Use cases of non-fungible tokens (NFTs) are numerous, so it’s hard to know what they all are and how they can benefit you. This guide covers 7 important use cases of NFTs in detail and explains their real-world value to you, whether you’re an investor or just someone who’s interested in the space. What are non-fungible tokens (NFTs)? NFTs are blockchain based assets with intrinsic value that aren’t divisible, like bitcoin or ether.
Table of Contents
- What is NFT?
- Use case of NFT as Proving Ownership
- Use case of NFT as Protocol-Locked Funds
- Use case of NFT as Authentication
- Use case of NFT as Data Storage
- Use case of NFT as Virtual Gifting
- Use case of NFT as Digital Collectibles
- Use case of NFT as Artwork
What is NFT?
NFT is a digital asset that is not interchangeable with other assets of the same type. NFTs are unique, like a fingerprint, and can represent items such as land or virtual worlds, art, digital collectibles, and more. There are many ways to use nft: trading with other nft users, transferring ownership rights to another person, designating which currency you want to use for purchases in games, etc. Where do I find them?: The easiest way to find nft's is through decentralized exchanges (DEX) where you'll be able to trade ETH for tokens from the protocol’s smart contract. Some popular DEX's include IDEX, Waves DEX, and EtherDelta. When searching for specific types of nft, there are also marketplaces. One example is OpenSea which focuses on digital collectibles. On OpenSea, you can buy and sell anything from CryptoKitties to rare Pepe Cards. Other marketplaces like Rarebits have a wide variety of different kinds of non-fungible tokens available including game items and clothing brand logos. Why use NFT? How to use NFT? Where to use NFT? Let's explore seven use cases for NFTs.
Use case of NFT as Proving Ownership
One of the most popular and well-known use cases for NFTs is proving ownership. This can be applied to digital or physical assets. For example, you could use an NFT to prove ownership of a digital file, like a photo or video. Or, you could use an NFT to prove ownership of a physical object, like a piece of art or jewelry. In either case, the NFT would be stored on the blockchain and could be verified by anyone. Anyone can also verify that they have not been tampered with because the blockchain uses cryptography to ensure data integrity. The same concept applies when trying to prove ownership of something that has been digitized. For example, if someone sends you a photo over email, they might attach it as a JPEG image file. But what if they edit it in Photoshop before sending it? How do you know that this is indeed the original photo? The solution here is similar - if someone sends you an original JPEG image file (or one without any edits), then it would be different from other photos in your inbox because its hash would differ from all other files’ hashes. To check this, one would just need to check the photo's hash against the original version stored on their computer. Similarly, there are many potential use cases for NFTs where a person cannot visually identify whether something is authentic. Take for instance artwork: even if you were able to see it in person, how could you tell whether it was real or fake? There are many legitimate artists who make replicas of famous paintings, but these replicas are often too good to spot with the naked eye. Again, blockchain technology provides us with an elegant solution - we store copies of each painting on the blockchain and create a unique fingerprint (or hash) of each painting using cryptographic methods so that no two paintings have identical fingerprints.
Use case of NFT as Protocol-Locked Funds
One way to use an NFT is to lock funds in a smart contract so that they can only be used for a specific purpose. This is called a protocol-locked fund. For example, you could create an NFT that locks up your company's funds until they are used to pay employee salaries. This would ensure that the funds are only used for their intended purpose. Another possible use case is tokenizing rare objects. These objects may not have any worth beyond being collectibles but still need protection from theft or damage. In this case, you might want to place restrictions on who can interact with the object and how it can be transferred. It is also important to set limits on what happens if the owner dies without designating someone else as heir. To do this, the owner needs to specify which accounts should get control of the NFT when they die. For example, they could say that if one account gets more than 50% of the tokens then all of them go to that account. They could also give a sequence of instructions for passing tokens on to different people depending on percentages (e.g., start with whoever has 10% of the tokens and continue moving down the list).
The potential applications for non-fungible tokens are huge! With these sorts of programs in place, ownership becomes transferable between humans in ways never before possible. The future looks bright!
Use case of NFT as Authentication
One popular use case for non-fungible tokens is authentication. For example, a company could use an NFT to represent a product's warranty. The customer could then authenticate the product by scanning the NFT's QR code. This would prove that the product is covered by a warranty and has not been tampered with. Another example might be event tickets. Fans at concerts are often asked to show their ticket in order to gain entry into the venue. In this case, they can just scan the QR code on their phone or hold up their physical ticket and verify that it matches up with what was scanned. And even if someone else tries to enter using a counterfeit ticket, the system will recognize them as a fake and refuse them entry. So next time you're out at a concert or trying to go through airport security, you'll know how useful these little things can be!
Use case of NFT as Data Storage
Data storage is a use case for non-fungible tokens. For instance, a patient's medical records can be stored on NFTs. Thus, the data would be unalterable and secure, as well as accessible from anywhere. And if they wanted to share them with someone else, they could do so easily by sending them the token. The tokens could also be made to expire after a certain period of time, which makes sense because not all medical records are relevant indefinitely. Using this type of system means patients would have full control over what gets shared and when. They could give another person permission to access or modify their data at any time, or revoke that permission whenever they want. It would even allow family members to keep track of each other's health conditions without being physically present. Furthermore, it could provide an immutable history of a patient's care. If a doctor tries to change something in the record, it will show up in red with an annotation saying that it has been changed. The nft may also contain instructions about how it should be used, such as metadata about what kind of encryption keys are needed to decrypt the information. By using these types of tokens, patients will no longer need to trust their healthcare providers with storing their information—they can store it themselves and only release small portions if they choose.
Use case of NFT as Virtual Gifting
Have you ever wanted to give a friend a virtual gift, but didn't know how? Well, with non-fungible tokens (NFTs), you can! NFTs can be used to create virtual gifts that are unique and can't be replicated. Plus, they're easy to use - all you need is an NFT-compatible wallet and you're good to go! Here's how it works: First, you'll need to purchase some NFTs. Next, send them over to your recipient. When the recipient receives their new NFTs, they'll have the ability to trade them on their own or add them into their wallet and start using them right away! To keep things fun, they could share their NFTs with friends who might want one too. Virtual gifting makes it easier than ever to give something to someone else in a more personal way! By creating custom virtual items with NFTs, you don't just get to customize what someone gets as a gift. Instead, you get to customize the whole experience from giving to receiving.
For example, imagine that John wants to buy his daughter a very special necklace for her birthday. With traditional e-commerce sites like Amazon and eBay he would only have two options: buying it for himself so she has no idea what she was getting or purchasing one of the millions of other necklaces that are available online today. But thanks to non-fungible tokens (NFTs) John now has another option! He can create a personalized virtual gift and make it feel truly special. Imagine if he bought this necklace with an NFT token called Daughter’s Necklace instead of with dollars or euros. Now when he purchases this specific token, it will show up at the top of his daughter’s inbox ready to be gifted! The next time she logs in, there will be this beautiful new token waiting for her. It’ll say Father’s Gift – Daughter’s Necklace written on the backside and that means only one thing: Happy Birthday! I love you! Dad!
Use case of NFT as Digital Collectibles
A non-fungible token (NFT) is a unit of data on a blockchain that represents something unique and therefore not interchangeable. NFTs are used to create digital collectibles, which can be anything from virtual art to in-game items to crypto-kitties. The sky is the limit when it comes to what can be created as an NFT, which is why they are so popular. People can purchase rare physical goods like guitars or sports cards, but also have their own car registered as an NFT on Ethereum’s network.
Another benefit of NFTs is that they can be created in a trustless manner. This means there is no centralized party acting as a middleman or holding custody over your digital collectibles. Instead, users have direct control over their own data through private keys which grant them exclusive access to trade or use their NFTs. Digital collectibles are starting to grow in popularity and are becoming an accepted asset class within blockchain games. Players can acquire these assets by playing games and earning in-game rewards, purchasing with fiat currency, trading with other players, or buying with cryptocurrency. It's up to each player whether they want to keep their collections privately stored or share them on decentralized marketplaces such as OpenSea. Some gamers feel like they need certain tokens to stay competitive while others just want some eye candy for their desktops at work. No matter why you buy into the market, owning digital collectibles has never been easier than now thanks to its emerging popularity among cryptocurrency enthusiasts.
Use case of NFT as Artwork
In the world of non-fungible tokens (NFTs), each item is unique and therefore cannot be replaced by another item. This makes them ideal for use cases where ownership or provenance is important, such as with digital artwork. When an artist creates a piece of digital art, they can mint an NFT that represents it. The NFT would include metadata about the artwork, such as when it was created, what inspired it, and even a link to the original file. Collectors can then buy and sell these NFTs on marketplaces like Foundation and OpenSea.
The digital artwork market is still nascent, but these NFTs could be used to prove that an artist created a piece of art. The metadata associated with an NFT is one way for a collector to establish provenance. Other options include linking an NFT to metadata stored on IPFS or another decentralized storage solution. Digital art provides some use cases for nft, but there are also plenty of uses for fungible tokens.
In conclusion, non-fungible tokens are a versatile tool that can be used in a variety of ways. With so many potential uses, it's no wonder that they are becoming more and more popular. Whether you're looking to use them for digital art, gaming, or even just as a way to store data, there's sure to be a use case that fits your needs. So why not give them a try?
0 Comments