Academy Series #1: A primer on Non-Fungible Tokens
NFTs are certainly one of the biggest crazes in the crypto, blockchain, and the Web3 space. With 2020 being the year of DeFi, 2021 will certainly be marked by the emergence of NFTs.
At BEPRO we are at the cutting edge of the NFT trend and we have the privilege to deal and work with several brilliant projects and teams that are constructing many different apps and solutions using NFTs.
However, we still see a lot of curiosity and misunderstanding around the topic so we decided to start a series of articles where we will cover NFTs end-to-end: we will clarify questions, address common misconceptions, and also cover use cases and opportunities in the NFT space!
The weird crazy world of NFTs…
We think it’s fair to say that NFTs took the world by storm in the beginning of the year.
Everyone heard about them somehow: people trading expensive 8-bit pictures of Crypto-Punks, high-profile celebrities launching their own NFTs, Gary Vee and Mark Cuban discussing how NFTs are the future, millions of NBA video moments being traded digitally, and an artist that single-handedly sold an NFT for the unbelievable amount of $69 million dollars!!
So… what is exactly this new thing called NFTs?
Before going further, let’s start with the fundamentals and understand what fungibility is! Think of a one-dollar note. All dollar notes are alike, and there is no particular distinction between them. You can trade them and use them back and forth with ease, and you can replace a dollar note with another dollar note and the meaning and value are exactly the same. A dollar note is what we call a Fungible artifact.
Now, if you think of something like a football trading card signed by your favorite player, that item is now completely unique. There’s no other in the world like it, and it has some value and scarcity associated with it. That card is an example of what we call a Non-Fungible artifact.
In simple terms, if you lend someone a dollar, when they return it, you don’t expect the EXACT same dollar note you lent. But if you lend a unique artwork to someone, then you better get the EXACT same piece when they give it back to you :) or at least one of greater value!
What is an NFT then?
NFT stands for Non-Fungible Token. Tokens are simply digital artifacts, issued and living on a blockchain, that might carry a specific meaning or have a smart contract embedded within them.
As their name states, NFTs bring non-fungibility to the digital world. An NFT is then a unique, digital certificate issued on a blockchain. An example of an NFT use-case is to provide ownership rights to an asset (typically a digital one such as a digital work of art) but also real-world items.
A common misconception is to say that NFTs are digital art, but, although it may sound disappointing, the NFT is not the art piece that was created by your favorite artist… The actual piece might be a PNG/JPEG living on your own harddrive, a decentralized IPSF location, or even on a cloud server you don’t necessarily own (yes.. it’s tricky but we’ll cover more on that later.
On the other hand, independently of location, the NFT represents the ownership rights of that art piece, and this is where things become interesting! Until the rise of NFTs, digital ownership has always been a very difficult topic to address properly. It was difficult and hard to prove and achieve consensus on who owned digital creations, and how that ownership could change in an trustless but openly verifiable manner.
NFTs, because they are decentralized, and living on public blockchains, provide an immutable source of truth on digital ownership rights that hadn’t previously existed.
NFTs are a game-changer for the digital economy and can unlock tremendous value for all the stakeholders of the digital economy of the XXI century.
Applications and Use Cases?
Digital Art is probably the first thing that comes to mind when thinking of practical use cases for NFTs. It’s obviously a great contender for ownership rights, but also for consumerization by the public. Digital art was, without a doubt, what brought NFTs to the mainstream, especially with help of platforms like Rarible and OpenSea.
However, NFTs can really be applied to anything digital (such as drawings, music, and even a tweet) and there are several other very interesting use cases applications for NFTs.
Some examples include:
- Digital & Real-World Art — Creating a certificate of ownership and authenticity of any art item;
- Fashion — Providing authentication to avoid counterfeit and fake goods and clothes;
- Licensing & Certification — Providing a immutable proof of educational license or certification, validated on a blockchain;
- Sports — Tokenizing sports tickets to prevent counterfeit, and restrict unfair resale market dynamics;
- Domains — Creating unique domain addresses as NFTs;
- Virtual Worlds — Allowing users to own and monetize virtual land and property in different virtual worlds;
- Gaming — Tokenizing in-game items or goods, so gamers can exchange with other peers, and transpose the goods to other environments, secondary exchanges, or even other games;
As you can see, the world surrounding NFTs is vast and diverse.
We obviously can’t cover everything in a single article so in the upcoming series, we will explore a bit further the implications of NFTs in the digital economy, the upcoming growth and potential of ownership in the digital age, and detail several possibilities and use cases for NFTs.
But in the meantime, can I start now?
Of course you can! At BEPRO Network we build tools for builders and help ambitious individuals and teams speed up their idea development. We recently released our NFT Factory into our codebase which allows you to easily build NFT-based applications. Start here: http://docs.bepro.network
If you have questions or ideas around the topic feel free to reach out directly to us and I’ll be happy to help! Just ping me directly at email@example.com !
About BEPRO Network
BEPRO Network is a codebase for DeFi, Gaming, Prediction Markets & More. We are a Code-as-a-Service protocol providing technology and support for blockchain-based applications.