The Perception of NFTs Need to Change and Here's Why
The Perception of NFTs Need to Change and Here’s Why.?
Non-Fungible Tokens or NFTs have become a buzzword in recent times, and while many involved in the industry see them as a revolutionary technology, others view them as a digital fad, a waste of money or synonymous with scams.
It’s upsetting, but these perceptions are not entirely unfounded. The infancy of the industry and bad actors looking to exploit the tech and use it for get-rich-quick schemes, has resulted in false promises, scams and rug pulls.
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For context: A rug pull is a type of scam where a fraudulent developer lures people into investing in what appears to be a lucrative project. The developer will then ‘pull the rug out’ from under the project - essentially selling all their tokens and crashing it into a worthless asset.
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However, it's important to recognise the potential of NFTs and change the way we perceive them. So, in this blog, we will explore how NFTs have the potential to revolutionise industries.
What are NFTs?
NFTs are unique digital assets that cannot be replicated. They are stored on a blockchain, which provides a secure and transparent way to store and transfer ownership of the asset. Unlike traditional digital assets, NFTs are not interchangeable, which means that each one has a unique value.
Fungible tokens or assets are divisible and non-unique. For instance, fiat currencies like the dollar are fungible: A ￡1 coin in London has the same value as a ￡1 coin in Machester. This is also applicable to the cryptocurrency, Bitcoin. 1 BTC is worth 1 BTC no matter where it is issued.
Nonfungible assets, on the other hand, are unique and non-divisible. They should be considered as a type of deed or title of ownership of a unique, non-replicable item. For example, a flight ticket is nonfungible because there cannot be another of the same kind due to its specific data.
Imagine you have a box of mints, each of which is identical in appearance and taste. These mints are fungible, meaning that one mint can be exchanged for any other mint in the box without any difference in value.
Now, let's say that each mint in the box has a unique, randomly generated code printed on it. Suddenly, the mints become non-fungible, as each mint now has a distinct identity that sets it apart from the others. Just like how a dollar bill with a unique serial number is different from another dollar bill with a different serial number, each mint with a unique code cannot be exchanged for any other mint in the box with a different code. This makes each mint a unique asset with its own value, rather than an interchangeable commodity, AKA Non-Fungible.
This uniqueness makes NFTs revolutionary, not just for their interesting-looking JPEGs, but also for the ability to trace the history of the asset. NFTs are immutable and recorded on the blockchain, making it near-impossible to falsify ownership, which could lead to many great applications.
Addressing Misconceptions?
As mentioned previously, NFTs have a few common misconceptions, such as that they are a waste of money or just a blatant scam. NFTs could also have a bad rep as they are sometimes pooled in with cryptocurrencies, which have also been prone to bad press and scams.
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You’ve likely heard of the Bored Ape Yacht Club - one of the most successful NFT projects to date, racking in billions of dollars for their owners, Yuga Labs. While they started as just a couple of interesting-looking photo collectables, the revenue the company generated has gone on to fund an entire metaverse that is being built called the Otherside.
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Many of the problems stem from individual bad actors who sink their teeth into projects with the promise of providing expertise. A lot of the time the people who are starting NFT projects do it with the sole intention of getting rich quickly and don’t actually have any knowledge of the space.?
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Now let’s talk about how NFTs can actually be applied beyond just art and digital collectables. Before we get into the specifics, there are a couple of things you have to understand, one of those being Soul-Bound Tokens.
Soul-Bound Tokens.?
This is a relatively new concept, but according to Vitalik Buterin, the founder of Ethereum, they are going to be the future of NFTs.
Soul Bound Tokens (SBT) is a type of NFT that is bound to your soul and is not accessible by everyone and only viewable by those you share it with. You may be wondering how we can bind NFTs to your soul, and that's a great question! - We can't. Technologically we are not at a point where we can bind an NFT to a spiritual and immaterial entity. In this case, a soul refers to a wallet that is forever linked to you and can never be transferred.
The point of SBTs is that with the power of blockchain, we know exactly where those NFTs have been and can ensure they have never been transferred. It can also make sure that people cant forge SBTs as we can trace back their origin and verify their source.
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Okay, now let's give you an example, let’s take someone's career history. Imagine if every job you’ve worked at gave you an SBT outlining the details of your job. Then when you go to apply for a new job they would be able to see all of your past tokens and could verify they are from a reputable source. This would instantly eradicate fraud and falsified information and could drastically speed up the hiring process.
The blockchain allows all the information to be stored on a digital receipt of sorts, one that can never be altered and is fully immutable by everyone.
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Applications of NFTs
Gone are the days of NFTs being a quick cash grab, most projects now need to have some utility behind them to be successful. Let's talk about some of that utility.
Ownership seems to be the most obvious application - and it’s because that would be amazing. This links back to the Soul Bound Tokens - if you have a secure wallet, you can have ownership of anything. Concert Tickets? Make it an NFT. House Ownership? Make the deed an NFT. Selling your car? Imagine if all you had to do was transfer an NFT to another person to complete it. No paperwork, nothing. The possibilities with ownership are endless and something that I imagine we are going to be seeing a lot more of in the coming years.
Some utility that we have seen being developed:
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This is what I mean, the possibilities are endless! It’s not just a jpeg or a piece of digital art, it's something that can change the world.
Take a listen to this podcast about using NFTs to build a recognisable brand:
Now let's get back to the blog...
The Future of NFTs?
It may seem like NFTs have run their course and the market is over for this technology, but as you’ve seen, this isn't the case and there is so much happening in the background.
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NFTs are still very much in their infancy, and the potential for their use is limitless. The future backed by blockchain, Web3 and NFTs is bright and if we as a collective can start to move towards a more transparent and decentralised state, we can create a more efficient and equitable world.
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However, it's essential to ensure that the hype surrounding NFTs does not overshadow their real-world utility.
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People have polarising views on NFTs and cryptocurrency and we hope this has given an insight into how NFTs are more than just a digital fad or a waste of money. We are at the point of early adoption with a wide range of new technologies - look what was said when the internet was first introduced.?
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NFTs have the potential to revolutionise various industries and provide a more secure and transparent way to store and transfer important assets.?
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It's time to change our perception of NFTs and start exploring their full potential.
So next time you see a project using NFTs, really do your own research and evaluate if that is going to be a net positive project and not just another quick cash grab.