The future and applications of non-fungible tokens (NFTs) after the bubble burst

Much has been written about NFTs after the bubble burst. They have been condemned and even left for dead. Something similar happened at the beginning of this century with the dot-com crisis. It was such a promising technology that investors' expectations soared above reality with hopes of returns in the short and medium term impossible. Technology needs time. This process is called technology absorptive capacity and has several levels, namely industry, society and individuals.

As it happened then, many investors began to speculate without knowing very well how this technology worked. This article will try to shed some light on this. Let us begin.

Non-fungible tokens (NFTs) (also known as non-finite tokens, rare tokens, or tokenized assets) are a new digital token standard that has become popular in recent months. They are used to represent unique digital assets. Unlike standard ERC20 tokens, each non-fungible token unit is unique and cannot be exchanged for another token or replaced if lost or broken. Non-fungible tokens typically represent ownership of something like a virtual in-game item, virtual real estate, copyright, identity, membership in an organization, or even an access token. They can be used to prove ownership or to verify the authenticity of the asset. Let's see why these tokens are useful and how they can be implemented in practice.

Why use non-fungible tokens?

Let's differentiate fungible tokens (FTs) that can represent anything, but can prove nothing. They contain no metadata or unique identifiers that can be used to prove ownership or authenticity. Also, they can be issued and transferred too quickly for some applications. Fungible tokens are also much more difficult to secure and verify. Since all tokens are identical, one token cannot be distinguished from another and the authenticity of any given token cannot be proven. In contrast, non-fungible tokens (NFTs) are easy to protect and verify. They are designed to be a unique token that cannot be exchanged for another token. The owner of the token can include metadata in the token, such as its provenance, ownership history, ratings, digital signatures, and links to related documents, images, and websites.

Virtual assets in the game

An NFT gaming token can represent anything, such as a virtual in-game sword, a magic potion, or a castle. The game developer can link the item to unique and verifiable information, such as the identity of the player, the identity of the seller, and the authenticity of the item. The game developer can also set the token's attributes, such as the item's condition, rarity, ownership history, and price. Attributes and information on the token can be verified. The player can then sell, trade, or give away the item, but the item will always remain linked to the original information. This can be used as a decentralized way of trading digital collectibles.

Virtual real estate

Virtual real estate can be used to represent game objects, land, buildings, company shares, voting rights, digital assets, or even real estate. The owner can add information about the provenance, such as the date of purchase, the identity of the seller and the price paid for the property. The owner can also add metadata such as the number of votes received for the property, a link to legal documents related to the property, and the identity of the appraiser who valued the property. This can be used as a decentralized form of digital stock trading.

Digital art and collectibles

Some digital artwork and collectibles are traded as ERC721 tokens. The owner can add metadata to the token, such as the name of the artist, the title of the artwork, the date it was created, descriptions, links to images of the artwork, and the name of the museum that houses the artwork. The token metadata can be verified. The token can be traded or sold, but the token's metadata remains attached to the token. This can be used as a decentralized form of digital art trading and collecting.

Cryptocurrency trading

A token can represent any asset, such as shares of a company or a position in an index. The token owner can add metadata to the token, such as the name of the asset, the stock or position price, the identity of the seller, and the seller's digital signature. The token metadata can be verified. The token can be traded or sold, but the token's metadata remains attached to it. This can be used as a decentralized way of trading cryptocurrency tokens.

Conclusion

Non-fungible tokens are an exciting new development in the world of digital assets and cryptocurrencies. By tokenizing real-world assets and linking them to unique tokens, they offer a new way to digitize unique objects. They can be used to represent anything from virtual game objects to real-world assets such as artwork and collectibles. They can also be used to represent virtual real estate and company shares. These tokens can be verified and presented in a way that is easy to use and understand. The technology will evolve to facilitate the spread and widespread use of NFTs in the same way that we can create a web page in minutes, something unthinkable in the year 2000 for the vast majority of users. NFTs are here to stay.