The non-fungible token industry, currently valued at $ 100 million, is changing the perception of ownership and authenticity of digital assets. Leading companies in the gaming and blockchain world are already experimenting with NFTs in a variety of ways. The main goal, however, is to prove the authenticity and ownership of digital objects, which had proven difficult until the advent of blockchain technology.
Blockchain technology allows digital assets to have unique identifiable attributes that make them rare and irreplaceable. In NFT marketplaces like OpenSea, a variety of projects are working on the production of all kinds of creative and transferable NFT items.
While there has been a lot of excitement over the past decade about fungible digital assets like Bitcoin (BTC) and Ether (ETH), non-fungible tokens are just getting started and there are already plenty of advances to write home about.
A quick NFT primer
While a fungible token such as Bitcoin cannot be distinguished from other tokens of this type and can be replaced by this, a non-fungible token is distinguishable from other tokens and cannot be replaced or replaced.
For example, a banknote in a wallet can easily be borrowed and replaced with another. The person taking the loan does not necessarily have to return the same banknote. This banknote is therefore a fungible item that can be replaced by another of its kind on a one-to-one basis.
However, when buying a unique work of art or a plane ticket, it is impossible to get the same value by exchanging the item for another – provided those items are unique. Therefore, a ticket that gives you a standard class seat on a flight to Location A is not the same as a ticket that allows you to board a private jet to Location B.
Blockchain makes it possible to own NFTs in the digital world, much like anyone would own a baseball card in the physical world. These digital assets can be stored in the blockchain and transferred from one owner to another without the risk of illegal collection and duplication. Tyler Perkins, vice president of marketing at Immutable – a blockchain-based game development company – told Cointelegraph:
“The use cases for NFT are incredibly powerful. Whether it’s unprotected ownership of video game items and domain names, creating digital scarce art, or tracking goods, they work well for a variety of high value use cases in a digitally native world. “
However, it would be difficult to discover NFTs without a marketplace. Perkins noted that “marketplaces play an important role in the discovery and growth of NFTs,” adding, “The ability to trade a digitally scarce, unique asset is one of the technology’s main selling points, so marketplaces naturally support it.” Below is an overview of some popular NFT marketplaces.
OpenSea is considered the world’s largest marketplace for NFTs. With a transaction volume that exceeds many of its competitors, OpenSea offers a wide variety of virtual assets ranging from digital collectibles to domain names, digital art to card games, etc.
Simply put, the platform acts as a one-stop shop for all non-fungible tokens. Users can also customize their NFTs and sell them to a target audience in the market. OpenSea currently hosts more than 1.2 million NFTs and provides tools that allow developers to create NFTs and incorporate them into games with minimal effort.
According to the company’s CEO Devin Finzer, the future of the NFT industry will be much more active in the purely digital gaming world before real asset tokenization gains momentum.
On June 8th, PlayDapp was launched as a customer-to-customer NFT marketplace, allowing users around the world to freely trade blockchain in-game items. Currently, the platform allows users to trade in-game items from CryptoDozer and DozerBird, which are the only blockchain games supported on the market. Plans are underway to bring out titles such as “Together with the Gods: Knights of the Dawn”.
Not only is PlayDapp a platform for gamers looking to trade NFTs, it also offers developer support. According to Choi Sungwone, the platform’s general manager of strategy, the company plans to provide tools that will allow “RPG genre game items to be traded through PlayTapp MarketPLAce via NFT.”
PlayDapp focuses on creating in-game items that can be traded between users and is backed by the involvement of industry experts such as Koh Kwang-wook, the former chief technology officer of Item Bay, the world’s first website dedicated to online Game items.
About a year ago, SuperTree, the company that supports the PlayDapp marketplace, joined Samsung’s C-Lab program, a startup incubation program that supports the development of promising startups.
Game, the company that owns Game Credits, aims to be the esports industry’s game currency. At its core, the Game Credits platform uses the GameCredits (GAME) token for multiple purposes. First, the token serves as in-game currency that NFTs can be used to buy and sell in the market.
GAME token holders can also use tokens to fund the development of high quality games on the platform. The token is used to pay for transactions on the NFT marketplace and to pay fees associated with the creation of NFTs by developers.
In addition to being a marketplace for in-game items, Game Credits provides solutions for owning and creating digital assets by providing developers with pre-built tools that allow NFTs to be quickly integrated into gaming platforms.
With Game Credits, developers can earn with the NFTs they have created even without knowledge of blockchain programming. Jason Cassidy, CEO of Game Credits, told Cointelegraph that the NFT exchange is an integral part of the ecosystem: “NFTs represent the other half of crypto – the parts of our world that are unique and of value to us for very different reasons are.”
Founded in 2015, Decentraland is a user-owned, decentralized virtual world that has an NFT marketplace where users can buy, develop, and later sell land. The platform also allows users to create original artwork and scenes using simple construction tools. In addition to buying and selling virtual land, Decentraland’s NFT marketplace has wearable avatars along with other NFT items based on the Ethereum blockchain.
Each virtual element on the platform is represented with a token that is recorded in a ledger secured by blockchain. For example, virtual land is represented by a token called LAND, and those who have such tokens can build other tokens that represent other items such as a house, hotel, or school above the virtual land.
Although the platform is still under development, at its core Decentraland wants to create a new way of interacting with NFTs by creating a rich experience tied to a local business network.
The Enjin marketplace was one of the first NFT marketplaces to go online. Enjin, a platform for issuing blockchain assets, allows developers to use their Enjin coin (ENJ) to develop NFTs. Enjin Coin is based on Ethereum with a refined NFT standard that includes the Enjin suite and enables the creation and monetization of digital games.
So far, Enjin has worked with other industry players to create tools like the EnjinCraft plugin, an open source plugin that enables token NFTs to be used in Minecraft. Therefore, players can link Enjin wallets to buy weapons and avatars in-game, or swap them for other items in Minecraft.
After partnering with Ubisoft, Microsoft and Samsung – to name a few – the Enjin team has grown in popularity in the Ethereum world and plans to expand its platform while enabling safe ownership and trading of NFTs .
With a weekly volume of more than $ 1 million, Rarible is one of the leading marketplaces for NFTs, according to Dapp Radar. However, the Russia-based platform wasn’t established until 2020.
Rarible is a community-owned platform that offers a wide variety of digital assets, from digital artwork and domain names to various types of collectibles. In addition to the ability to allow players to trade NFTs, the platform allows users to use the Rarible Governance Token (RARI) to create custom NFTs. This feature allows artists to create music albums, films and even books whose property is secured on the blockchain.
The rarible token is also used as a governance token, further transforming the rarible market into a decentralized autonomous organization.
Rarible recently partnered with CoinFund, a New York-based blockchain investment firm, through which Rarible is expected to raise funds to further develop its NFT market.
The way forward
There is currently a consensus in the crypto community on the value of fungible digital assets like Bitcoin and Ether, which is determined by market forces. Non-fungible assets, however, are valued for completely different reasons and are increasingly becoming the other half of the blockchain discussion.
With reports pointing to growth of over 2.5 billion users, Cassidy believes that future growth will depend on the usability of NFT exchanges: “Hot NFT sectors like the arts need these marketplaces for price discovery to take shape because their value is purely subjective. The exchanges provide this basis for awareness of a new asset class and direct access to investments in it. “
The future of the NFT landscape looks bright as organizations like the Blockchain Game Alliance seek to bring NFT-minded minds together to further develop the industry. However, there are still some challenges along the way. For example, Cassidy noted that the lack of liquidity makes it risky to invest in certain NFTs as the market is still in the early stages with a limited number of buyers. Since the value of assets is viewed as subjective, an investor may have to wait a while to get the desired price.
With most NFTs based on Ethereum, Cassidy added, “The more Ethereum struggles to scale, the more challenges the NFT industry will face, as the ERC-721 and ERC-1155 standards currently make up the majority of all NFTs in existence today. “
Perkins also identified scalability as the main problem hindering further growth in the industry. However, he felt that scalability might not long be an issue given the efforts of several projects to develop scalable layer two solutions designed to improve the way decentralized applications process out-of-chain transactions. Therefore, Layer Two solutions reduce the cost of switching NFTs from one user to another while increasing the overall efficiency of Ethereum-based platforms.