The concept of cryptocurrency is so vast that we all know just a little bit about it. There is so much to explore and grasp from the enormous concept of cryptocurrency. Normally people are only aware of Bitcoin and Ethereum but the cryptocurrency concept is much wider than this.
Most of the world population has never heard anything about non-fungible tokens this is because they have started with a digital game named “digital kitties” where visual cats of unique identity are bought and sold. This game manages to earn over 12 million through the sale and purchase of virtual cats.
The failed to grab the attention of some value investors despite being so popular. There is more than just a crypto kitty game in non-fungible tokens. They hold much more potential than just a game. In order to understand how much potential non-fungible tokens carry we will first discuss what are they:
In order to understand the concept of non-fungible tokens, first, you need to know what are fungible ones. A fungible token is a form of replaceable token having similar identities. For example, you lend someone 20$ note and when he pays you back you can’t expect him to play the same 20$ note.
The note will be identical but not the same one. Whereas non-fungible tokens are irreplaceable and unique. Unique information and attributes of non-fungible tokens make them impossible to swap or irreplaceable. For example:- plane ticket of every passenger look alike but have different and unique attributes.
When you dug deep in the concept of cryptocurrency, you will find fungible tokens mostly. Making a trade with fungible tokens make it slightly easier and less complicated than non-fungible tokens. These tokens are easy to use and also helps in promoting liquidity. This might be hitting your mind that if most of the tokens are fungible in cryptocurrency why there is a need for a token to be non-fungible. Let us discuss.
Precious to collectors:
Almost everyone is a collector of thing in one way or other. Likewise, you get allure by seeing your favorite items, even want to collect and safeguard them. Non-fungible tokens also allure the collectors. Due to the uniqueness of these tokens, the demand for a particular token can extensively increase their value. For example, In the 17th century, tulips were collected by many people because they were found to be unique than other flowers.
Demands for tulip were so high that an entire state can be fed by selling an exotic tulip bulb. Another example of collectible things can be art. Collectors of art spend almost 40million dollars every year collectively to buy an artwork. Artwork can not even give you enough benefits but still has a huge market size and demand.
There are numerous unique collectors in the market crazy about their collection. These collections may include rare coins, digital goods, currencies, etc. Introducing non-fungible tokens in the collection market can link all the collectible owned by a person to a digital and unique token.
Why Non-fungible Tokens are valuable?
The scarcity and uniqueness of NFTs are behind its increasing value. They are more flexible than other tokens because of the fact that they are made on blockchain technology. The buyer having the sole custody of something can make it digital through these token.
It allows the user to have a digital collection of unique items. For example: If a game shuts down the NFTs in that game will be of the buyer who is the sole owner of the game, not the developer. There areas where you can see the use of NFTs like 1. Legal documents:
There is a company in Australia named Open law using NFTs as a collectible for legal documents. The future of these tokens is bright. They offer a unique identity to each entity which makes them valuable in the long-run. 2. Games: The use of these tokens started with a game named “digital kitties” and topped over 12 million in terms of sales. 3. Traditional collectible like accessories and cards etc.
The benefit of using these tokens are not just limited to specifically one game or platform, it is a much wider concept than just collecting things. The potential of a non-fungible token is not just collecting precious and trendy collectibles but has a lot more applications too. Let us further discuss the future application of these tokens in the real world.
Future application of NFTs:
These token were developed under standard ERC-721. Non-fungible tokens carry more potential than just being traded as digital kitties games. A real-life example of non-fungible assets can be real estate property which is bought and sold like every day.
Each one is unique in its own way and value increase with the increase in demand. Even nowadays they are traded through the blockchain mechanism. Many pieces of land have inherent value based upon the location of the land too, linking the digital tokens to the ownership of the land.
This will derive the land a more efficient and effective marketplace. Thus, it can play an important role in the real estate industry making it easier and effective for making a deal. This can be the same case for raw coffee or any other day-to-day useful items. The cost to implement this project can be an issue.
However, many start-ups like open law have already resolved this issue. Various searches have been going on for making transfers through NFTs in land and real estate business.
Ownership of scarce and digital items are made possible because of NFTs on the blockchain. This is an undeniable potential that non-fungible tokens hold in itself. The most productive use of NFTs can be a tokenizing of all the physical assets in the future.
In Final Words
Non-fungible tokens hold enormous potential in the digitization of physical assets in the future. Some of the applications have entered the real world and others are waiting to become part of them.