The simplest example that can be given is that of the dollar as a currency. If you owe someone a dollar, you expect that person to return a dollar, but you don't expect them to return you with the same dollar bill they owed you. You'll accept any kind of dollar, say four 25-cent coins, because you're worried about the value of that dollar and not the same dollar it gave you. In other words, the dollar is fungible. So, fungibility is the ability of an asset to be exchanged with other assets of the same type. Other fungible assets are commodities, such as oil, or gold bars.
On the other hand, non-expendable assets cannot be exchanged with each other. They are not interchangeable because each of them is unique and does not have the same value as any other asset.
Non-fungible assets are usually collectibles, but not always. An example of a non-expendable item is a car. If you send your car to the mechanic and he gives you another one that is in better condition, you will be happy. If the car is in worse condition, you will not be happy. But the mechanic's car doesn't have the value of your car, so it's not fungible.
Another example is if your grandfather gives you an antique watch: for its sentimental value, there is no other watch in the world that has the value of that watch. Or if you've created a work of art that's special to you, there's no other item that can have the same value, so that artwork is non-fungible.
Advantages and disadvantages of non-fungible tokens(NFT)
Like other crypto assets, NFTs have their advantages and disadvantages. Let's see what they are.
Advantages:
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NFTs can be a way for many people to join the world of cryptocurrencies and blockchain.
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Authenticity is guaranteed through Blockchain development services, which increases the value of NFTs and makes them more desirable as a marketplace.
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Many people struggle to monetize their work, especially in art and games, and NFTs can serve as a new way to generate income in these areas.
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NFTs can simplify the trading of collectibles. Several rare items can be purchased as digital versions of the collectibles.
Disadvantages:
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It takes a long time to create decentralized applications for NFTs. And sometimes, the process can get complicated.
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The NFT market is usually new. Therefore, NFTs are not used as much as fungible crypto-assets. So, for users who have no experience in decentralized application development, it might be difficult to use NFT.
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There is a potential for loss when one buys an NFT in the hope of making money by selling it to make a profit. If the market deflates, the buyer will experience a loss.
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Since it is still considered a new market, understanding NFTs can be tricky for people who are new to the realm of cryptocurrency development company and blockchain development services.
Why are non-fungible tokens popular?
In 2019 and 2020, NFTs experienced a modest rise in popularity, but their popularity skyrocketed in early 2021. Many artists and creators have come to see NFTs as an opportunity to showcase their skills digitally.
In February 2021, personalities such as YouTuber Logan Paul and rapper Post Malone got on the NFT bandtrain.
A tweet from an NFT space analyst, Cherie Hu, noted that in the last week of February 2021 alone, $18.2 million was spent on music NFT sales, 80% of all music NFT sales from the previous nine months.
However, this is nothing compared to the NBA's collectible digital NFT sales that exceeded $250 million in historical sales through the Boardroom platform. The most staggering thing is that $218 million was spent in February 2021.
There are several factors why NFTs are becoming popular. Cryptocurrencies, in general, are experiencing growth and are increasingly accepted. Blockchain development services are being seen as a solution to many problems in various industries.
The technology behind NFTs might be complex to understand, but factors like the cult behind NFTs, and scarcity are what make them so popular. The fact that it is a new technology and the feeling of being part of such an early stage also have their role. Cherie Hu best described it: "NFTs help bridge the stubborn gap between the emotional value and market value of art in a digital world."
Real-world uses of non-fungible tokens
Could NFTs tokenize the real world? Real-world uses of non-fungible tokens are starting to become more prevalent and more diverse. However, the use case for NFTs is still in its early stages. Let's analyze the most popular cases.
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Art:Programmable art is one of the most common types of NFT. Art is opening the doors to the adoption of blockchain technology as it is enabling the tokenization of various works of art. The blockchain offers proof of ownership, so when a user buys a work of art, they will be able to see the history of it. You can also know the former owners and the prices for which it was sold.
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Music files:They can also be associated with NFTs. Artists can mint their songs on NFT with platforms like Rarible and Mintbase.
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Certifications and licenses:these types of licenses can be minted in the form of NFT. Therefore, this can save a lot of time for those who verify records by verifying certificates and paper documents. With NFTs, they won't have to go through those procedures.
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– Sports:NFTs can prevent ticket forgery by issuing tokenized game tickets on the blockchain network.
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– Real estate:properties can be tokenized on a blockchain development services platform. A property is divided into smaller assets. Investors can then buy these assets through blockchain-based exchanges. Real estate tokenization also eliminates third parties in the transaction when someone buys or sells a home.
The Future of Non-Fungible Tokens
Many in the cryptocurrency development company are considering NFTs as the next big thing.
American billionaire entrepreneur Mark Cuban has expressed his opinion on NFTs, saying they have enormous potential.
Billionaire investor Chamath Palihapitiya and influencer Gary Vaynerchuk have also praised NFTs lately.
NFTs can be real-world assets digitized or tokenized on the blockchain. This demonstrates the great potential that NFTs have and the number of opportunities that exist for different uses. Since they are in the early stages of development, it is the perfect time to start learning and becoming familiar with NFTs.
Big brands are starting to get into NFTs. For example, the fantasy football game Sorare has registered 100 football clubs on its platform.
Soon NFTs could become familiar to all of us, just like Bitcoin. With the use of NFTs, many diverse fields such as law, art, supply chain, video games, certificates, and licenses can benefit. The sky's the limit for NFTs.
Conclusion
It's a fascinating time for cryptocurrencies and blockchain, and NFTs can be considered the strawberry of the cake.
They truly represent a unique part of the blockchain development services and have the potential to explode in a big way, not either because they can potentially solve various problems for different industries.
In addition, users can rest assured that copyright and authenticity will be preserved with NFTs, thanks to the wonders of blockchain technology.
