NFTs or non-fungible tokens come in various shapes and sizes. The different types of NFTs range in use cases and are only just beginning to take form. If you’ve heard of them more recently and around the time of writing, then you’re probably only familiar with the hype and extravaganza surrounding their association with digital art. NFTs have been around for a while. Their roots are heavily tied to trading cards and collectibles but can be used for more.
In the early 90s, a concept known as crypto trading cards talked about forming a new type of currency. Crypto trading cards made mention of some early aspects of today’s NFTs. They explained topics on scarcity, exclusivity, and provenance. It was an idea that conveyed the concept of digital cash. Initially a joke, it would be the first-ever explanation of NFTs or non-fungible tokens.
Fast forward to 2012, when Yoni Assia explained ways that this technology could be applied to real-world examples such as real estate, commodities, and bonds. They were known then as colored coins. Originally designed to be a currency, its initial use cases ranged from property to digital collectibles. They even allowed for the storage of small amounts of metadata.
The rise of the different types of NFTs we encounter today is primarily due to the Ethereum blockchain development in 2017. It gave developers the chance to create decentralized apps. In doing so, innovation could move at the speed of light. Things like games and marketplaces started to take shape.
Today there are many different types of NFTs. They gained early roots in developer and gaming communities, non-fungible tokens have gotten a lot of interest from venture capital. They are currently being used in so many different ways.
Some of the current use cases are:
Trading cards have been around for ages. Many of us grew up opening packs searching for that one particular card. Today it’s no different, except we’ve gone digital. People can buy and trade virtual trading cards and keep them just like keeping the real thing. Trading cards are also heavily linked to gaming. Today, some of the more popular NFT games are built off trading card game concepts similar to Magic the Gathering.
The collectible market is no stranger to NFTs. These items have varying attributes and properties. They’re scarce, can be traced back to their owners, and are highly desirable. Massive hype has been built around many collections. Bored Ape Yacht Club and CryptoPunks are two examples. Both are trendy sets with a large community and tons of built-in utility. Collectibles, like anything, are subjective and built around sentimental value.
Gaming is the biggest driver of the industry. The demand for in-game assets has increased ten-fold. People are buying things like outfits, shoes, weapons, and property. Fortnite has made fortunes off in-game purchases alone. This model lets businesses continue to generate revenue and pull in the community. Programs allow creators and developers to take part and participate in open marketplaces. While guild DAOs are popping up around games. The play-to-earn market is also taking shape and has helped coin “GameFi.” Gaming is pushing the boundaries and using different types of NFTs to create an entirely new form, Semi-Fungible Tokens.
Art is a use case we are all very familiar with. It’s probably the most popular only because of its media coverage. Art NFTs come in various shapes and sizes. Images, music, and video are all ways creatives can express themselves. Many people wonder what’s the point and argue that ownership is make-believe. However, interestingly enough, the initial intention behind NFT technology was to create a monetized system for artists to get paid for their art. It was also a way to protect their intellectual property. Today that is still the idea.
Sports hasn’t let this marvel pass them by. Onboarding in early 2020, organizations like Formula 1, MLB, NHL, and the NBA all took to NFTs. Socios created fan tokens and started working with clubs to expand their customer experience and engagement with the team. Due to the nature of the space, sporting teams have made great use of the utility and created different types of NFTs and experiences around them. FC Barcelona developed fan tokens to influence a locker room mural. The Golden State Warriors were the first team to launch their own collection.
A network of virtual environments, the metaverse is where people can interact with each other and objects just like the physical world. People can purchase virtual land at extremely high valuations and build whatever their heart desires. Communities, gaming, commerce, and more are finding homes in the metaverse. It is a vast world similar to seeing massive success and replication of real-life experiences.
In life, we buy clothes for various reasons. Some of us like specific brands and prefer the image we give off when seen wearing those clothes. One of the different types of NFTs used today is virtual fashion. They are the digital wardrobe for your virtual life. Just like the hats, jackets, jeans, sunglasses, and sneakers you wear every day, so too will your avatar. Think skins for your character and more. These virtual wardrobes allow you to personalize your personality and experience just like you would otherwise.
Decentralized domain name services let you register a domain name and sell it on NFT marketplaces. Usually, a third-party company would be involved that would manage your domain. Buying one on the NFT market grants exclusive term ownership, cutting out the middleman.
If you thought the internet couldn’t get more interesting, you could buy and trade memes on the NFT market. What’s neat is that the person in the meme is the actual seller in some cases. More popular memes have raked in between $30,000 and $770,000. The most valuable meme is the Doge meme, selling for $4 million.
Music and Media
Music and media are also experimenting with NFTs. With NFTs, artists get the advantages of reaching out directly to their followers and new audience; the listeners get a premium experience. The sense of exclusivity in purchasing NFT music is one of the foremost reasons for infusing traits of vintage vinyl records. The growth of music NFTs in the non-fungible tokens list could offer reliable prospects for addressing the concerns of music piracy and intermediaries.
Events / Event Ticketing
Events and event ticketing is a fascinating use case that will most likely drive a lot of innovation due to the nature of the actual object. NFTs grant access to an event by verifying their identity and tickets. Event managers could use different types of NFTs and data to control and manage the event while providing exciting experiences for ticket holds. The secondary market also opens up a lot for customers. Customers can purchase tickets through auctions. Or even participate in a secondary collectible market since tickets are often sought after memorabilia.
When you think of NFTs, it’s easy to compare them to deeds since one of their primary objectives is to provide a record of ownership. This is why the tokenization of real estate and luxury goods has been one of the immediate use cases outlined for the technology. NFTs can introduce the flexibility of purchasing a car or home. Therefore, NFTs representing real-world assets can capitalize on the opportunities with cryptographic proof of ownership.
Evidently, one of a non-fungible tokens’ crucial traits is scarcity in certifications and licensing. Every NFT is unique and cannot be interchanged. With identity NFTs, they can serve as unique identifiers. They can also act as reliable support for identity management systems. These NFTs could be used for certifications and licensing, and personal identity information without risks of losing it.
Finance / Insurance
The expansions of blockchain technology have caused different types of NFTs to pop up in the financial sector. Many people have treated them like securities. A healthy trading market ensures significant attention from Wallstreet Bros and Bras. Fractionalized funds have become a hot item while an entire insurance industry is underway. NTFs are even being traded on the NASDAQ, with ETFs focusing on companies driving this space.
This is just the tip. We’re just now being granted access to this military-grade technology. It’s been around for a long time in laboratories and research centers under careful watch. As more and more people begin to understand the technology and ideas behind it, there will be more innovation. There’s no telling what kind of products or applications can be built around this technology.