Non-fungible tokens (NFTs) are a group of unique crypto tokens that cannot be replicated or divided. All cryptocurrencies are fungible, i.e. they can be broken into smaller units. For instance, you can buy a tiny fraction of Bitcoin, and its smallest unit is called the Satoshi.
NFTs on the other hand cannot be broken into smaller units. Since their arrival, NFTs have rapidly become popular because of the many ways they can be used. In spite of this, the industry is still young, and there is much more to explore as far as NFTs are concerned.
This means that there are many more ways that NFTs can be used in the future, but here are five use cases for which NFTs are already applied in 2023.
One of the first applications of NFTs was in the area of art. They have helped to solve the age-old problem of scarcity in digital art, by making it possible to create authentic versions of art that cannot be copied.
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Anyone can see a piece of art on the blockchain and download it, but only one person can truly prove ownership of such a piece of art and that is achieved through NFTs. This is why NFTs are very popular in art.
NFTs have also found use in finance with the coming of decentralized finance. They provide unique financial benefits to their owners, and their value comes from their utility. For example in an NFT staking model, a user can stake tokens and then receive an NFT which serves as a ticket to access the next pool.
Once the user accesses the next pool, the NFT is destroyed, making it impossible for anyone else to use it again to access the same pool. This application in DeFi is one of the most recent use cases for NFTs so far.
Gaming is a fast-growing industry within the crypto world, and at its center are NFTs. Because it is an industry with a huge demand for unique items, it is one of the biggest applications of NFTs. Games like Axie Infinity and Battle Pets have integrated NFTs already.
They are both games with tradable pets and items that are used as NFTs. You can also trade such items on external marketplaces outside the gaming environment.
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NFTs can also have utility in gaming. For example in Axie Infinity, each Axie has a unique set of for battling that makes each one distinct from any other. The uniqueness of each pet can be represented with an NFT that cannot be replicated.
NFTs have also found a use case in Music. You can now attach audio to an NFT to create a collectible piece of music. This is similar to the use of NFTs in art, but there is much more.
Up to this point, music artists have been cheated out of royalties for their music. Through the use of NFTs however, they are able to get payment for their art, which is a major application in the music industry that has encouraged more young artists to enter the entertainment industry.
Real-world assets such as real estate have been a major cause of dispute for centuries. This is because anyone can forge papers and claim ownership of a place, but that is gradually changing with the application of NFTs.
It is now positive to digitize ownership of a piece of land or some other asset such that only one person can claim ownership of it.
This is the place of NFTs, but it hasn’t seen wide acceptance yet. However, it is a promising application of NFTs that holds great potential as the world moves towards a global digital economy.
These are five of the many applications of NFTs that are becoming more common and hold a lot of promise for the future. Are there others you can think of?
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