There are hype waves of several trends in crypto. There was a hype about DEXes (decentralized exchanges), followed by DeFi hype. During the summertime, we had a Yield farming hype bubble, which already burst. But there is another hype wave coming. The NFTs wave. But, are NFTs such a big thing as DeFi is? Or it is just a new-fashioned thing in crypto?! There is one certain thing. Even if there will be a bubble of NFTs here and there, they are built on the blockchain so they will stay with us!
NFTs are not just CryptoKitties
Non-fungible tokens are unique tokens by their characteristics so they are interchangeable. You can see them as the digitalized version of the real-world asset. For all the existing NFTs, let's describe it on a perfect and most known example. CryptoKitties!
The most known NFTs are built on Ethereum in ERC standard (an acronym for Ethereum Request for Comments) as ERC-721 tokens. Those tokens can’t be divided like the fungible ones such as ERC-20 standard tokens. The indivisibility is a logical approach, due to the reason that NFTs represents ownership of some physical or digital assets, such as gaming items or kitties.
Above mentioned CryptoKitties were one of the most discussed examples of NFTs. The idea of this popular game was to collect those non-fungible tokens/kitties and breed them to create new species. But its popularity made Ethereum almost unusable those days and gas fees very high. Because their users were so crazy about CryptoKitties and the scalability of Ethereum wasn’t limitless. So other transactions on Ethereum were stuck because people wanted to collect and trade their digital cats.
But from that time a few things changed. There are different non-fungible tokens, which tend to be popular besides games like CryptoKitties. Collectables, digital art, digitalized invoices, certificates, in-game items, identify tokens, and even Real Estates.
And those digitalized real-world items can be now sent over the world as NFTs.
Algorand allows creating NFTs by ASA
Algorand standard asset (ASA) is a functionality, that allows Algorand to issue new assets in some standardized way straight in Layer-1 of Algorand blockchain. Those can be either fungible tokens like utility tokens or stablecoins and also non-fungible tokens such as collectibles or game tokens.
Those tokens can be as well in restricted versions, which is a step towards fulfilling the possible regulations. Restricted version means that the fungible or non-fungible tokens can be sent only to the allowed accounts, not all the accounts in the Algorand network. We might see those restrictions from there to there in the not-so-distant future, so that’s great that Algorand is already prepared for these solutions.
Cooperation on the run
Algorand joined The Blockchain Game Alliance (BGA) in June this year. BGA is one of the main blockchain gaming associations with a number of amazing partnerships including Enjin, Ubisoft, MetaMask, AMD, and so on. The membership of Algorand will bring the needed adoption of online blockchain gaming.
NFTs solution
NFTs built on Layer-1 of Algorand blockchain profit from the most significant qualities of Algorand, which are great security performance, decent level of scalability while remaining excellent level of decentralization.
Very useful will be also the simple creation of NFTs on Algorand as well as the robust set of developer tools and resources.
Algorand will enrich the gaming industry by its benefits which are low transaction costs and fast block finality associated with fast and quick-finalized transactions. You simply don’t want to spend a few bucks on a transaction and wait minutes for confirmation, when playing an online game.
NFTs are the real usecase of cryptocurrencies which will hit the crypto industry by a storm in the close future. Algorand will be there as well!
Conclusion
Algorand with its Layer-1 functionality called Algorand Standard Assets brings significant benefits to the gaming space. The network speed, high throughput, transaction finality, and transaction costs are at such a level, that perfectly serves the gaming industry. In ASA there can be built fungible assets, as well as non-fungible throughput, restricted fungible, and restricted non-fungible assets.
The creation of NFTs is at maximum speed at minimal costs, which is contrary to today’s high Ethereum transactions (gas) fees and limited Ethereum throughput.
NFTs on the blockchain means, that there is present proof of ownership, which is necessary in the gaming world. Players now own their selected/purchased characters and items in the game. This brings real value to the gaming space because NFTs can be then monetized by the players. The virtual living space will have higher and higher demands and importance and also impact real physical life. The 21st century will belong to the online-gaming and digital world without a doubt!
With such improvements like ASA (Algorand Standard Assets) build right in the first layer of Algorand blockchain, we can anticipate Algorand to become a strong player on the field of the smart-contracts platform, that will suit perfectly for the online gaming space.
About Algorand
Algorand is a decentralized blockchain platform running on its type of Byzantine agreement called the Pure Proof-of-Stake (PPoS). The Pure Proof-of-Stake algorithm has low computational complexity and due to that, it has very cheap and fast transactions. The block finality is immediately after the approval, which happen usually in 4 seconds.
There are two main roles in the consensus process. The validator, which can be anyone with a minimum of 1 ALGO and is randomly and secretly selected by using a cryptographical lottery called VRF (Verifiable random function). After proposing the block, the committee of 1000 nodes are selected to vote for if the block is a) valid or b) invalid. When the block is found valid by the majority of the committee, then it's written to the blockchain with instant finality. When the block is found invalid, another validator and committee are selected by VRF.
Because almost anyone can participate in the consensus and propose the block, there is reached a maximum level of decentralization. And without any compromises on the scalability nor the security.
Algorand Foundation is behind Algorand blockchain and is led by Silvio Micali, inventor of Algorand and co-author of Zero-Knowledge Proof, as well co-author of Verifiable Random Functions. Silvio Micali owes the Turing Award from 2012 (kind of the equivalent of the Nobel Prize in IT) for laying the foundations of modern cryptography.
