NFTs are the real deal, here’s why!
Getting into web3 it’s really hard not to hear the acronym NFT, and that could all be for a good reason as many believe it to be a significant component of this new web 3.0 ecosystem. When talking about NFTs, a lot of us unconsciously dub them as digital arts and think of JPEGs that might cost a fortune. That might be one protagonist in this story, but in reality, NFTs in image format is merely a simplistic form of what Non-Fungible Tokens would ultimately have in store for us.
A curious deeper look into the existing ecosystem wouldn’t be without wild futurist views. So far, apart from digital art, NFT usage has seen adoption in a variety of applications from fashion to decentralized finance, metaverse to gaming, and even property holding to legal records. Honestly, that’s why it’s becoming such a hyped and popular category in the crypto world!
In this article, I will briefly explain the concept of NFTs, where it’s coming from, and possibly where it is going to go. So, let’s dive into this rabbit hole together and explore this journey.
What is an NFT?
NFT by concept
Imagine playing a game of cards with friends. In any standard playing card game, you know that each card has unique attributes. You shuffle the cards and hand them out to all players. In one of the rounds, you get lucky with an ace of diamonds (♦) & a queen of hearts (♥). Does any other player have the same card as you? That’s right! Another player might have an ace or a queen in their hand, but that card is not the same as yours. Maybe they have the same value cards, but they would surely be from a different suite, like spades (♠) or clubs (♣). In this example, regardless of what game you play, everyone can agree that you own a UNIQUE set of cards in your hand, which also applies to your friends. No one has a card that is exactly the same as another.
Your game also has some rules. That is 4 suites of 13 cards, which means there are 52 playable cards, plus 2 joker cards. For this example’s sake, let’s say each joker can assume any value you like in the game. In addition, as part of the game rules, you may trade cards of the same color, or even buy cards from other players by giving away some of your scores. Having these rules, do you understand that in some rounds, specific cards become more valuable? Maybe because players are in dire need of them for winning, or maybe they are desperate to get those cards to not lose the moment of remaining in the game.
Now back to your hand in the game, you continue to spread cards on the table. Everyone plays their turn and all you need to become the final winner is to get a King from a red suite (♦ or ♥)! In your turn, you ask players to sell you the card, but your friends want their Kings, and not give them away. One player is willing to sell you a Joker card in exchange for some scores, plus an unrelated card you have that he needs. If you remember the game rules, the joker could become any card, so if you have it you will be the final winner! There are only 2 Jokers in the game. It’s a RARE card, but for some reason, you are lucky and you can buy the winning card. Are you going to buy the Joker card? You will win.
In the above example, we can say each card can be an NFT. Just like when you handed out the cards and everyone accepted the ace of diamonds (♦) & queen of hearts (♥) belong to you, in the crypto world, a blockchain consensus accepts you own an NFT when you get one. Also just like each playing card belongs to a deck, an NFT can be part of a group known as Collection. Simple, right? Knowing the similarities to our example, we can better understand and define what an NFT is in technical terms.
NFTs by definition
NFTs, also known as non-fungible tokens, are UNIQUE, digital items whose ownership is managed by blockchain. These unique tokens can have different quantities (rarities) and be in the shape of collectibles, digital art, domain names, event tickets, game items, and even legal records for physical assets.
You can also think of it as the opposite of a fungible asset for example a currency. When dealing with currency, a five-dollar bill will always be replaceable by another five-dollar bill (or even five $1s). In contrast to cryptocurrencies like Bitcoin or fiat money, NFTs are Non-Fungible because every token is unique and has its own traits & attributes. In a more low-level view, NFTs are non-interchangeable units of data stored on a blockchain, making them resistant to alteration, destruction, or replication. Therefore, NFTs can be verified by smart contracts on a blockchain, which provides them with extrinsic value.
A Non-Fungible Token (NFT) can seem complex, you can think of them as a vehicle to share virtually any form of item using the blockchain.
The Early Days and A Decade of NFTs
Just like most conventions, NFTs received incredible favours from the Ethereum blockchain and community for their adoption throughout the years. But, the root concept behind the non-fungible tokens can be found, prior to the Ethereum existence, in a 2012 paper by Meni Rosenfield which introduced “Colored Coins” for the Bitcoin blockchain.
The idea of Colored Coins was to establish a class of methods for representing and managing real-world assets on the Bitcoin 2.0 blockchain to prove ownership of those assets. Unlike the fungible Bitcoin tokens, colored coin design added a ‘token’ element that determined the usage, making each coin segregated and unique. Bitcoin’s scripting language was never meant to enable such types of behaviour within its network. Such limitations meant that the Colored Coins concept could never be fully realised in a bitcoin transaction, however, it did lay the foundation to further experiments leading to the invention of NFTs.
On May 2nd, 2014, digital artist Kevin McCoy minted the first-known NFT ‘Quantum’ on the Namecoin blockchain. ‘Quantum’ is a digital image of a pixelated octagon that hypnotically changes colour and pulsates in a manner reminiscent of an octopus. Quantum NFT was later sold for about $1.4 Million in 2021.
The outcome of this was significant efforts, experimentation, and development that followed on other blockchains. 2016 beckoned on the era of the meme and saw the release of a host of Rare Pepes NFTs on the Counterparty platform (Bitcoin 2.0). Important to note, however, is that the Bitcoin blockchain was never intended to be used as a database for tokens representing the ownership of assets, and thus began the big shift for NFTs to the Ethereum blockchain. Ethereum blockchain also began adopting its initial NFTs as digital game assets with Dapper Labs developing “CryptoKitties” which was the first widely-recognized implementation of NFTs, launching on the new ERC-721 standard for Ethereum.
Since 2017, we’ve seen the rise of many successful NFT projects and they began to become mainstream e.g. Beeple’s $69 million NFT auction piece or the Bored Ape Yacht Club. So far, the NFT space has become more lively and continues to expand Web 3.0. It’s interesting how NFTs are gaining more momentum in a variety of crypto aspects, and todaycreating an NFT continues to become simpler with many dApps simplifying the process through easy-to-use interfaces.
Following the huge success of CryptoKitties, NFT gaming really began to gain momentum and move forward with NFTs gathering increasingly more public attention.
NFT gaming and metaverse projects were shining in the spotlight and the first to break ground in this space was Decentraland (MANA), a decentralised VR platform on the Ethereum blockchain. Decentraland is an open-world gaming platform that allows players to explore, play games, build, collect items, and more, and everything that you find, earn and build there, you own on the blockchain, mainly in the form of NFTs. By 2022, There were also more successful NFT collections, and metaverses like Sandbox, in addition to dozens of other projects in development.
Our mQuark dApp can also simplify the creation of new NFT projects with interoperability in mind, a concept that’s unique to mQuark protocol, helping NFT enthusiasts focus on their artistic visions, rather than handling technical drudgeries of writing code.
Are NFT adopters getting scammed?
In fact, a large sum of adopters who FOMO into NFTs are likely to be scammed. Some people usually complain that NFTs have no store of value. Are they right? The answer is, “it depends”.
How to uncover NFT scams?
NFTs are vehicles to identify unique ownership of assets, as a key-driven factor to support the valuations. They can be relied upon until their hosted blockchain exists. The arts behind NFTs are just a small factor in this vehicle. Marketing such NFTs and building a good community is another significant factor of successful NFTs. In the case of foul NFT projects, a common pattern is to sell inflated and unworthy or unreliable files for massive prices, sometimes even promises without any technology-backed solutions, which could lead to scams. Artists opposed NFTs because they mainly focus on the art itself and the monetary component which deviates the art purpose from the art community. However, the project builds on top of the community can be a factor to push NFT valuation further.
As is often the case with new innovative crypto technologies, you need to keep awareness of fake and bogus NFTs and don’t judge a book by its cover. If you understand smart contracts, read them to learn if the community promises are fulfilled in the code, or get advice from vetted reviewers. Look for signs if the project is living up to expectations and promises, or if there is any form of guarantee that you are making a fair deal, for example, the art is truly represented by the artist you like and support. There is no easy way to do this of course, but you can always reduce risks by collecting enough information about the NFT project not to make an unwise transaction decision.
Brightside of valid NFT projects
Contrary to the aforementioned, if you come vis-a-vis an honest artist or project, you may also find great deals in acquiring their NFTs. But remember, in the crypto world, It’s not just art that creates success for projects. The community that supports the artist or the NFT projects is heavyweight, so keep an eye on how your community is growing and you can also be part of the voice to expand it, i.e. when you truly believe in it.
How the NFT era is changing the current web
Web 1.0 to web 2.0 was a journey from email communications to social media, but what the current web lacks is true data ownership, a concept that is merely implemented in centralised servers which hold your data belongings. Companies like Facebook, Google, Apple, etc. make user data fragile to authority censorship and bans on their platforms. NFT implementations of web 3.0 standards make the use cases inherit the decentralisation of blockchain. Thus opening room for NFTs to attribute ownership and prove the media’s timelines in a censorship-resistant way.
Well, it’s not exactly internet crackdowns that NFTs can help with! But censorship is the way that hosting platforms can not take away your right of owning and using your data from you, like banning you from a platform like Instagram or Twitter. and very recently, with web3 social media protocols like Lens, there is more opportunity to look at a future that is democratised and open to freedom of speech.
A web2 comparison
The following table shows a comparison summary side by side:
Future and NFT speculation of 2032
As the NFT industry continues to set sail into its 2nd decade aiming to disrupt notable industries like gaming, music, art, and ownership, we’ll certainly be seeing more unique implementations and use cases that can extend beyond the current phenomenon. To that goal, the NFT community will need a collective understanding of the direction of this standard as an ecosystem, mainly to facilitate risk-free adoption, for example in terms of NFT regulation, prices, and valuations.
The More Evolved Digital Culture
What drives today’s digital culture is a sense of belonging to matters tangible outside the physical world. The NFT community is much like eSports gaming that interacts and plays together to thrive only with the focus on the NFTs to improve members’ sense of being part of the community. The growth of this community to 2032 will also need you to look at the age gap and next-generation users, those we recognize as Generation Z today.
Web 2.0 Brands in Mass Migration
Just like the digital culture, NFT ownership has vast demography in GenZs, which makes it an attractive bridge for brands that love to connote youth and livelihood. Therefore, it wouldn’t be a wonder to observe NFTs also evolve into branding bridges between traditional companies and web3. A strategic jump that is quite clear in the pivotal direction of leading web 2.0 companies such as Facebook, who recently rebranded to Meta after they publicly announced interest in creating a metaverse with the aid of their Oculus VR (Don’t underestimate Zuckerberg. That man’s data-driven decisions are based on 2.8 billion user data!). Meta is also pushing NFTs into Instagram, the second-largest social media with a massive GenZ user base. NFTs can push such branding to the next level with open interaction with users and receiving their support. Aside from Meta, a collective of metaverses can be speculated for the next decade, even becoming more tangible with the advancements of performant hardware and game consoles.
The vision of interconnectivity
In such an age for ultimate web3 communication, we also need to keep the paste with the inevitable advancements of the future. By 2032, there is a missing piece for the interoperability of NFTs. That’s why we created mQuark protocol, the smallest extendable NFT schema, that would solve the interoperability of NFTs for web2 and web3 projects, even acting as a migration bridge between metaverses. A quark NFT embodies the same vision of interconnectivity in web3. Through the provision of smart contracts and digital identities, the metaverse connects standalone stores of value to form an internet of value, and the current state of interoperable metaverses means they will not be able to break the fourth wall, instead, they keep the user’s belongings representing solely within their own entity, not knowing how they can interpret pieces of NFTs from other web3 entities. mQuark solution to NFT interoperability encompasses value inheritable, extension, and interpretation through schema, and that’s how we see a vision of interconnected web3.
Authored by: Davood Hakimi Mood, Technical Lead at soonami.io