What Is An NFT?

UniPro founder Connor Borrego explains what exactly an NFT is.

Defining NFTs

NFT stands for non-fungible token and it represents a digital identifier, like an immutable serial number, for a piece of content or data stored on the blockchain-powered internet. Most applications of the technology today, focus on leveraging the public recording mechanism to provide a record of ownership over digital assets like property deeds, artwork, and other collectables and high-value assets.

Evolution Of Existing Software Architecture

Those familiar with current software systems and cloud computing will recognise the importance of IDs as a tool for software developers to create functional programs. NFTs’ unique property, as a result of being a blockchain tool for new cloud software, is that of being a common, shared, or publicly useful identifier for decentralised data coordination while maintaining privacy and security. Meaning that users of one software system should be able to transition to a second software servicing the same need without a massive effort to restructure their data.

How Is It Being Used Now?

Most applications of the technology today, focus on leveraging the public recording mechanism to provide notary services for collectables and high-value assets that can be represented digitally like property deeds, artwork authentication, shoes, handbags, and other luxury items; or to provide those same notary services to digital assets like collectables from brands, celebrities, artists, and video game ecosystems. 

As of the last 9 months, we are starting to see more advanced applications of NFT utilisation under development currently, with social media, streaming services, and business saas primarily in the marketing and advertising space emerging as business use cases for the data management tool.

Segments Of NFT Business Models

When it comes to understanding the various segments of businesses and organisations that are utilising NFTs to derive streams of revenue and funding for their operations, it is most helpful to look at specific examples of some of the examples that have the earliest traction with early user adoption. To that end, we are going to explore the 2 most prominent forms of NFT application, digital collectables and public notary services, as well as the emerging decentralised big data marketplaces.

Digital Collectables

The digital collectables side of NFT business models revolve around selling deterministically scarce, and commodified, digital assets like media, in-game avatar customisations, in-game resources, and limited membership organisation seats.

A blockchain-powered video game that utilises its cryptocurrency as a token to purchase video game character upgrades and in-game resources like land, raw materials, and collectables that enhance the gameplay for the user. Just as games like Fortnite enable their users the ability to pay to customise their game experience, Decentralised is opening up that in-game economy and its collectables to financiers and other software engineers that would like to advance the game functionality in the future.

An online country club that sold a tiered membership system of 2,727 “Global” & 6,363 “Leisure” collectable NFTs that garnered $10.4M in 48 hours to purchase a Top100 golf course, with the NFTs acting as their key or membership identification to access the club. Presumably, the organisation would grow beyond its initial membership, and single footprint to make the online country club model more practical, which TopGolf or Equinox Gyms would serve as the best comparison.

Public Notary Services

Public notary services utilise the trustless, encrypted, public ledger technology to register physical asset ownership to the blockchain as NFTs and document the exchange of the physical items between parties with NFTs that represent the underlying physical assets.

Is building a public ledger to bring transparency and accountability to using NFTs to document chains of custody over the trade of individual rare metals, minerals, gemstones, luxury, and collectable goods transactions. It has many well-recognised institutions backing it from the World Economic Forum and the United Nations. The sourcing of many of these items is historically exploitative and they bring trust to brands that want to prove their supply chain is clean to their customers, which is an increasingly in-demand component to the sale of many of these items today.

Best known for being an online marketplace to exchange collectable sneakers and other fashion and luxury collectable items, providing verification and authentication services to ensure the integrity of the exchange. This company launched an NFT marketplace to tokenise exchanges occurring on the platform for users who wanted NFTs to document ownership of their collectables, provoking a lawsuit from Nike in the process.

Big Data

Advancing the use case and monetisation of digital assets are the companies leveraging the functional properties of NFTs to create more sophisticated digital assets, representing the products of many of today’s existing data exchange products like advertising exchanges like Facebook or The Trade Desk.

This project, which is a spin-out from the highly successful decentralised finance platform, Aave, is a blockchain protocol focused on creating a decentralised social network by creating standard social graph objects as NFTs that can be managed via blockchain wallet software such as MetaMask. The tokenised ecosystem to provide users with profiles, content publishing, and audience engagement tools inevitably will lead to an advertising solution to support content creators on their network, as exists within current social media platforms.

Taking the opposite approach to Lens Protocol, which is taking a user-first approach to inevitably building an ad network, AdsDaX is taking the direct path of developing ad placement technology  for both media buyers and sellers, facilitating the exchange using NFTs to represent both advertising placement performance and targeting related data. The advantage is trust, transparency, and standardisation which lends itself to easy regulation and governance over a presently unwieldy industry.

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