NFTs and the take over
What are NFTs and why are they important?
NFTs is an abbreviation for Non-Fungible Tokens. Fungibility is the state of being interchangeable. For example, money has fungibility because there is no difference between one dollar and another dollar. Bitcoin also has fungibility because it is interchangeable and each individual coin is generally the same (1 btc from Mike is the same as 1 btc from James).
Non-Fungible Tokens are different to bitcoin and most other cryptocurrencies; if you traded one non-fungible token for another, you would have something completely different. This is because each NFT is unique with its own unique cryptocurrency hash.
Use cases for NFTs
The distinct construction and uniqueness of each NFT makes them ideal for the following potential digital applications:
- art
- intellectual property
- securitizes
- charity
- index funds
- memorabilia
- ticketing
- tokenization of in-game and real world assets
- financial contracts
- loyalty programs
- identity management
- and many more…
Because they are based on blockchains, NFTs can also be used to remove intermediaries and connect artists with audiences or for identity management. NFTs can remove intermediaries, simplify transactions, and create new markets.
Why are NFTs important?
NFTs can also democratize investing by fractionalizing physical assets like real estate. It is much easier to divide a digital real estate asset among multiple owners than a physical one. That tokenization ethic need not be constrained to real estate; it can be extended to other assets, such as artwork. Thus, a painting need not always a single owner. Its digital equivalent can have multiple owners, each responsible for a fraction of the painting. Such arrangements could increase its worth and revenues.
The most exciting possibility for NFTs lies in the creation of new markets and forms of investment. Consider a piece of real estate parceled out into multiple divisions, each of which contains different characteristics and property types. One of the divisions might be next to a beach while another is an entertainment complex and, yet another, is a residential district. Depending on its characteristics, each piece of land is unique, priced differently, and represented with an NFT. Real estate trading, a complex and bureaucratic affair, can be simplified by incorporating relevant metadata into each unique NFT.
