Non Fungible Tokens: Redefining Scarcity
NFTs, short for non-fungible tokens are all the rage within the cryptocurrency industry today. Famous digital artist Beeple made history after he auctioned “Everydays – The First 5,000 Days” for a whopping $69+ million. In addition, several other pop culture icons such as Kings of Leon and Aphex Twins have released their music albums and art as NFTs.
Clearly, the NFT fever is here to stay. With that in mind, in this guide, we will continue from where we left off in the previous introductory guide to NFTs and explore how the RSK ecosystem is helping build tomorrow’s NFT ecosystem through innovation and significant partnerships.
Index
Summarizing NFTs
Characteristics of NFTs: What Makes them Unique?
Most Popular Use-Cases of NFTs
Current State of the NFT Landscape
A Few of the Most Expensive NFTs
RSK’s Approach to NFTs
Coinsilium Partnership
Closing Thoughts
Summarizing NFTs
As a quick recap, NFTs are essentially “one-of-a-kind” (non-fungible) digital assets that can easily be bought and sold just like any other traditional asset. Simply put, NFTs can be thought of as digital tokens that function as certificates of ownership just like those of traditional equities or government bonds.
The major differentiating factor that separates NFTs from other digital tokens is their non-fungibility. An NFT can never be interchanged with another token of the same type in that every NFT is unique due to its digital ownership and there exists one and only one of every NFT. The non-fungible characteristic of NFTs gives them the immense potential to forever change the way how we view ownership of assets.
Characteristics of NFTs: What Makes them Unique?
As mentioned earlier, it is the digital ownership of an NFT that makes it unique. An NFT owned on any public blockchain such as RSK or Ethereum will exclusively belong to its holder and it can never be replicated whatsoever.
To give a real-life example, consider buying a personalized ticket. Suppose Andy buys a ticket for a movie he has been planning to watch for a long time, only he will be able to enter the theater based on his purchased ticket as it will have all of Andy’s personal details printed on it such as his name, age, social security number, gender, etc. Andy’s friend Joe cannot go watch the movie using Andy’s ticket.
This property of the ticket which hinders it from being exchanged between different people is called non-fungibility. In the case of NFTs, non-fungibility not only makes the underlying digital asset unique but also makes it scarce. Thereby, creating a supply deficit that pushes the asset’s price up.
In simple terms:
1) NFTs Cannot Be Exchanged
Drawing from the aforementioned movie ticket example, NFTs cannot be exchanged with another person or party. Due to their lack of fungibility, an exchange of NFT with the intention of receiving the exact same worth of value in NFT is not possible. Andy cannot exchange his movie ticket with that of Joe and still expect to enter the theater.
2) Every NFT is Unique
All NFTs are unique in that they have their own digital footprint that cannot be replicated or duplicated under any circumstance. There will always be one of Beeple’s “Everyday” digital art.
Most Popular Use-Cases of NFTs
Although NFTs is a fairly novel concept within the rapidly booming blockchain and digital asset landscape, their use-cases continue to balloon at an exponential pace. Ranging from art, music, content, virtual property ownership, the number of use-cases for NFTs is quickly gaining traction.
Listed below are a few of the most popular use-cases of NFTs:
1) Digital Art
There is no denying that NFTs exploded into mainstream media on the back of digital art frenzy. As alluded earlier, Beeple’s historic auction of “Everydays – The First 5,000 Days” for $69 million is a testimony to the fact that the mainstream is just waking up to the potential of NFTs to change the paradigm of art ownership.
Digitizing art solves numerous pain points associated with the old-school way of buying and storing artifacts such as the high cost of maintenance, logistics, safety and others. By owning a digital form of art, the owner is not bothered with any of the additional expenses. Additionally, the owner does not have to pay any extra fee to any third-party or agency to broker the transaction. NFTs enable direct interaction of sellers and buyers which helps both the entities to save transaction costs.
2) Music
Recently, popular rock band Kings of Leon sent shockwaves in the music industry when they announced they would be releasing their upcoming studio album as an NFT. At the time, the vast majority of the music industry was alien to the concept of NFTs. However, since the announcement, people are finally wrapping their heads around the latest phenomenon.
By releasing the album as an NFT, Kings of Leon claim that fans will be able to use it to prove ownership. Additionally, NFTs will enable fans exclusive rights to certain bonus features such as ownership of limited-edition vinyl, access to future live shows or alternative album artwork.
In the long-run, NFTs look poised to replace traditional paper-based gig tickets which suffer from several problems such as counterfeiting, duplication, etc. A gig ticket minted in the form of an NFT or let’s say “NFTicket” would be impossible to duplicate as its ownership will forever be stored in the underlying smart contract.
3) In-Game Assets
The gaming industry is typically the first of all industries to experiment with emerging radical changes that promise to improve the existing systems in place. NFTs and the gaming industry suddenly looks primed to explore even more with solutions that enable gamers to play online under a decentralized incentivized environment.
A Few of the Most Expensive NFTs
While the NFT craze continues to engulf the world, it is important to know the extent to which NFTs have popped up recently in monetary terms. While the concept of NFTs sounds trivial at first, its monetary implications certainly seem to be speaking an entirely different story. Listed below are three of the most expensive NFTs that have been auctioned to date.
1) Beeple – “Everydays – The First 5,000 Days”
This collage of 5,000 paintings made by Beeple was sold for a record $69 million major auction house Christie’s. It was also the first piece of purely NFT artwork to be auctioned by a prominent auction house.
2) CryptoPunk #3100
This digital artwork was auctioned on March 11, 2020, for approximately 4,200 ether ($7.5 million).
3) CryptoKitties – Dragon
Perhaps one of the earliest applications of NFTs in the real-world, Ethereum-based digital collectibles game CryptoKitties took the world by storm during the 2017, early 2018 crypto bull run. One of the NFTs from the application, called Dragon was sold for $170,000.
RSK’s Approach to NFTs
As mentioned previously, Watafan enables celebrities across the globe to directly interact with their fans via their own digital trading cards dubbed watacards that function as milestones to remember significant moments in their lives. To prove ownership, each watacard is cryptographically signed by the celebrities from their personal wallet on the blockchain.
However, since then, RSK has come a long way forward in terms of innovation in the NFT space. This can be substantiated with the help of recent partnerships that indicate that RSK is primed to become a major player in tomorrow’s NFT-dominated economy.
Coinsilium Partnership
On March 2, 2021, Coinsilium, a blockchain and open finance venture builder and an investor in leading blockchain projects such as RSK, IOV Labs, among several others announced its wholly owned Gibraltar-based subsidiary — Terrastream Limited – had entered into a MoU with Indorse Pvt. Ltd., a Singaporean company to form a joint venture geared toward launching a NFT technology-development studio in Gibraltar.
Dubbed “Nifty Labs,” the NFT development studio will work toward developing robust smart contract systems for NFT applications that would include bridge for NFTs on Bitcoin using RSK technology.
Commenting on the development, Eddy Travia, CEO, Coinsilium, noted:
“On behalf of the board I am most pleased to be able to announce the execution of this MoU with Indorse. This development marks a significant step forward for Coinsilium in the advancement of its newly adopted Blockchain venture builder strategy.”
With increasing attention and fast-growing investor interest in NFTs, (NBA Top Shot have now reached USD250 million in aggregate sales of ‘NFT Moments’ as of last week according, to CryptoSlam) the timing of this new proposed partnership with Indorse could not be better for Coinsilium’s ambitions within the fast-growing NFT space. The proposed partnership will also bring Indorse’s technical skills to the fore as demand for the development of NFT solutions continues to grow at an exponential rate.”
It is worthy of note that through the partnership, Nifty Labs will be working towards developing smart contract systems for NFT applications compatible with the RSK token standard so as to enable NFT transactions on the RSK blockchain. This will also make it possible for NFTs to be traded for RBTC or RIF ecosystem tokens and be used within the RSK ecosystem of decentralized applications (dAppps) and platforms.
Looking at the bigger picture, the alliance is essentially an attempt to bring NFTs on Bitcoin. At present, although ERC-721 compatible smart contracts and tokens can be written on the RSK blockchain, there still exist several missing elements that are required to make the RSK ecosystem conducive for different markets such as digital art, gaming, collectibles and other undiscovered applications.
In essence, Nifty Labs is committed to ideating and implementing different capabilities via the RIF marketplace to allow the flourishing RSK ecosystem to compete effectively with other competing NFT platforms and protocols.
Closing Thoughts
The world is only just warming up to the endless possibilities that NFTs can potentially offer. The untapped potential of NFTs cuts across different industries, be it art, real estate, music, cinema, gaming or anything else. Keeping up with the times, the advent of NFTs was only a matter of time. Paper-based ownership just does not cut it in the 21st century, especially in a world where everything is getting increasingly digitized.
Identifying the plethora of scope that NFTs offer, RSK blockchain is one of the leading blockchain projects that is betting big on NFTs.