NFTs (Non-Fungible Tokens) have taken the internet world by storm over the past year or two. When we think of NFTs today, we mostly think of the digital cartoons that have saturated our social media screens apes, punks and everything in-between. There have also been massive NFT art sales, epitomized by this eras answer to Damien Hirst: Beeple, who famously sold an NFT art work for $69 million in March 2021.
However, there is a sense that NFT technology has only scratched the surface of its true potential. The fact that some NFTs are apparently worth millions of dollars is all part of the financial bubble around cryptocurrencies that were currently living through. Speculation and status are driving the NFT market today. The bubble will likely burst at some point, though, so the question is: what else can NFTs do? Do they have legitimate use cases beyond digital collectibles and art investment?
To answer these questions, we first need to understand how NFTs are built.
NFTs are largely based on a single protocol: ERC-721. Its an Ethereum standard that was released in early 2018, based on code written by Dieter Shirley, the founder of a digital collectibles product called CryptoKitties. From about December 2017 on, CryptoKitties set the template for the NFT craze of today, with the non-fungible felines selling for up to hundreds of thousands of dollars.
The non-fungible part of NFTs simply means that each NFT is unique unlike, say, a cryptocurrency like ETH, which is fungible (one ETH is exactly the same as another ETH). This uniqueness is only specified on a blockchain though, it is not necessarily legally binding. ERC-721 is how NFT ownership is claimed on the Ethereum blockchain, via a smart contract.
ERC-721 is not the only Ethereum standard that developers can use, but it is the one most suitable to build NFTs with. Other standards include ERC-20 (to keep track of fungible tokens), ERC-777 (another standard for fungible tokens, but this one enables more complex interactions), and ERC-1155 (a multitoken standard that is fungibility-agnostic).
After ERC-721, ERC-1155 is the next most suitable for NFTs but it tends to be used more for gaming applications. For example, in a game you might spend money to buy a mix of fungible and non-fungible digital assets (a magic sword, a piece of clothing, etc).
What ERC-721 does is implement an API for tokens within smart contracts, which specifies ownership for each unique NFT and allows it to be bought and sold. ERC-721 is a fairly basic protocol and has limited functionality. As the NFT marketplace OpenSea described it, it [ERC-721] provides a mapping of unique identifiers (each of which represents a single asset) to addresses, which represent the owner of that identifier, as well as a permissioned way to transfer these assets, using the transferFrom method.
The limited functionality of ERC-721 has prompted some crypto critics to note that the standard risks being marginalized by platform players, like OpenSea. Moxie Marlinspike, the founder of encrypted instant messaging service Signal, recently experimented with NFT development and pointed out that OpenSea has already begun to add proprietary features that extend ERC-721. Protocols cant move as quickly as platforms, he commented on Twitter, so opensea iterates as a platform to enable all the things missing from erc721 (royalties, bids, auctions, social features, etc).
This, of course, is the same pattern that we saw in Web 2.0 where open protocols like RSS were eventually pushed aside by proprietary technologies (Facebooks news feed, Twitters feed, etc).
Regardless of whether OpenSea and other centralized NFT platforms eventually take control of the NFT market (if they havent already), NFTs seem poised for expansion. Four years ago, OpenSea described itself as a peer-to-peer marketplace for rare digital items. CryptoKitties and CryptoPunks (the first popular set of NFT profile images for social media) were among the leading NFT collections at that time.
Incidentally, the original CryptoPunks were created before ERC-721 existed, so they were developed by modifying the ERC-20 code just enough to produce non-fungible items. Theyve since been wrapped into ERC-721 tokens, allowing them to be traded in marketplaces like OpenSea.
Fast forward to February 2022, and OpenSea describes itself as the NFT marketplace with everything for everyone. In an introductory video, OpenSea defines NFTs as any digital unique thing that can be bought, sold, or traded online. Examples include art, virtual experiences, your favorite bands demo, virtual property.
Despite expanding the definition of NFTs over time to include everything, OpenSeas top five collections as of today are all collectibles.
So when will we see a breakthrough non-collectible NFT? One person more qualified than most to answer that question is William Entriken, the project lead when ERC-721 was created and now an independent consultant for blockchain projects. In a recent interview, Entriken said that the next wave of NFT growth will be driven by influencers of non-technology things makeup, fashion, art, [] musicians. He thinks these new NFTs wont get caught up in a speculative frenzy.
Right now, everythings like talking about dollars and Coinbase and money and trading, he said. Trading doesnt really apply so much to some of these new NFTs that were going to see, because theres not really monetary value.
He didnt mention specific examples, but one I can think of is NFTs from musicians. Buying an NFT from a musician youre a fan of might confer certain benefits to you that only you and other super-fans are interested in advance tickets to their concerts, a behind-the-scenes blog, etc. As Substack author Dan Fowler nicely put it, in this scenario an NFT is predominantly a vehicle in which to sell rights.
This is already starting to happen with early adopter musicians. Steve Aoki, a popular DJ, is launching an Ethereum NFT membership club called A0K1VERSE. According to crypto news site Decrypt, holders of Aokis NFT Passport will gain access to various benefits, including live and metaverse concerts and events.
Its a fascinating time for NFTs. Firstly, because there is a threat of centralization by NFT platforms like OpenSea (I put that word in air quotes only because Web3 proponents claim to be anti-centralization). Secondly, and in my view more importantly, the true market for NFTs would seem to be more of a rights-based use case rather than the speculation-based one were experiencing right now. Creators selling an NFT to confer rights makes a lot more economic sense to me than buying a digital cartoon or artwork and hoping you can on-sell it to another sucker for more money.
NFTs need substance by offering real value to really take hold in our online culture. The speculation were seeing now in NFTs is hopefully a temporary sideshow.
Follow this link:
Can NFT Technology Expand Beyond Digital Apes and Punks? The New Stack - thenewstack.io
- Report: Apple acquires French startup behind AI and computer vision technology - 9to5Mac - April 22nd, 2024 [April 22nd, 2024]
- CACI Awarded $1.3 Billion Task Order to Provide Communications and Information Technology Expertise to U.S. ... - Business Wire - April 22nd, 2024 [April 22nd, 2024]
- What is semi-automated offside technology and how does it work? - The Athletic - April 22nd, 2024 [April 22nd, 2024]
- Can technology save us from an ecological apocalypse? - interview - CyberNews.com - April 22nd, 2024 [April 22nd, 2024]
- Does LaLiga have goalline technology? What about other major leagues? - AS USA - April 22nd, 2024 [April 22nd, 2024]
- Driver Assistance Technologies: NHTSA Should Take Action to Enhance Consumer Understanding of Capabilities and ... - Government Accountability Office - March 31st, 2024 [March 31st, 2024]
- OpenAI reveals Voice Engine, but won't yet publicly release the risky AI voice-cloning technology - The Associated Press - March 31st, 2024 [March 31st, 2024]
- Nexalin Technology Full Year 2023 Earnings: US$0.63 loss per share (vs US$0.30 loss in FY 2022) - Yahoo Finance - March 31st, 2024 [March 31st, 2024]
- 'Battle for your brain': What the rise of brain-computer interface technology means for you - WBUR News - March 31st, 2024 [March 31st, 2024]
- Firsthand Technology Value Fund (NASDAQ:SVVC) Research Coverage Started at StockNews.com - Defense World - March 31st, 2024 [March 31st, 2024]
- Suzhou Anjie Technology Full Year 2023 Earnings: Misses Expectations - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Inside the shadowy global battle to tame the world's most dangerous technology - POLITICO Europe - March 31st, 2024 [March 31st, 2024]
- The Technological Pivot Of History: Power In The Age Of Exponential Innovation Analysis - Eurasia Review - March 31st, 2024 [March 31st, 2024]
- 'Women Behind the Wheel' explores the intersection of gender, culture and cars - NPR - March 31st, 2024 [March 31st, 2024]
- Shanghai Weihong Electronic Technology Full Year 2023 Earnings: Revenues Beat Expectations, EPS Lags - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- A Look At The Fair Value Of Powertech Technology Inc. (TWSE:6239) - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Weaver Network Technology Full Year 2023 Earnings: EPS Beats Expectations, Revenues Lag - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- New York City will introduce controversial AI gun detection technology amid subway crime crisis - SiliconANGLE News - March 31st, 2024 [March 31st, 2024]
- Earnings Not Telling The Story For Beijing CTJ Information Technology Co., Ltd. (SZSE:301153) - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Vontron Technology Full Year 2023 Earnings: EPS: CN0.35 (vs CN0.34 in FY 2022) - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Huawei Revenue Rises as Technology Giant Commits to Growth - Technology Magazine - March 31st, 2024 [March 31st, 2024]
- Shenzhen Fortune Trend technology Full Year 2023 Earnings: Beats Expectations - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- USPACE Technology Group Limited (HKG:1725) May Have Run Too Fast Too Soon With Recent 28% Price Plummet - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- NYC to test gun-detecting technology in subway system - SILive.com - March 31st, 2024 [March 31st, 2024]
- Cancer Treatment: 3D Printing and Scanning Technology - Surviving Mesothelioma - March 31st, 2024 [March 31st, 2024]
- Does Contel Technology (HKG:1912) Have A Healthy Balance Sheet? - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Oppo Find X7 series now supports 5G-Advanced technology with up to 10 Gbps downlink speed - The Indian Express - March 31st, 2024 [March 31st, 2024]
- DCPS receives nearly $20k in grants for technology program advancements - The Owensboro Times - March 31st, 2024 [March 31st, 2024]
- Hangzhou Electronic Soul Network Technology Full Year 2023 Earnings: Misses Expectations - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- International Business Digital Technology Full Year 2023 Earnings: CN0.07 loss per share (vs CN0.019 loss in FY ... - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Analysts Are More Bearish On Guangzhou Tinci Materials Technology Co., Ltd. (SZSE:002709) Than They Used To Be - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Daheng New Epoch Technology Full Year 2023 Earnings: EPS: CN0.11 (vs CN0.16 in FY 2022) - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Tesla offers U.S. customers a month's trial of its driver-assist technology - Reuters - March 31st, 2024 [March 31st, 2024]
- Slam Dunk Technology: How AI Is Revolutionizing The Game Of Basketball - Forbes - March 31st, 2024 [March 31st, 2024]
- China Environmental Technology and Bioenergy Holdings Full Year 2023 Earnings: CN0.03 loss per share (vs CN ... - Simply Wall St - March 31st, 2024 [March 31st, 2024]
- Vuma and Huawei team up to launch industry first 50G PON ... - Light Reading - July 15th, 2023 [July 15th, 2023]
- See What Kim Kardashian and Kylie Jenner Look Like With Aging ... - E! NEWS - July 15th, 2023 [July 15th, 2023]
- AFRL conducts swarm technology demonstration > ONE AFRL ... - afrl.af.mil - May 20th, 2023 [May 20th, 2023]
- Shell to use new AI technology in deep sea oil exploration - Reuters - May 20th, 2023 [May 20th, 2023]
- Former Google CEO says AI at 'center' of technology competition between US and China - Fox News - May 20th, 2023 [May 20th, 2023]
- Agriculture and technology combine to drive the industrys growth - Times of India - May 20th, 2023 [May 20th, 2023]
- Technology and the Skills Shortage - Financial Times - May 20th, 2023 [May 20th, 2023]
- New License Agreement Announced for Next-Generation Base ... - BioPharm International - May 20th, 2023 [May 20th, 2023]
- Orion Governance Licenses Technology from GE to Deliver Next Generation Data Governance Solution - Yahoo Finance - May 20th, 2023 [May 20th, 2023]
- World needs to be 'vigilant' as AI technology improves and ... - KTVZ - May 20th, 2023 [May 20th, 2023]
- After Losing Son, Ridgefield Mother Pushes For Technology to Prevent Hot Car Deaths - NBC Connecticut - May 20th, 2023 [May 20th, 2023]
- After last year's fan violence in Queretaro, has Fan ID technology ensured safety for Liga MX fans? - ESPN - ESPN - May 20th, 2023 [May 20th, 2023]
- Bleach: The Soul Reapers' Gigai Technology, Explained - CBR - Comic Book Resources - May 20th, 2023 [May 20th, 2023]
- Cogito Tech - Catalyzing Transformation in Global Healthcare ... - Business Standard - May 20th, 2023 [May 20th, 2023]
- Barriers to Use of Technology in Diabetes Management - Patient Care Online - May 20th, 2023 [May 20th, 2023]
- Blue technology startups presented at the inaugural Gulf Blue ... - The University of Southern Mississippi - May 20th, 2023 [May 20th, 2023]
- CureVac files expanded patent lawsuit against Pfizer/BioNTech over ... - Reuters - May 20th, 2023 [May 20th, 2023]
- Harrison Ford defends use of de-ageing technology in new Indiana Jones film: I know that that is my face - Yahoo News - May 20th, 2023 [May 20th, 2023]
- Sanwo-Olu: Nigeria needs technology to compete with likes of China - Guardian Nigeria - May 20th, 2023 [May 20th, 2023]
- Prejudice in technology, and the necessity of time: Books in brief - Nature.com - May 20th, 2023 [May 20th, 2023]
- New technology uses ordinary sunlight to disinfect drinking water ... - Stanford University News - May 20th, 2023 [May 20th, 2023]
- Incredible AI technology shows what UK cities will look like in 2050 - LADbible - May 20th, 2023 [May 20th, 2023]
- Your Firm and Your Tools - Top Technology Initiatives - CPAPracticeAdvisor.com - May 20th, 2023 [May 20th, 2023]
- Tom Hanks: I could appear in movies after death with AI technology - BBC - May 20th, 2023 [May 20th, 2023]
- Transform your career with Chief Technology Officer online course - Economic Times - May 20th, 2023 [May 20th, 2023]
- e-Learning Jamaica Technology in Education Conference Slated for ... - Government of Jamaica, Jamaica Information Service - May 20th, 2023 [May 20th, 2023]
- Andrew Maynard | What's a Luddite? From Industrial Revolution to ... - TribDem.com - May 20th, 2023 [May 20th, 2023]
- At Yale, Kaloyan Kolev used technology to create and to make ... - Yale News - May 20th, 2023 [May 20th, 2023]
- This technology could alter the entire planet. These groups want every nation to have a say. - MIT Technology Review - April 17th, 2023 [April 17th, 2023]
- The secret lives of snakes and how Georgia College uses technology to study them - 13WMAZ.com - April 8th, 2023 [April 8th, 2023]
- Technology Innovation Institute to host 2nd 'Additive Manufacturing the Future' seminar in Abu Dhabi - Devdiscourse - April 8th, 2023 [April 8th, 2023]
- Can Array Technologies Inc (ARRY) Stock Rise to the Top of Technology Sector Thursday? - InvestorsObserver - March 31st, 2023 [March 31st, 2023]
- Here's Why We Think Pfeiffer Vacuum Technology (ETR:PFV) Might Deserve Your Attention Today - Simply Wall St - February 18th, 2023 [February 18th, 2023]
- Will WM Technology Inc (MAPS) Stay at the Top of the Technology Sector? - InvestorsObserver - February 18th, 2023 [February 18th, 2023]
- Ways in which technology can enhance the abilities of law enforcement agents to assist the community - Times of India - February 7th, 2023 [February 7th, 2023]
- Meet The Titans: Google And OpenView (Microsoft) Faceoff On Chat Technology Innovation - Forbes - February 5th, 2023 [February 5th, 2023]
- MACOM Technology Solutions Holdings, Inc.'s (NASDAQ:MTSI) Stock Has Been Sliding But Fundamentals Look Strong: Is The Market Wrong? - Simply Wall St - February 5th, 2023 [February 5th, 2023]
- WVU Dept. of Ophthalmology acquires state-of-the-art technology for simulation lab - WV News - February 5th, 2023 [February 5th, 2023]
- Executive Vice President of Technology & Operations Alok Sethi Just Sold A Bunch Of Shares In Franklin Resources, Inc. (NYSE:BEN) - Simply Wall St - February 5th, 2023 [February 5th, 2023]
- Is Now The Time To Put Amkor Technology (NASDAQ:AMKR) On Your Watchlist? - Simply Wall St - January 27th, 2023 [January 27th, 2023]
- There Are Reasons To Feel Uneasy About New Oriental Education & Technology Group's (NYSE:EDU) Returns On Capital - Simply Wall St - January 27th, 2023 [January 27th, 2023]
- Technology has set us on a path toward one of two dystopian scenariosbut its not too late to save democracy - Fortune - January 17th, 2023 [January 17th, 2023]
- IonQ Acquires Entangled Networks And Locks In Quantum Networking Technology Critical To Its Future Success - Forbes - January 10th, 2023 [January 10th, 2023]
- Industrialization 3.0 - How Technology, Wall Street, And The Government Can Help The US Win In A World Of Re-Industrialization - Forbes - January 10th, 2023 [January 10th, 2023]
- Connect with aspirational India through technology and work in interest of world: Anurag Thakur to NRIs - Economic Times - January 8th, 2023 [January 8th, 2023]