Non Fungible Tokens(NFT) - The Next Big Thing After DeFi
After numerous years in the crypto market, there are new innovative protocols that are driving a huge interest. The Protocols that are hitting the crypto markets are none other than DeFi Protocols.
Decentralized Finance has shifted the world of crypto to the next level in 2020 and this term DeFi became the greatest buzzword among all of us.
At first, Bitcoin came to rule the crypto world, which is then spread as cryptocurrencies. Now, in the year 2020, the cryptocurrency world is driven by decentralized finance which made many traditional financial sectors adopt to DeFi protocols for their processing. 2020 has seen the rise of DeFi from the start of the year, to date. And now the space of DeFi is being replaced by the term called "NFT - Non-Fungible Token". This NFT is being popular among the people and experts hope that the upcoming year 2021, will be the rise of NFT.
The Year of 2020 and DeFi
Decentralized Finance aims to provide a permissionless, faster, and transparent ecosystem to process any kind of financial services. Already by the end of 2018, there started the waves of DeFi in crypto space, since the spread of DeFi is faster in the year 2020. There are now more than 200+ DeFi protocols on Ethereum Blockchain, 25+ DeFi Protocols on Bitcoin Blockchain, and 2 DeFi products on EOS blockchain which offers people an ecosystem to process financial processes such as Banking, Insurance, lending, borrowing, and more. The most popular DeFi protocols that are driving the cryptocurrency globe are COMPOUND, Uniswap, Aave, Maker, and more.
The Global Market Revenue of 2020 rises with the help of rising of trading volume on many DeFi based DEX like Uniswap, Sushiswap, and more. Many people preferred DeFi based DEX trading to CEX and traditional DEX to exchange their cryptocurrencies as it provides greater liquidity. This shift and mass adaptation of DeFi over CeFi has made decentralized finance a notable thing in the year 2020.
Crypto World after DeFi - What is next after DeFi?
As we are all at the end of 2020 and have deep driven by the concept of Decentralized Finance, there rolls a query in each of our minds that What would be the next big thing in the cryptocurrency globe that would replace the spread of DeFi and lift the crypto industry to the next level?
From the recent survey, experts conclude that the potential to compete with DeFi and to bring a boom in the cryptocurrency world lies with “NFT - Non Fungible Tokens”.
If you are the one who continuously updates yourself with the flow of cryptocurrency waves, you must be knowing the effect of NFTs in recent days and will have a belief that these NFTs along with DeFi can create a huge impact in the upcoming years.
NFT - Next Booming Factor in 2021
The next booming factor in this digital economy would be the utilization of Non Fungible Tokens by the greater mass in the year 2021. Already the use of NFTs has increased in a constant manner and surely this will be the booming factor that pushes the crypto lovers as a whole.
Without any pause, let us discuss this Hottest Topic “ NFT”.
What is NFT?
NFT - Tokenized Version of Digital/Real-world Assets.
A Non-Fungible Token or NFT is a special kind of cryptographic token that represents any unique asset. These NFTs operate as verifiable proofs of authenticity and ownership inside the blockchain network. The NFTs are not interchangeable which introduces scarcity in the digital world of assets.
NFTs are the building blocks of a blockchain-powered or distributed ledger powered world. These NFTs find application in several digital items and processes such as crypto gaming.The notable and first use-case of NFTs in the crypto-collectible trading card gaming.
What is Fungibility?
The term Fungibility refers to the equal value among the assets. It implies the right to exchange a product or assets with other products or assets of the same kind. These Fungible assets simplify the process of trade and exchange of assets.
Thus any two objects are equivalent in design and their individual units can be replaced mutually is referred to as Fungibility.
Major Use-cases of NFTs
Let us deeply look at the top use-cases of non fungible tokens in the digital economy.
The most and popular use-cases of Non-fungible tokens is Gaming. Blockchain gaming allows players to securely trade assets and offer a layer of authenticity and verifiability to all the players.
NFTs provides a compelling solution for all digital ownership of game items and allows users to generate real-time revenue by utilizing their gaming skills.
Users have the way to decide the direction of future developments within the games.These gives the opportunity to design their own virtual world & operate in verifiable gaming marketplaces.
With NFTs, anyone can buy a creation and showcase it by knowing the full history of the assets. For eg: Artist details, date of origins, previous ownership, value of assets and lot more.
Artists will receive a bigger payment for their artwork with the elimination of third-party fees and with P2P payments.
These NFTs hold unique information about a particular asset, which makes them better use-cases for identification, licenses, qualifications, and certifications that are registered on any blockchain network. Non fungible tokens would be so useful in controlling data like medical history, personal profile,education, address, and all other digital details.
Media & Entertainment
The media and entertainment industry is facing fraudlaunce in a massive way. With the involvement of blockchain technology, prevention of copying the files in the media and entertainment is made easy.
The most improving sector in this digital economy is Real Estate. In this real-world, the assets in the real estate are tokenized on the blockchain. This allows for smooth transactions which eliminates the third-party intermediaries and also prevents conflicts in ownership.
Some other use-cases of non fungible tokens are as follows :
- Virtual Assets
- Event Tickets
- Athlete's DNA Data
- Sports and more.
Challenges Faced in the adoption of NFTs
Here are some important barriers which we face while developing and adopting the NFTs in the real world.
1. The regulations, which bridges the gap between a centralized & decentralized world.
2. The problem of infrastructure
3. Lesser user experience
5. Higher Transaction Fees and more.
All the tokens on the Ethereum must follow some set of protocols, which complies with different ERC token standards. The most used ERC token standard in cryptocurrency is ERC 20 standards which define a set of rules.
With Non-Fungible Tokens, the blueprint or the ERC standards works differently,the use of ERC-721 standard allows smart contract code to embed to make desirable tokenized assets.
The ERC -1155 standard allows us to develop fungible and non-fungible tokens for gaming. ERC 998 tokens allow for multiple tokens transfer on single transactions.
Top 5 NFT MarketPlace
It is a decentralized NFT marketplace whose governance token RARI is issued on July 2020. In Rarible, the content creator can mint their creative work into fungible & non fungible tokens and sell them. If you are a collector, you are allowed to purchase digital collectibles secured in the blockchain network.
This RARI token can be used to vote, moderate the artworks, and more governance issues. Since, As users have the in-charge to decide on the platform, Rarible is becoming an actual Decentralized Autonomous Organization(DAO).
GRAP is the native Token of GRAP Finance, with the supply which gets adjusted each day with the demand in the market place. This project involves an experiment known as "Wine Making" which is a kind of NFT mining.
The Crypto Wine is gained with the pledge GRAP liquid currency pairs for lossless investments.
ethArt is an on-chain ERC 721 deployer for all ETH artists designed to meet the needs of a free way to deploy & manage ERC 721 tokens for all artists.
ARTE is the voting token and token holders can manage the information of NFTs which is backed by the value of ERC 721 deployed.
Aavegotchi is a collectible game which is created by Aave, which is one of the leading DeFi projects. This new crypto game is the combination of both DeFi and NFT elements.
GHST token is the governance token of Aavegotchi game and in this game, the NFTs are staked with Interest-generating Tokens. These are also known as DeFi-powered tokens.
It is a 3D virtual world that is powered by the Ethereum blockchain.In this platform players can use Avatars to create, explore, and experience in the gaming platform.
MANA is the native token of Decentraland and is used to pay in the games. These MANA holders have the right to vote in the game.
Some other NFT projects familiar in the NFT marketplace are as follows :
- Somnium Space
- DEGO Finance
- Chiliz and more.
Future of Crypto Globe with NFTs
The prevalence of NFTs is longer in the crypto market, since from the test version of Cryptokitties in Oct 19, 2017. But the NFTs are getting huge attention in recent days with the largest number of active users in the blockchain related games.
Until there is a space for the gaming industry to boom, the NFTs will also have a greater space to grow higher. All the blockchain-related games started integrating NFTs and thus with the adoption of blockchain technology, there will always be a booming digital world that is powered by DeFi and NFTs.
Since the adoption of NFTs is greater in gaming and it will be increased in all other use-cases soon in the future with the complete adoption of blockchain technology. The benefits of blockchain,NFTs, DeFi, and all other crypto innovations brought in gaming and other industries are huge and immeasurable. Thus, let us hope for a better economy with the complete adoption of NFTs in the nearer future.
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