Blockchains brought viable and facilitated processes that were hitherto complex or time-consuming, such as document authentication and registration and process chain control; the NFT or “Non-fungible token” is being placed by the cryptocurrency community as something to be used in everyday life in the not-so-distant future. This article aims to clearly explain the potential of this technology and the impact it may have.
I will start by presenting some basic concepts in a summarized way:
Blockchain
Blockchain is a distributed registration technology that aims at decentralization as a security measure. An important feature of a blockchain is not to allow tokens, currencies or units to be duplicated. We say that the network is decentralized because there is no central server that takes care of the system, all transactions carry the previous transaction itself, eliminating the need for an entity responsible for maintaining the transactions since this is done collectively by users. In general, all the information circulating on the network is in the public domain, giving you access to the transactions carried out and the addresses that sent / received them, at the same time this network becomes anonymous because it is not necessary to enter personal information to enter the network.
What is a token and what is it for
Imagine you travel by bus with Zulonga's Bus and earn points for each trip, these points can be exchanged for a new ticket or discounts for other destinations, but Zulonga's can set a time limit for using these points or simply cancel them ; that is, the accumulated points can be yours, but you don't have full control of them. Through the use of blockchains, these points accumulated with the purchase of a ticket gain independence giving you full control of the points regardless of the issuing company's existence. Bringing to the universe of cryptocurrencies, tokens can represent a good, value, service or a real asset, such as a gold amount, can be freely traded among its users, without the possibility of intervention by the issuer.
What is fungibility
Fungibility is the attribute belonging to goods that can be replaced by others of the same species, quality and quantity. Money is a great example of a fungible asset, given that when you lend someone an amount, you are not demanding back those same notes, but a value, which can be paid with any other notes. If I give you a new $ 100 bill and I get a $ 100 bill from you that is old and has been used a lot, there was no loss of value in the exchange since the physical state of the note does not change the value it has.
Non-fungible token
A non-fungible token is the representation of a unique digtal asset. This means that it cannot be exchanged for another NFT that is absolutely the same. The use of blockchain for tokens of this format brings the characteristics of this technology to NFT: the unique and personalized digital assets can be managed and transferred transparently, with immutable records and in a totally decentralized process. NFTs can be used, for example, for in-game items. Thus, it is possible to tokenize the different visual options of the characters, and can also resell them to other players in a simple way and without risk of blow.
Think of a virtual auction of digital artwork that can be transferred between any markets, museums or buyers around the world. Now imagine the painting “Monalisa”, by Leonardo Da Vinci. It is a work that anyone can search for the image, download it to the computer, print it and actually use it as a painting. Only, even with millions of copies, the original work is unique. NFT assets preach this same concept, which can be a token associated with a physical object or a completely digital work of art. None of them is the same as the others, and each one receives a digital seal of authenticity to prove that no one else will have access to that piece. Therefore, it is not possible to assign an NFT asset to two identical works because no two are the same. NFTs have been used for the purpose of creating scarcity of these files in the same way as physical pieces, the purchase and sale of tokens is extremely fast, and can be done from anywhere in the world, through any compatible platform. This is yet another important feature inherited by the blockchain.
Trading of NFTs is facilitated in decentralized markets, which is yet another major advantage of using blockchain. In this case, decentralization goes further than just selling: anyone who creates tokens that follow the standards of their category, will be able to list their own NFTs for sale in a marketplace. There is no way to defraud the data of a digital art, nor to change the power of a
weapon of an NFT game, not even creating a copy of a collectible card with the same timestamp as a previous item. Therefore, it is possible to guarantee the authenticity of the tokens, just as it is relatively simple to prove the scarcity they have.
There are already some real cases of use of NFT in several areas, for creators and developers it is possible to use the SandBox website to sell their personalized game items as in the example below:
NFT can also be used to control the copyrights of texts, music and scripts. Thus, the author makes a registration in blockchain and from there it is enough to manage the token that represents the property to negotiate the rights of his work without depending on intermediaries.
The rock band “King of Leons” has already commented positively on the use of NFTs. One of the ideas is the creation of "Golden tickets", with exclusive experiences for fans of the band, which may include presence in the front row at the shows.
The website valuables created an environment where you can sell your tweets, that's right, sell your tweets. For the creator of a tweet, just decide if you want to issue it on blockchain to create a unique authenticated version. According to Valuables, buying an item from the platform means obtaining a unique certificate, since it has been “signed” and verified by the creator. This user for example offered $ 4.20 for Elon Musk's tweet shortly before he manipulated the bitcoin crash (joke - or not)
We are at the beginning of this process of discovering uses for NFT, but it is already possible to affirm that since they are programmable assets, the use cases are almost unlimited, depending only on the creativity and inventiveness of the users. Some believe that this market will not develop because blockchain programming is still complex or because the quality of the services available is not high. And it is true that there is still a long way to go. But it is necessary to remember that the internet, in the beginning, was slow, difficult to use and with few resources, but now it has become an indispensable element for our life in society, it is in everything we consume and wherever we are.
Thank you for reading :D
