Non-fungible token

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A non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable.[1] This is in contrast to cryptocurrencies like bitcoin, and many network or utility tokens that are fungible in nature.[2]

Applications[edit]

Non-fungible tokens are used to create verifiable digital scarcity, as well as digital ownership, and the possibility of asset interoperability across multiple platforms.[3] NFTs are used in several specific applications that require unique digital items like crypto art (rare art), crypto-collectibles and crypto-gaming.

The first use case of gaming related NFTs have been crypto-collectible trading card games.[citation needed] Projects like Age of Chains and Rare Pepes have been using the Counterparty protocol to issue Bitcoin based blockchain trading cards as NFTs as early as 2016.[citation needed]

Art was an early use case for blockchain. NFTs prove authenticity and ownership of digital art.[4] The launch of CryptoPunks In June 2017 paved the way for "rare" art on the Ethereum Blockchain.[5] DADA.art built from the CryptoPunks model and launched the first marketplace for rare digital art in Oct 2017.[6]

Later, popular blockchain games like CryptoKitties made use of non-fungible tokens on the Ethereum blockchain.[7] NFTs are used to represent in-game assets, and are controlled by the user, instead of the game developer.[8] This lets the assets be traded on third-party marketplaces without permission from the game developer. Marketplaces for rare art include Nifty Gateway, Super Rare, Known Origin and MakersPlace.[citation needed]

Specific token standards have been created to support the use of blockchain in gaming. These include the ERC-721 standard of CryptoKitties, and the more recent ERC-1155 standard.[citation needed]

A new use case for NFTs is to create custom ERC-721 holding Fungible Tokens (FT) these can contain cryptocurrencies, digital files and other NFTs these can be traded then destroyed to claim their contents[9]

Growth and mainstream appeal[edit]

Non-fungible tokens made their way into mainstream news when CryptoKitties went viral[10][11] and subsequently raised a $12.5 million investment.[12] RareBits, a Non-Fungible Token marketplace and exchange, raised a $6 million investment.[13] Gamedex, a collectible cards game platform made possible by NFTs, raised a $800,000 seed round.[14] Decentraland, a blockchain-based virtual world, raised $26 million in an initial coin offering,[15] and had a $20 million internal economy as of September 2018.[16]. Nike holds a patent for its blockchain-based NFT-sneakers called ‘CryptoKicks’.[17]

References[edit]

  1. ^ Merriam Webster Definition
  2. ^ Schroeder, Stan. "Crypto trading card game 'Gods Unchained' looks pretty sweet in first gameplay trailer". Mashable. Retrieved 2018-11-18.
  3. ^ "Enjin is Creating a Real-Life Ready Player One, and It's Powered by Blockchain". VentureBeat. 2019-04-16. Retrieved 2019-08-14.
  4. ^ "The Art World Needs Blockchain – Irish Tech News". irishtechnews.ie. Retrieved 2018-05-02.
  5. ^ "how cryptopunks creators charmed the art world and paved the way for blockchain art". Breaker. 2019-01-19.
  6. ^ "the blockchain art market is here". Artnome. 2017-12-17.
  7. ^ Wong, Joon Ian. "The ethereum world is now obsessed with breeding cartoon cats". Quartz. Retrieved 2018-05-02.
  8. ^ "CryptoKitties shows everything can — and will — be tokenized". VentureBeat. 2017-12-04. Retrieved 2018-05-02.
  9. ^ "Emblem Vault - an entire wallet inside a Token". Emblem Vault. Retrieved 2020-10-23.
  10. ^ Wong, Joon Ian. "CryptoKitties is jamming up the ethereum network". Quartz. Retrieved 2018-05-10.
  11. ^ "CryptoKitties Mania Overwhelms Ethereum Network's Processing". Bloomberg.com. 2017-12-04. Retrieved 2018-05-10.
  12. ^ "CryptoKitties raises $12M from Andreessen Horowitz and Union Square Ventures – TechCrunch". techcrunch.com. Retrieved 2018-05-07.
  13. ^ "Crypto-collectibles and Kitties marketplace Rare Bits raises $6M – TechCrunch". techcrunch.com. Retrieved 2018-05-07.
  14. ^ "Blockchain startup Gamedex raises $0.8 million seed round to build platform for digital collectible card games like Pokemon – TechStartups". techstartups.com. Retrieved 2018-05-07.
  15. ^ Russo, Camilla (2018-06-12). "Making a Killing in Virtual Real Estate". Bloomberg. Retrieved 2018-09-05.
  16. ^ Hankin, Aaron (2018-09-04). "People are making more than 500% buying property that doesn't actually exist". MarketWatch. Retrieved 2018-09-05.
  17. ^ https://thenextweb.com/hardfork/2019/12/10/nike-blockchain-sneakers-cryptokick-patent

External links[edit]