that was so hard We believe that non-fungible tokens (NFTs) are important.But enough people seem to be paying attention to them that I feel the need to do so as well. Roman Kräussl and Alessandro Tugnetti provide a useful overview of the current situation in “Non-Fungible Tokens (NFTs): A Review of Pricing Determinants, Applications and Opportunities.” (economic research journalApril 2024, pp. 555-574).
Non-fungible tokens are digital assets with the important characteristic that ownership of digital items is provable and traceable on the blockchain. However, it is not a digital currency like Bitcoin or Ethereum. Instead, as Kräussl and Tugnetti point out, NFTs come in five different formats: games, collectibles, metaverse, utilities, art, and metaverse. Their description is as follows:
In the gaming space, NFTs represent assets that can be used within a video game, elements of which are stored on a blockchain. This is a major departure from traditional video games, as the player gains actual ownership of in-game assets through the buying and selling of his NFTs. Gaming NFTs have demonstrated a remarkable ability to attract active users and, as a result, have achieved the highest participation rates compared to other categories. This high level of user engagement
Continuous interaction between players increases the fluidity of the gaming field. … Examples of popular gaming NFTs include Axie Infinity, NBA Top Shot, and CryptoKitties.Not all that different from physical collectibles, NFT collectibles are released as collections or series that represent variations of the same image, video, or other media. For example, the characters in the Cryptopunks project differ from each other in certain attributes, such as male/female, human/alien/monkey, presence or absence of accessories, and they also differ in price. Although NFT collectibles record the highest level of transactions, the number of active wallets is much lower than gaming NFTs. … (T)His focus on the market is due to some big-ticket deals. Nadini et al. (2021) show that the top 10% of buyer-seller pairs contribute to his 90% of the total number of NFT transactions. Examples of NFT collectibles include CryptoPunks, Bored Ape Yacht Club (BAYC), and AZUKI.
The third major group, NFT utilities, are assets that provide utility to the physical or digital world through blockchain. In other words, a utility token is one that grants its holder the consumptive right to access a product or service (Howell et al., 2020), so its use is tied to the need to collect or use the desired token. Not directly related. In particular, these tokens have utility functions, as they serve as a means of payment on the platform or provide access to a company's services (Gryglewicz et al., 2021). Utility NFTs consist of various categories such as financial, health, supply chain, and digital identity. The most popular NFT utility projects are VeeFriends (which grants access to VeeCon, a multi-day event exclusive to VeeFriends NFT holders), Ethereum Name Service (ENS), which allows users to purchase and manage domain names for digital assets. ), and Nouns. .
Art NFTs can be defined by excluding them from previous sectors. Art NFTs are assets that are not released as a series (as can occur in collectibles, etc.), have artistic functionality, and can be used within any type of video game hosted on the blockchain. I can not do it. This type of token has brought a lot of innovation to the art market, especially by easing the barriers to entry into this opaque market. Anyone can create and sell works on a variety of platforms in a much shorter amount of time than traditional art markets, with the average time from purchase to resale for art NFTs being just 33 days. The average resale period on the art market is 25 days. 30 years (McAndrew, 2023). Additionally, art NFTs have addressed issues that have impacted traditional art markets for decades, such as provenance, title, authenticity, and a more equitable distribution of income. Deeper buyer involvement has been enabled by artists themselves creating communities via social networks such as Twitter who are drawn to NFT collections. …Primary examples of art NFTs are ArtBlocks, or SuperRare, which are tokens that represent generated art through algorithms, and The Currency, by artist Damien Hirst, which consists of 10,000 physical objects held in a physical vault. 10,000 NFTs corresponding to artwork.
The fifth major group, Web3 or Metaverse, can be defined as an extension and grouping of the previous group. The Metaverse is a virtual universe that can be accessed through a computer screen, laptop, virtual reality (VR), or other digital system. Users who access this world can create their own virtual avatars and interact with the reality around them, including other users. They can purchase virtual land within the Metaverse to create their own organizations and host events. Companies often establish virtual businesses, creating spaces where they can offer goods and services, promote products and organizations, and host virtual events (Goldberg et al., 2021). Examples include game developer Atari from Decentraland, Adidas from The Sandbox, and Cryptovoxels.
This list will help clarify why NFTs don't play much of a role in my life. I'm not a gamer. I don't play in the multiverse. We do not make collectibles. When we get art, it's to hang on the wall. I think at some point there may be an organization where utility NFTs serve as a form of organizational membership that is important to me. So far, annual membership cards for certain museums and standard online ticket purchases seem to be working fine for me. I have no desire to diversify my assets into NFTs for financial or aesthetic reasons.
However, as we are constantly reminded in modern society, my preferences are not universally supported. Meanwhile, the NFT market appears to have annual sales of hundreds of billions of dollars. Obviously, many of them are related to games or collections.