If You Aren’t Already Embracing NFT Technology, WHY NOT?
As the world moves towards a digital blend of physical, virtual, and augmented realities (ar), more industries will realize why NFT technology is beneficial for their strategies. It isn’t just a next-decade issue. It needs to be carefully considered when discussing implementation plans for this year and beyond.
I’m not saying businesses need pixelated digitalart. Rather, I am referring to NFT technology and the innovative opportunities it provides. They might end up being called something else – the branding for “NFTs” could have been more user-friendly. “WTF is an NFT” is a common question we often get.
Understanding NFT Technology as it stands right now.
How can users better understand what a non-fungible token (NFT) is AND how can the various NFT tokens be used?
Taking a look at the token standards available on the Ethereum Protocol might help provide clarity on the purpose as well as potential of NFTs, while demonstrating the unprecedented opportunities NFT technology affords.
ERC-20 is a fungible token that is tradable and divisible, used for various cryptocurrency tokens, with an exchange smartcontract data structure. This is NOT an NFT TOKEN. MATIC, ANKR, OP, GALA, and APE are all examples of ERC20 tokens.
The star of the show is ERC-721. Someone who has been a friend of TRON DAO and advisor over the years is William Entriken, one of the lead authors of the ERC-721 standard. It is what almost everyone knows to be a non-fungible token (NFT), and is tradable but non-divisible. ERC-721 has a number of use cases, including art, game props, profile pictures (pfps), and community passes. More than anything else, ERC721 verifies identity and ownership.
ERC-1155 can operate as both a fungible and non-fungible token that is tradable yet divisible when fungible, but non-divisible when non-fungible. Its purpose is more to represent in-game value and property for GameFi. It indicates the value held in a holder’s wallet as well as authenticates ownership of an asset or property.
The Soulbound Token (SBT) is non-tradable and non-divisible, because it is linked to its owner permanently. It can be used for health records, certificates verifying learning or a task accomplished, which is then held to verify experience like a resume and more. This type of NFT can be used to enhance user profiles, which have seen minimal ownership by users. The SBT is similar to ERC-721, but transferring it is not possible.
Brand new on the scene as of May 7, 2023 is ERC-6551. This new token standard expands the possibilities of ERC-721, because it enables its smart contract account to hold assets. Each ERC6551 acts like a smart contract wallet for each ERC-721. This is revolutionary technology, because it builds on the innovation of ERC-721 with the ability to perform transactions, interact with applications, hold other tokens (both crypto or NFTs), and provide on-chain identity. Multiple NFTs can be held or sold via ERC-6551. Multiple onchain identities can be created and then used to engage with smart contracts, decentralized apps, gaming property and rewards, credit ratings, and loyalty programs. The ERC-6551 technology will be essential to interoperability between platforms and one day possibly even between blockchains, verifying identity as well as powering commerce.
So, with that background, let’s get back to it.
If you aren’t already embracing NFT technology, WHY NOT?
NFTs provide a new way of representing ownership of digital assets.
They are unique, indivisible, and irreplaceable, making them perfect for representing one-of-a-kind items such as art, music, and collectibles.
NFTs have the potential to create entirely new revenue streams for businesses.
By creating and selling unique digital assets, a business can tap into a new market of collectors and enthusiasts who are loyal to their product, business, and brand.
NFTs empower collaboration and cooperation.
NFTs can be used to represent engagement with a decentralized autonomous organization (DAO), where ownership is distributed among a group of stakeholders who make decisions collectively about a business purpose or generous cause.
NFTs have real-world use cases we haven’t even imagined yet.
NFTs are a relatively new technology, and as such, there is still a lot of room for innovation and experimentation. Businesses that embrace NFTs now have the opportunity to be at the forefront of this technology and drive innovation in their industry. By experimenting with new use cases for NFTs, businesses can stay ahead of the curve and provide a unique value proposition to their customers. For example, integrating artificial intelligence (ai) with NFT tech allows NFT innovation to evolve and adapt as A.I. learns how users engage with NFTs. Furthermore, cities and countries can create more efficient and streamlined civil infrastructure, which not only helps native residents but also local businesses.
NFTs can be used to create and engage with the SUPER FAN.
For example, musicians can create limited edition NFTs that provide exclusive access to concerts or backstage passes. Sports teams can create NFTs that provide access to exclusive content or even ownership in the team itself. Celebrities can “tokenize” their brand as well as personalized experiences, inviting fans to participate in their economy, not just have transactional relationships with it.
BOTTOM LINE:
In the further decentralization of the internet, a small group of super fans will matter more than a large mass of shallow engagement.
NFTs are a technology that every industry should be thinking about right now. They provide a new way of representing ownership, open up new revenue streams, enable unique fan experiences, drive collaboration, and fuel innovation. Businesses that embrace NFT technology now will be in the driver's seat as the coming Decentralized Industrial Revolution transforms commerce and community as we know it.
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