NFTs refer to non-fungible tokens which mean they are unique and exist deployed as individual chains of ownership of anything that has been tokenized and can be traded. For example, this art piece of the Nyan cat is non-interchanged with each other and is non-divisible.
Why so much hype on NFTs
NFTs as of yet have helped artists and creators create financial value for their works, NFTs add the important key element of scarcity to assets and collectibles. This is the reason why we have seen much growth in NFTs as more people started to engage in NFTs mostly for the craving to own authentic original pieces of certain assets. NFTs first made huge noise during 2017 when Dapper Labs’ game CryptoKitties was sold for $170,000. Subsequently, more and more NFTs use cases started to appear.
What are some of the factors that determine the value of NFTs?
· How rare is it?
· Is it an original?
· Is it one-of-a-kind?
· How many copies are there?
This is where the blockchain chips in, by tokenizing all these details of an item on the blockchain, it provides authenticity, trust, no counterfeits, and becomes harder to temper with as you know it blockchain is the most secure network right now.
My learning about NFTs on Bitcoin
Since the introduction of NFTs in the crypto space, Bitcoin has not been so much associated with NFTs. This is because Bitcoin is currently being used as a store of value that does not have anything to do with smart contracts and has scalability challenges that make it incapable of NFTs. Nonetheless, most people would not resist if NFTs start to exist on Bitcoin because it is the strongest secure blockchain around and could come with fewer costs and fix scalability issues in the NFTs space. So, I bet anyone would want the possibility of having their NFTs on the most secure blockchains.
How Stacks unlocks the possibilities of NFTs on Bitcoin
The Stacks blockchain addresses the limitations of scalability and smart contracts on Bitcoin through a unique consensus algorithm that runs between two blockchains. The Bitcoin blockchain functions as the settlement layer and source of truth while smart contracts are executed on the Stacks chain. Stacks enable scalable smart contracts directly on Bitcoin without modifying Bitcoin hence Stacks inherits all Bitcoin’s power in this process. Cool right? As a result, having Stacks has made it possible to have NFTs on Bitcoin as one can manage, creating NFTs using Stacks which is anchored on Bitcoin.
Stacks already has a wallet that facilitates NFTs and they are also working on a marketplace for NFTs called Openriff. This will be huge in the NFTs space as Stacks is highly scalable due to its PoX mechanism which allows thousands of Stacks transactions to result in a single hash on Bitcoin. Stacks introduces the concept of micro blocks that give initial confirmation in seconds. Also, Stacks implements PoX mining that anchors to Bitcoin security hence security issues are not a problem. The NFTs space right now faces challenges with scalability and high transaction fees as we saw during 2017 on the sale of NFT CryptoKitties which almost crushed the Ethereum Blockchain. Stacks comes with the solutions to issues regarding high fees, scalability, and security as Stacks is so scalable and so secure which makes it the best solution to bring more possibilities of NFTs on Bitcoin, it also costs less than $2 to mint an NFT on the Boom wallet. Note that creating an NFT on the Boom wallet does not need you to have any special skills or tools, the interface is so user-friendly and simple which makes minting and creation of NFTs so simple because of the hash power of Bitcoin.
Below is an example of an NFT of Wen laser (Muneeb) art being stored in the Boom Wallet.
What kind of use cases can get unlocked with NFTs on Bitcoin.
Gaming
Gaming is showing to be the most sector adopting and benefiting from NFTs because its barrier entry is low as everything in gaming is already digital. For example, with decentraland users own certain tokenized parts of a game. With NFTs on Bitcoin, we might see more uses such as developers and users earn money for their work and time they invest in gaming as developers can be able to create something in a game and give it a fixed supply, then give users the ability to create user custom items using simple skills. These items can be sold on a secondary market and end up making both the developer and user money, this will also help in sustaining games for a long period meaning the developers will not have to constantly make new items every time to keep users entertained. There is also huge growth in second lifestyle gaming as some people do gaming all day every day hanging out with their friends. Growth of this sector can grow exponentially with NFTs on Bitcoin, as possibilities of moving your assets or collectibles from one game to another be archived in the gaming world.
NFT Credentials
Institutions such as universities and colleges can adopt NFTs to manage credentials. Imagine having your credentials being issued as an NFT signed by institutions with a cryptographic key. This can help with issues that keep rising around the need for secure digital storage of data and security. Non-Fungible Tokens (NFT) can contain unique information about a specific asset. Any kind of data like medical history, property details, a personal profile, education qualifications, and financial information can also be included.
Loans
The DeFi sector can also benefit from using NFTs and cater for the ongoing problem that the Defi faces, of collateral on loans. Currently, in DeFi, the vast majority of DeFi lending protocols are collateralized. One of the most interesting ideas is to use NFTs as collateral. This means that now you’d be able to supply an NFT as collateral and borrow money against it.
Entertainment and Media
As we know piracy, copyright infringement, and plagiarism are critical challenges that have been affecting the media and entertainment industry for so long in terms of sales and growth. NFT can use blockchain technology to prevent such fraud, making replicating ideas, and creative work impossible.
Non-Fungible Tokens (NFT) on Bitcoin can also play an active role in event management, digital asset management, licensing, taking care of certificates, maintenance of attractive collectibles, and the sports industry to store the records of teams and athletes.
In conclusion, with the hype surrounding NFTs right now, NFTs remain a to be a mysterious puzzle that can be either good or bad. However, we can see more and more infrastructure being build for NFTs and I see great potentials in NFTs that there will certainly become an important aspect of our lives.
REFERENCES
J.Mith. Introducing Boom: A Wallet for STX & NFTs on Stacks 2.0. Stacks. (2021). Accessed on: https://blog.stacks.co/boom-wallet
https://techcrunch.com/2021/02/27/if-you-havent-followed-nfts-heres-why-you-should-start/
https://linda.mirror.xyz/df649d61efb92c910464a4e74ae213c4cab150b9cbcc4b7fb6090fc77881a95d
https://hackernoon.com/will-non-fungible-tokens-nft-become-a-trendsetter-in-the-industry-9v30345e
https://www.youtube.com/watch?v=otcztejzpA8&t=24s
