Why Is The NFT Space Gaining Traction And What Are The Major Use Cases?


What is the practical use of an NFT?

Non-fungible tokens (NFTs) have swept the blockchain sector, notably following the DeFi explosion. According to NonFungible.com, a daily NFT market tracker, the daily number of sales in September 2021 reached a peak of 33,900-plus, and NFT sales surpassed $10.7 billion in the third quarter of 2021.

With increased awareness of decentralised applications, there was increased traction in the NFT space. From Cryptopunks to Amitabh Bachchan, NFTs have started a mainstream trend that has enabled the entry of new and global names into the market.  

But is it enough to bring mainstream adoption? Or does the NFT industry need to evolve a few changes to facilitate that? 

NFTs were a seed planted with Colored Coins shortly after the introduction of Bitcoin, but the garden that can be seen today is due to the boom of blockchain technology that occurred in 2017, beginning with the creative and unique game, Cryptokitties, which presented a use-case of blockchain technology that appeared simple and appealed to the mainstream audience. This marked the start of new developments and a renewed emphasis on NFTs as a platform for creation, investment, ownership, and experimentation.

NFTs are digital tokens that are one-of-a-kind and cannot be copied, replicated, or duplicated. They are recorded in the blockchain. These can then be used to validate authenticity and ownership. NFTs are tokenized copies of real-world and digital assets that have been instrumental in promoting novel notions such as fractional ownership and 'play-to-earn' games.

The excitement generated by this disruptive technology has driven mainstream organizations and corporations to jump on the latest blockchain innovations. As a result, NFTs are a viable choice because their use-cases include exploiting pre-existing assets and leveraging their existing value.

Major Use-Cases of NFTs 

Practical NFT Use Cases Beyond Digital Artworks - Hongkiat

Digital Art: One of the early adopters of this technology was digital artwork. Artists can sell a portion or all of their digital artwork as NFTs with pre-determined payout criteria defined in the underlying smart contract. India has had sufficient success in this use case. For example, within the first month of the WazirX NFT marketplace's opening, more than 160 digital art pieces were sold.

NFT use cases music

Music: Although the first sound recording was made in 1877, commercial artists are frequently not total owners of their tunes, and revenue sharing can be unfair. NFTs have alleviated this issue by allowing artists to tokenize music recordings, artwork, text, apps, data, and even physical items such as concert tickets or one-of-a-kind souvenirs. Even Indian major performers, such as Sonu Nigam, are getting in on the action with the Indian music industry's first-ever NFT series in collaboration with JetSynthesys.

Collectibles: NFTs have flourished in the entertainment business as well, in the form of exclusive collectibles for fans or exclusive advantages. This use case has thrived in the NFT markets and has been a significant driver of mainstream adoption. Recently, the NBA collaborated with Dapper Labs, the creators of Cryptokitties, to produce the NBA Top Shot, a collectible NFT that functions similarly to trading cards, which has now generated over $230 million in revenue. Similarly, Amitabh Bachchan's NFT collection in India received the highest ever bid of $420,000.

Real Estate: By tokenizing land or property, NFTs enable fractional ownership, which would include authentic information such as price, measures, location, and so on, and there would be no need for third-party commission. Currently, work is being done to make this a physical reality, albeit it already exists in virtual reality. The world's first digital NFT house, known as the Mars house, which sold for $500,000, is one illustration of how an NFT, metaverse, and real estate amalgamation could look. Decentraland, a virtual blockchain-based land where people may buy and own chunks of the entire land available, is another unique concept.

Gaming: The virtual game Cryptokitties, which debuted in 2017 and was one of the world's first attempts to incorporate blockchain beyond the realms of technology and industry, was NFTs ticket to fame. Today, the NFT business has reached new heights in the gaming sector with the introduction of the P2E or 'play-to-earn' idea, as well as efforts to build 'playable NFTs,' an imaginative concept that allows gamers to uniquely identify game characters and actually own them.

Barriers To Mainstream Adoption 

The general use of NFTs is now a feasible future, and it has already paved the way for extremely distinctive and exceptional technological breakthroughs. However, there are a few more hurdles to overcome.

During the early phases of this industry's development, consumers were required to pay in cryptocurrencies, which non-native crypto users were uncomfortable with. Furthermore, when the network was congested, the gas expenses became prohibitively expensive. Today, however, this barrier has been successfully removed with the emergence of new platforms that offer little or no gas fees for transactions, immediate cross-chain operability, and accessibility.

Most NFT minting systems and applications are also working to improve their user experience in order to gain widespread adoption in the decentralized sector, but they still need to be refined.

However, a continuing impediment is the lack of variety in content offers. Artists, musicians, content providers, and others can generate NFTs for sale, although they are limited in terms of the media formats supported by various platforms. NFT minting platforms can support standard audio, video, image, and text media assets, but not complicated mixed-media ones.

As blockchain technology progresses toward new and inventive solutions, this barrier will be addressed as the space grows.

Virtual World To Real-World Markets 

With web3, there was a frenzy of new technologies and solutions centered on the end-user. There has been a growth in the number of platforms and protocols committed to making the user experience less burdensome and reasonable. To minimize the cost of trading and minting NFTs, new decentralized applications and platforms were developed, as well as a slew of new marketplaces that were less expensive than dealing with the Ethereum blockchain.

One of the primary drivers was the growth of decentralized finance. Non-native users were able to see cryptocurrency and crypto-asset liquidity. NFTs were able to extend from gaming and digital art to collectibles and investments as DeFi gained traction.

NFTs have evolved beyond being a testing ground for digital art to reaching the mainstream industries of gaming, entertainment, finance, and investments due to the expansion in the space to support user-friendly transactions.

There are a few flaws that need to be ironed out, but there are several participants in the market right now who are attempting to deliver seamless user experiences. These platforms enable potential non-native crypto and blockchain users to enter and successfully navigate the market through gasless transactions, multi-chain transfers, interoperability, accessibility, and scalable solutions.


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