One of the most exciting aspects of blockchain and cryptocurrencies as investment opportunities, as well as game-changing aspects in the world at large, are Non-Fungible Tokens (NFTs) and the use cases that they unlock. While NFTs were first introduced in CryptoKitties, one of the earliest and most popular DApps to be launched on the Ethereum network, these unique tokens have wide applications beyond collectibles that can disrupt multiple industries.
What are non-fungible tokens (NFT)?
Non-fungible tokens, also known as ERC-721 tokens, are a class of cryptocurrency that are being increasingly used to disrupt the world economy and trade. Since they have not been widely adopted, we only have a handful of examples to show what is possible with these types of tokens when the technology becomes more mainstream. We still have plenty of time to speculate about their potential uses for businesses and what the non-fungible token market could look like if web3 does take off because there is an entire class for them on etherscan. io. The list of Ethereum dapps already using them is impressive: Rarebits, CryptoKitties, Ethercraft. The future looks bright for this new type of digital asset! That’s why it’s important to understand how they work so you can be prepared for their implementation in your business. Here are some quick definitions: 1) An instance of a non-fungible token (NFT) represents one unique object which you own or someone else owns; 2) A standard fungible token (ERC-20) represents something fungible – just like paper money which can be exchanged among people; 3) You can transfer ownership of a fungible token by giving it away or sending it to someone else – but not an NFT, since each has its own identity.
Blockchains without fungibility are useless
As a business owner, you should care about the future of finance on the blockchain because it impacts your ability to generate revenue. Blockchains without fungibility are useless, and unable to process commerce with merchants or partners who don’t want to accept your coins because they have dirty transactions from gambling sites or other uses that violate terms of service. You could be locked out from an entire network if nodes refuse to include any transactions from your address for fear that someone will copy it for illicit purposes and use the node’s space on their blockchain as a platform for money laundering or terrorist financing. As new technologies like Web3 continue to progress into the future, fungibility may become more important than today’s Lightning Network. However, there is still time to make changes before then – currently the finance industry is not concerned with these issues. The majority of companies view cryptocurrencies through three lenses: Transactions, Identity, and Assets. They are only interested in one part of finance; while another has a broader perspective on all aspects of cryptocurrencies. One company we interviewed sees tokens as providing a key solution to data management problems which plague the current state of digital marketing. Their work requires them to collect large amounts of information about people browsing websites, and this company stores their customer profiles on chain so they can provide analytics to those customers’ webmasters. The cost-effectiveness of using crypto assets (transactions) instead of traditional data management methods gives them room for expansion into emerging markets where capital constraints would otherwise limit them. A few years ago I read a research paper by Richard Krawczyk called An Analysis of Bitcoin Anonymity. In it he describes how he took advantage of Bitcoin Core client bugs in order to deanonymize certain addresses on the blockchain and learn some details about their history. He was able to determine when bitcoins were sent between two wallets, how many bitcoins were sent and how many bitcoins remained at each address after sending funds elsewhere. His techniques were able to identify both buyers and sellers on the dark market Silk Road 2.0 thanks to transaction chains which revealed common recipients among users engaged in illegal activities. This allowed the US government to successfully prosecute Ross Ulbricht, the alleged operator of the original Silk Road. At first glance, his findings seem to show that fungibility has little value in bitcoin but we believe this isn’t true. He might have been able to do this with previous versions of bitcoin core but not now. Most of the other currencies are even worse off. Our advice is to use a privacy coin like Monero or Zcash for sensitive financial activities such as buying illegal items or funding terrorism.
Why does this matter?
The future of business looks to be headed in a very interesting direction, with the rise of blockchain technology and Non-Fungible Tokens (NFT). Businesses that aren’t exploring this space now may soon find themselves behind their competitors who have been expanding their knowledge and expertise into the modern technology.
Imagine if a company like eBay got to decide what specific data it would want users to be using as a currency: That’s something that might happen when blockchain becomes more ubiquitous. There are many different theories as to how this could change how we interact on the web – especially with marketplaces such as eBay, Etsy, Amazon and AliExpress – but these conversations will only become relevant if there is widespread adoption and understanding of blockchain among consumers. We’re not quite there yet, so for now let’s focus on the benefits of NFTs in the here and now.
Ebay started life by focusing exclusively on physical goods; thanks to blockchain technologies, it could one day evolve into a marketplace where all transactions involve digital assets. We’re not at that point yet; while eBay has filed patents for the use of blockchain technology to trade digital items, they still need to educate their customers about its potential before they can make any meaningful changes. If they don’t take this initiative, they risk being replaced by startups or other companies that do invest time and money into developing new technologies before ecommerce giants can react. When people talk about blockchain without mentioning bitcoin, it’s often because they’re trying to avoid confusing newcomers. However, the best way to explain what blockchains are and why they matter is through examples of things that already exist today. A great example of this is social media. When Facebook shares an ad with you on your timeline, you should be able to know where that ad came from and who paid for it. With blockchain technology powering everything behind the scenes, you’ll get full transparency over which ads you see online – and furthermore, advertisers won’t need your personal information in order to access your attention span. In addition, microtransactions between bloggers and readers will allow for seamless payment exchanges. These are just two reasons why anyone involved in marketing should consider exploring the possibilities of blockchain technologies.
Today, everyone wants to know what’s coming next — and as it turns out, there are some huge opportunities waiting right around the corner. With less than 1% of the world’s population owning cryptocurrency at this point in time, we haven’t even scratched the surface of its potential impact on our society!
What Do You Think? How Will Blockchain Impact Social Media? When you share a post on a social media platform, the content is hosted on their servers. So long as they own that server, they control the content that you publish and receive. That means that the user doesn’t actually own anything – it’s stored in the company’s databases and it belongs to them. It also means that there are security risks associated with storing sensitive data on centralized servers, since if those servers are hacked, then every user is compromised too.
That’s where blockchain comes in handy: This technology decentralizes data storage to keep it safe and ensure that no single entity owns any of it.
Some real use cases on how we can benefit from NFTs
Lending services, like Everex and Unchained Capital, provide loans to people without traditional collateral at the cost of a high interest rate. The platform ensures that those who are creditworthy are given access to capital while preventing predatory lenders from exploiting the poor. These two platforms combine NFTs with their smart contracts to automate their operations and streamline processes such as disbursing loans. By using NFTs for every loan transaction, this model can also drastically cut down on overhead expenses like paperwork which cuts costs for borrowers as well.
In addition to businesses that provide financial services, other uses cases include authentication via Non-Fungible Tokens or even art galleries. For example, if you have an authenticated token tied to your identity and something happens to you (your account is hacked), you have recourse because there is no need for ownership records. If someone steals your NFT then they cannot make any transactions because they do not own it– it is tied only to you. For art gallery owners, by adding ownership data within the digital ledger of an artwork’s blockchain entry, it allows them greater control over their works (such as setting the price). Allowing artists or collectors to buy tokens instead of having to purchase physical artwork means that those who appreciate fine arts will be able to buy original pieces more easily and affordably than ever before. It also reduces the risk of theft and damage since NFTs are immaterial assets. The ability to lend value to assets through technology creates economic opportunities for many different industries; this is just one way that we can benefit from Non-Fungible Tokens! We hope this post has inspired you to learn more about NFTs and think about what possibilities they may open up for us in the future. Stay tuned for our next blog post where we discuss the issue of scalability in Ethereum blockchains. In conclusion, as mentioned above, NFTs allow us to leverage the power of the blockchain while giving users better privacy and avoiding some major pitfalls associated with previous technologies. We hope this post has helped inform you about how NFTs work and how they might change the world. Stay tuned for our next blog post about the scalability issues with blockchain technology. As mentioned earlier, by leveraging the power of the blockchain, Non-Fungible Tokens allow us to enjoy its benefits while limiting some major pitfalls related to previous technologies. But there is still room for improvement – namely, scaling. Ethereum’s blocksize limit is ~800kb. Compare this to Visa’s average card payment volume of 18kb/second. This means that Visa could process roughly 6,700 transactions per second while Ethereum could process around 15. We believe the solution to scaling problems lies in building off-chain solutions: decentralized exchanges, Plasma Cash protocols, and state channels. We can also take advantage of the use of multi-signature escrow accounts. Utilizing these methods, Ethereum can improve its scalability to reach millions of transactions per second. This would allow for NFTs to exist in abundance, as creators are free to invent new and different types of NFTs that were previously restricted due to limitations in the Ethereum network. We look forward to seeing how these developments impact the evolution of web 3.0 and Non-Fungible Tokens in the future!