already beginning to see numerous real estate companies explore the potential of NFTs.
The potential of NFTs within DeFi is incredibly exciting. One protocol we’re already seeing is investors obtaining loans by using NFTs as collateral. If you don’t pay back the loan, the NFT will be sent to the lender. Seeing as though you can tokenise anything as an NFT, this could work incredibly well when it comes to loans.
Maybe a smaller industry, but NFTs are going to fit like a glove within the outdated ticketing industry. NFTs have the potential to remove ticketing fraud, as well as provide efficient exchange of tickets on secondary marketplaces.
With NFTs only beginning to announce themselves to these major industries, as well as many more, there’s no doubt that we’re going to see them around for a very long time.
NFTs Empower Creators
Currently, creators of all kinds are very much reliant on the platforms and infrastructure that their professions relate to. For example, the majority of musicians are reliant on platforms such as Spotify or Apple Music. These platforms have ginormous followings and provide today’s artists with the most exposure. However, their revenue share is extremely limited. Artists handover ownership of their work and receive very little in return - something that doesn't seem right.
NFTs provides the opportunity for musicians and creators of all kinds to be less reliant on these dominant platforms. They’re potentially going to open the door for greater earning potential and invite a more fair distribution of wealth within an industry.
One way that NFTs will greatly improve earning potential is through royalties. These are coded into NFTs via smart contracts and ensure that the creator of an NFT is compensated a small percentage of every secondary sale that takes place. This essentially means that creators will continue to earn from every project or asset that they created for the rest of the NFTs life (forever).
Earning potential is only one benefit for creators. NFTs are providing exciting ways for creators to reward fans, investors, and supporters.
NFTs Empower Builders
With the desire for creators to utilise NFTs, there needs to be platforms in place for the magic to happen. NFT technology is incentivising developers and builders to build new-age software that allows creators to embrace the benefits that NFTs provide.
NFTs also provide a modern method of fundraising for projects. Previously, many teams were shut down by the low possibility of fund-raising, or just getting bought out by bigger companies. But now, highly capable teams and developers are able to build the funds necessary through NFT collections. This new way of gaining capital is promoting innovation and inviting some of the finest talent to build problem-solving technology.
Teams and projects are also able to reward their NFT investors handsomely and efficiently through smart contracts and other exclusive benefits - a big reason why we’re seeing incredibly expensive NFTs on the market right now.
The Future of NFTs
The future for NFTs looks bright. With so many issues with the current functioning of our planet, the use of blockchain technology promotes a more transparent process for virtually anything. NFTs are now considered a key fundamental of blockchain technology and they’re evolving at a rapid pace.
Momint aims to be a marketplace where one can purchase NFTs and invest in projects that are looking to solve real-world problems, as well as provide a base for businesses to adopt NFT technology.