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Ever heard of Non-Fungible Tokens (NFTs)?
Well, since the beginning of 2021, and as technology progresses, the industry has radically changed to cater to content creators, streamers, and artists in a way where the authenticity of their production becomes an entirely not-so-new value proposition of its own. This is all thanks to the way NFTs function online, and how people interact with them in the buy/sell market space.
In short, NFTs are unique digital content hooked up to a blockchain that can be purchased and sold. Each NFT is one hundred percent authentic as there can be no exact replica.
What Are Non-fungible Tokens (NFTs) and how do they work?
Non-Fungible Tokens (NFTs) are becoming the new digital investment craze. Since fungible items are anything that can substitute another item of the same category (think of it like exchanging your ten $10 bills for one $100 bill), NFTs are digital tokens that identify the asset as the original, unique, rare one and being non-fungible, they cannot be exchanged with each other. Just like how you couldn’t exchange your house with your neighbor’s house even if they are almost identical.
Essentially, the NFT says into the digital world: “Hey! This is the original one!” It cannot be exchanged or divided, unlike money or bitcoin. This is because the token lives in a blockchain, which is basically a digital record of transactions.
A quick example would be:
✅ You want to trade your one-of-a-kind engraved keyboard by Jeff Kaplan for the Mona Lisa, or cold hard cash.
❎ A friend offers you their one-of-a-kind Overwatch headphones signed by Jeremy Craig for half of the keyboard. You wouldn’t chop it up, right?
Now when someone gives you money – it’s recorded on the list (aka the blockchain), and if you spend that money on an item – a record is then added on the list for that transaction and everything else that happens after that.
An example of this would work like:
- Craig buys an NFT from the creator David for $100.00, Craig is the owner
- Craig sells that NFT to Sarah for $110.00, Sarah is now the owner
- Sarah sells that NFT to Joan for $200.00, Joan is now the owner
- Joan sells that NFT to Daniel for $220.00, Daniel is now the owner
Each record is called a block and all are chained together to make a very big list, thus, the blockchain. All these records are verified by numerous systems so everything is surely authenticated, you cannot just make something up and disrupt something’s authenticity. That is how cryptocurrencies like bitcoin, ether, and litecoin works- the blockchain creates ownership for money and tracks everything that happens to it in the digital world- purchases, exchanges, etc.
This is how NFT works as well but instead of tracking the ownership for money, it tracks the ownership of a digital asset, which could be anything under the sun. NFTs allow an asset to be bought and sold while keeping and checking its authenticity- keeping one safe from counterfeit and fake ones, it can then be collected just like fine art.
Thus, only one can own the original digital asset. Just like in paintings in the real world, only one can own the original Mona Lisa by Leonardo da Vinci, and that makes it special and of high value, right?
Where Can You Find NFTs?
NFTs can be found on different platforms that allow one to upload an asset, turn it into something with a token on it that someone else would buy. As of now, assets with NFTs are digital art, game clips, virtual land, trading cards, and social media memorabilia, etc. Generally, anything that can be collected can contain NFTs.
Here are sites that sell NFTs:
- Nifty Gateway
- Axie Marketplace
- NFT ShowRoom
- Terra Virtua
How Can You Create NFTs?
To create NFTs, first, you need to buy cryptocurrencies, usually Ethereum (ETH). Then get a digital wallet and connect the digital wallet to the platform you’re buying on. You can then set up your account on the website and add what you’re selling.
Artists are usually offered “royalty” over the original art they put on sale, this means that they get a commission every time their item sells since the NFTs identify that he/she is the original owner of the item. Sounds good, right? It sets you up for months or even years of income, especially if your item becomes popular- just like the 10-second video artwork that sold for $6.6 million last February.
However, it does not sound as easy as that, one has to pay a processing fee called “gas fee”. It is the fee for the process of putting the token into your asset and its cost depends on the supply and demand now. There are also tips on how you can be charged with a lesser gas fee since it depends on the market, sometimes the gas fee becomes lesser in the early mornings or weekends according to experts.
Which Companies Have Started Utilizing NFTs?
The start of the rush in NFTs is linked to the launch of the NBA’s Top Shot website last October where users can buy and trade NFTs in the form of moments in the NBA games- video clips of highlights. The most popular of which is Lebron James’ slamdunk clip that was bought by a user for $208,000. It is also said that the website already acquired $250,000,000 worth in transactions.
NFTs aren’t still evident in the major arcade and battle royale games but there are already exclusive crypto collectible games that gained popularity. Ever heard of the digital kitty that was sold for $170,000? Yeah, you read it right! 600 ETH (approximately $170,000) was spent by a user for the CryptoKitty ‘Dragon’ last December. CryptoKitties collectibles are some of the very first NFTs, every digital kitty is unique and the goal of the game is to collect as many different digital kitties.
The Ethereum-based fantasy football game Sorare is the most recent example of gaming NFTs. In the game, the cards of football players are collected by the user and he forms a team to challenge other users. The Sorare digital card of Kylian Mbappe, the forward of 2020 Champions League finalist Paris Saint-Germain FC, was sold for $65,000 in the recent auction.
Here are other quick examples of record-breaking NFT earnings from companies:
- The one-of-a-kind “1-1-1” race car from F1 Delta Time sold for 415.9 ETH last May 2019.
- In January 2021, Alien #2089 was sold for 605 ETH which was approximately $750,000 at that time. This NFT is part of the CryptoPunk collection, the first NFTs ever created.
- Just a month after Alien #2809 was sold, CryptoPunk Alien #7804 sold for 4,200 ETH which is approximately $7.5 million. It’s now the most expensive punk sold.
- In the NFT-based game Axie Infinity, an Axie named Angel was sold for 300 ETH last November.
The Next Applicable Uses of NFT in Gaming
It’s just a matter of time before NFTs take over the world of gaming. NFTs will be the greatest change to game monetization. They will allow gamers to own very rare and unique in-game assets- one-of-a-kind skins in Fortnite, weapons, armor sets, limited edition wheels or car packs in racing games, even virtual lands- anything with collectibles.
NFTs can also pave a way for effective security tokens- eliminating the risk of buying fake game collectibles. As collectibles become in demand, extremely rare NFTs will also increase in value and the owners may also make a considerable income by selling such. Apart from transforming in-game ownership, NFTs can also help users create a single digital identity for all games.
This means that one can move truly unique skins, experience levels, and other in-game items across games, creating a more unified gaming experience.
The possibilities that NFTs could offer in the world of gaming are endless- from collectibles, game ownership, to income generation. Whether or not NFTs are here for the long run, it has been evident that they have caused a rave and they have the potential to make their owners a lot of money.
NFTs have made a lot of changes in the digital world and it is yet to take over the world of gaming, so you still have a choice to make – will you ride this one out or ride in on it with full-gear?