Non-fungible tokens are a unique mix of commerce and art that have been a controversial topic on social media and in the news in recent years, but many people are still unfamiliar with them. What are NFTs? What types of NFTs exist and what are they used for?
10 Types of NFTs
NFTs are unique digital objects that sometimes represent real-world objects. NFTs are associated with cryptocurrency because they are often purchased with it and use the same underlying software as popular crypto. These 10 kinds of NFTs are used for a variety of purposes:
1. Trading Cards and Other Collectible Items
Many NFTs are produced specifically to be a collectible item in the same way that physical trading cards, collectible coins and other artificially scarce items are produced for sale to collectors. An example of this type of NFT is a toy company that sells action figures packaged with a code that the purchaser can use to redeem a related unique digital trading card.
Art is one of the most common types of NFTs. Many artists turned to creating NFTs of their digital artwork to address the issue of people stealing intellectual property on the internet. People can still copy NFT artwork files; however, only the authentic version carries the unique encoding that makes it valuable to art collectors. In this way, it is similar to a certificate of authenticity that may come with a physical piece of artwork to verify that it is an original work and not a reproduction.
3. Event Tickets
Digital versions of event tickets existed before NFTs, but NFT versions have the benefit of being encoded on the blockchain, making them difficult to replicate. Purchasers can store these tickets on their mobile devices and present them to the event holder for verification.
Some musicians sell digital versions of their music as NFTs to avoid having to give a share of the profit to streaming platforms and record labels. The same as digital artwork, these music recordings are still susceptible to being copied, but only the purchaser has the token that makes their copy an authentic version.
5. Video Game Items
Players have bought and sold in-game items for popular video games for decades. Eventually, gaming companies decided they wanted to get in on the action and started selling in-game items directly to players. These types of NFTs allow game creators to create a permanent record of ownership for specific in-game assets.
6. Famous Sports Moments
This type of NFT is a short video clip of a famous sports moment. The clips are usually of a specific game-changing event, such as a game-winning touchdown, or capture something historical, such as a baseball player’s 3,000th career hit.
Memes are most often videos or images that get spread around the internet on social media. Anyone can make a meme, but the most popular ones are usually copied from someone else, sometimes with some original modification. Much like with digital artwork, NFT memes provide a way to uniquely identify and own a particular meme.
8. Digital Fashion
Digital fashion is somewhat like clothes you might buy to dress up a doll, except it only exists in digital format. These types of NFTs are usually produced as limited or one-of-a-kind items, and some people use them to dress their online avatars.
9. Domain Names
When you purchase a non-NFT domain name, you must pay a third party to manage it and if you cease paying that party, you lose access to the name and it goes back on the market for someone else to buy. If you purchase a domain name on the NFT market, you gain exclusive rights to the name unless you decide to sell or give it to someone else.
The NFT market is still developing. Almost any digital asset can be made into an NFT. Social media statuses, videos, stories, articles and other creations are examples of digital assets that can be turned into NFTs if the creators can find a market for them.
4 Ways NFTs Are Used in Business
Many of the types of NFTs that exist are collectible items that only have value to other collectors. However, there is a variety of commercial uses for the technology.
1. Proof of Ownership
While disputes over the ownership of physical items do arise, being able to physically possess these items makes it easier to prove ownership of tangible goods. It is more difficult to demonstrate ownership of digital property. NFTs make it possible to verify ownership of specific digital property by associating it with a unique piece of a blockchain.
2. Proof of Participation
One of the reasons people go to events is that they want to be able to say they were there. Proof of attendance protocols makes it possible to provide people who attend your events with a collectible NFT that verifies attendance. These protocols can also be used to create tickets to the events.
There are times when businesses need to either issue documents or check documents that verify information about a person. Examples include birth certificates, medical records, death certificates, college degrees, licenses and certifications. These types of NFTs provide a way to tokenize this documentation so that it can be verified using blockchain technology. This could eliminate the need for physical versions of this documentation and provide more secure ways of protecting digital documentation.
NFTs offer businesses a unique way to monetize digital content. This aspect is currently mostly being used by artists, musicians and gaming companies. However, forward-thinking companies can use the technology to market digital products and explore new marketplaces, such as the metaverse.
Explore the Different Types of NFTs With DreamzTech Solutions
Whether you are just getting started or are running a Fortune 500 enterprise, DreamzTech has a proven track record of helping customers with any phase of the software development process. As your digital partner for blockchain and NFT solutions, DreamzTech can answer any questions you have about the types of NFTs and help you find ways to incorporate the technology. Contact us online to discuss your next project.