NFT Applications


<p>The idea of humans having deep experiences that engage our consciousness pre-dates the NFT era. Desired by some and feared by others, the concept of a parallel digital existence has been on the minds of many for decades, but how and when it would manifest would be another matter.&nbsp;</p>



<p>Computer-based virtual worlds have been built since the technology has allowed it and virtual worlds with their own economies are not a new concept, as the digital age matured so too have these worlds. In this age of decentralization secured by cryptography, new ecosystems of metaverses are evolving.</p>



<h2>Virtual Reality and Gaming&nbsp;</h2>



<p>The development of the gaming world has always been closely tied to the development of virtual worlds and this symbiotic relationship has been intertwined since the 1970s when massively multiplayer online role-playing games (more commonly known as MMORPG) were born.&nbsp;</p>



<p>The internet offered connectivity never encountered before and early text-based online games that were originally known as Multi-User Dungeon (or MUD) thrived.&nbsp;&nbsp;</p>



<h2>Centralized VR Worlds&nbsp;</h2>



<p>There are many virtual worlds (<a href="https://hello.vrchat.com/" target="_blank" rel="noreferrer noopener">VRChat</a>, Verbella, …), each with its own flavor and user base.&nbsp;</p>



<p><a href="https://www.virbela.com/" target="_blank" rel="noreferrer noopener">Verbella </a>is centered around friendly spaces to attend conferences, meetings, and lectures, whereas in VRChat, you are more likely to attend a rave!&nbsp;</p>



<p>Since the revolving global lockdowns, interest in socializing in virtual spaces has increased. Virtual worlds and economies are not new.&nbsp;</p>



<p>For example, <a href="https://secondlife.com/" target="_blank" rel="noreferrer noopener">Second Life</a> was launched in 2003 and is the largest virtual world built by thousands of creators from around the world. Millions of virtual items are being sold on its marketplace.&nbsp;</p>



<p>Even Second Life&#8217;s thriving economy has its limitations. Like all virtual economies, whether within a game or in a virtual world marketplace, finding a fair, transparent system that has verifiable traceable ownership still seems out of reach.&nbsp;</p>



<h2>From Early Virtual World to Metaverses</h2>



<p>Digital LAND is at the core of any blockchain metaverse, making it possible to trade, loan, rent, develop and build on LAND which is verifiably yours, unique, and decentralized. LAND&nbsp; constitutes the fabric of blockchain worlds.&nbsp;</p>



<p>One of the first blockchain-based worlds was <a href="https://nonfungible.com/market-tracker/decentraland" target="_blank" rel="noreferrer noopener">Decentraland.</a> Their ICO ran at the end of 2017, raising over $26 Million. They held a digital land auction or ‘Terraform Event’ at that time where interested parties could purchase LAND with MANA, an ERC-20 utility token.</p>



<p>By the Summer of 2018, <a href="https://nonfungible.com/market-tracker/cryptovoxels" target="_blank" rel="noreferrer noopener">Voxels</a> had issued their own LAND token representing a voxel-based digital world, where it was a priority to create an environment allowing anyone with any skill or ability level to easily participate and create.</p>



<p>Since then, other blockchain-based worlds have been created and issued LAND. Some are more VR-orientated worlds with gamified elements, others are a universe filled with different video games created by gamers&#8230;</p>



<p><a href="https://nonfungible.com/market-tracker/somniumspace" target="_blank" rel="noreferrer noopener">Somnium Space</a>, <a href="https://nonfungible.com/market-tracker/thesandbox" target="_blank" rel="noreferrer noopener">The Sandbox</a>, <a href="https://axieinfinity.com/" target="_blank" rel="noreferrer noopener">Axie Infinity,</a> and new projects like <a href="https://alienworlds.io/" target="_blank" rel="noreferrer noopener">Alien Worlds</a> are examples of the growing number of projects using NFTS as vehicles for their LAND issuance and economies.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img src="http://nfcms1/app/uploads/2022/07/58_sandbox-map.jpg" alt="The Sandbox map" class="wp-image-39251"/><figcaption>Part of <a href="https://www.sandbox.game/en/" target="_blank" rel="noreferrer noopener"><em>The Sandbox</em></a><em> map</em></figcaption></figure></div>


<p>LAND’s scarcity and uniqueness combine with its traceable and decentralized nature to create a valuable asset. Owning LAND goes beyond digital ownership: it also opens the door to a host of other opportunities, such as the ability to monetize LAND. For instance, creators and businesses can sell their own work from a gallery or store built on LAND they own, among many other possibilities akin to real-world ownership and opportunities.</p>



<p>LAND acts as any other ERC-721 token does since it can be traded on digital marketplaces such as <a href="https://opensea.io/" target="_blank" rel="noreferrer noopener">OpenSea</a>. Each piece of LAND represents a plot or area within a world. These plots can be grouped together to create larger estates and populated with a larger project, business, or game.</p>



<h2>Virtual Financial Reality</h2>



<p>VR worlds that are not blockchain-based all face similar issues around the true ownership of digital goods and of the worlds themselves. Indeed, they are run by companies on centralized servers which have their own vulnerabilities and rules that are imposed from the top down.</p>



<p>One of the problems within both gaming and virtual world ecosystems has been to integrate real-world systems into virtual ones in a complementary way.</p>



<p>Monetization is just one aspect of this. There is also cross-platform interoperability to consider and that doesn&#8217;t just mean being able to sell your digital assets across all marketplaces but also, for example, the possibility to keep all your assets (digital avatar, wearables, NFTs, cryptos, in-game items…) across different worlds.</p>



<h2>Cross-Universe Compatibility</h2>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img src="http://nfcms1/app/uploads/2022/07/57_interoperability-1.jpg" alt="Cross-Universe Compatibility: Interoperability" class="wp-image-37682"/><figcaption><em>Cross-Universe Compatibility: Interoperability</em></figcaption></figure></div>


<p>One of the biggest challenges for metaverses is interoperability with other NFT projects. Indeed, as each NFT has its own smart contract and standards, interactions between multiverses are not always easy to achieve. To our knowledge, there has yet to be an NFT that is interoperable between multiple blockchains.</p>



<p>While Decentraland continues work on its builder where you can now use NFT frames to display other NFTs publicly on LANDS, CryptoVoxels has been allowing free image uploading for a long time. This enables all artists to link their creations directly to the URL of the desired sales platform.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Metaverses are computer-based virtual worlds in which you can live a parallel digital existence.

Metaverses or Virtual Worlds


<p>VR worlds have of course been, and still are, created in many different versions but it was the arrival of the blockchain and its expansive possibilities that offered the potential to have real-world integration.&nbsp;</p>



<h2><a href="https://nonfungible.com/market-tracker/decentraland" target="_blank" rel="noreferrer noopener"><strong>Decentraland</strong></a></h2>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img src="http://nfcms1/app/uploads/2022/07/53_decentraland.png" alt="Decentraland Metaverse" class="wp-image-39261"/><figcaption>Decentraland Metaverse</figcaption></figure></div>


<p>One of the first blockchain worlds founded on Ethereum.</p>



<p>These Worlds have flourished since Decentralands ICO in 2017. The book and subsequent movie <em>Ready Player One</em> were influential at the time and the VR industry was pushing forward with lower-priced entry hardware. Crypto was at an all-time high and Decentraland attracted over $25 million in its initial crowd sale in 2017.&nbsp;</p>



<h2><a href="https://nonfungible.com/market-tracker/cryptovoxels" target="_blank" rel="noreferrer noopener"><strong>Voxels</strong></a></h2>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img src="http://nfcms1/app/uploads/2022/07/54_cryptovoxels.jpg" alt="Voxels Metaverse" class="wp-image-39266"/><figcaption>Voxels Metaverse</figcaption></figure></div>


<p>Launched in 2018, Voxels (formerly Cryptovoxels) quickly became the go-to hang-out for artists in the crypto-sphere. Developed by a small, passionate team, the possibilities for customizing the desired aesthetics for LAND are much more varied and open-ended than in Decentraland.</p>



<p>The graphic style is completely in voxels (like Minecraft) but the game is accessible directly from the web browser of a computer.</p>



<h2><a href="https://nonfungible.com/market-tracker/somniumspace" target="_blank" rel="noreferrer noopener"><strong>Somnium Space</strong></a></h2>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img src="http://nfcms1/app/uploads/2022/07/55_somnium.jpg" alt="Somnium Space Metaverse" class="wp-image-39271"/><figcaption>Somnium Space Metaverse</figcaption></figure></div>


<p>Somnium Space aims to create a metaverse focused on virtual reality. The total experience can therefore be experienced directly with VR glasses, although it is also possible to access the world of Somnium Space via a browser or an application to install.</p>



<h2><a href="https://nonfungible.com/market-tracker/thesandbox" target="_blank" rel="noreferrer noopener"><strong>The SandBox</strong></a></h2>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img src="http://nfcms1/app/uploads/2022/07/56_sandbox.jpg" alt="The Sandbox Metaverse" class="wp-image-39276"/><figcaption>The Sandbox Metaverse</figcaption></figure></div>


<p>One of a kind, The Sandbox is a metaverse where you can create video games inside each LAND. The rewards obtainable in the games are offered in $SAND, the in-game token that also serves as the overall currency for the ecosystem.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Blockchain worlds, or metaverses, are digital worlds that run on a decentralized blockchain system. The most popular metaverses have been deployed on Ethereum as decentralized apps.

Most Popular Metaverses


<p>Virtual economies in games have existed for years, such as marketplaces, currencies, and in-game assets such as skins and weapons in games like Fortnite and World of Warcraft, but currently, these are tied to each game that they are played in.</p>



<p>The markets in these games are largely unregulated with no real-world value except for the value placed in them by the players. The interoperability and security of having these and more held on a blockchain are immense.&nbsp;</p>



<p>The traditional gaming industry is a behemoth with many sources estimating <a href="https://www.statista.com/statistics/293304/number-video-gamers/" target="_blank" rel="noreferrer noopener">around 3 billion players during 2021</a>. Multiplayer online gaming has exploded over the years as the technology developed. Competitive gaming at a professional level, otherwise known as esports, is an extremely lucrative industry.</p>



<h2><br>A Rewarding System Reserved for the Elite</h2>



<p>Although there is money to be made for both players and games studios, the current system of monetization is mainly based on sponsorships and funding from advertisers. And mostly for the professional esports players, not for the average player who hasn’t got a huge YouTube or twitch following.</p>



<p>At best, earning anything is down to luck, possibly winning tournaments that you pay to enter… Some skills are obviously needed for certain gambling games, but gambling comes with its own hazards!&nbsp;</p>



<p>Virtual assets, skins, and in-game purchases are all commonplace within online multiplayer and other gaming ecosystems but generating real cash revenue for your time and skills spent in-game is another matter. There is no doubt that economies have already been established around games and their assets, players trade their hard-earned virtual items peer-to-peer with other players for cash but there are downsides to this.&nbsp;</p>



<p>For example, the majority of game studios prohibit the resale and exchange of digital assets. Other players can also associate it with cheating and buying your way in as opposed to earning it fairly. There is also the lack of interoperability between the assets and any other platforms as well as the trust issue of buying directly from a stranger.</p>



<h2>In-Game Digital Assets</h2>



<p>Potentially one of the most exciting use cases for NFTs is in-game digital assets. One of the issues with blockchain and crypto has always been finding a path to mass adoption. NFT in-game assets seem set to be the most likely catalyst for this long-awaited moment. </p>



<p>NFT in-game assets have a layer of security built-in and in addition, can be openly traded directly for crypto or traditional Fiat ($, £, €, etc.), on regulated and decentralized marketplaces. Also, digital ownership enables players to earn real-world cash for their skills and the time they spent playing the games.</p>



<h2>Using NFT in Video Games</h2>



<p>In 2014, the first &#8216;crypto games&#8217; began to appear with experiences mixing blockchain technology and well-known gameplay. Indeed, before 2018 and the appearance of the NFT standard on Ethereum, it was possible to participate in experiments such as:</p>



<ul><li>Buying trading card game NFTs</li><li>Playing rewarding adventure games in Bitcoin</li><li>Using servers to mine cryptocurrencies to reward players.</li></ul>



<p>Of the three projects that were chosen to work on the ERC-721, one of them was a mix of game and collectibles: <a href="https://nonfungible.com/market-tracker/cryptokitties" target="_blank" rel="noreferrer noopener">CryptoKitties</a>. The goal of the game is extremely simple: breeding two Kitties to have a third one that could have a rare trait. Each Kitties is a unique NFT that has between 5 and 10 strokes.</p>



<p>Beyond the speculative aspect, the interest here is the action of breeding that takes place on-chain. The information regarding the action cannot, therefore, be challenged. This has clogged the Ethereum blockchain because of the high number of complex transactions but has also given green light to developers wishing to do blockchain gaming.</p>



<p>In addition to crypto gaming that rewarded players in crypto, it was now possible to have games whose shares could be recorded directly on the blockchain.</p>



<h2>A Turning Point for the Gaming Industry</h2>



<p>Blockchain gaming has been heralded as the future of the gaming industry but as with every transitional shift in an already established sector, the intersection between blockchain and gaming has taken a few years to develop and is still in its infancy.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Before going deeper into how NFTs are being used for gaming, here's an introduction to the virtual economies and why NFTs are important for this industry.

NFT Gaming: Introduction to Virtual Economies


<p>The use of the word ‘blockchain’ differs according to the uses and more or less accurate synonyms have been used over time to try to encapsulate this booming gaming segment. Alongside blockchain gaming’, ‘crypto gaming’ was the first term to emerge. More recently, the term ‘<a href="https://nonfungible.com/academy/nft/gamefi-play-to-earn" target="_blank" rel="noreferrer noopener">play-to-earn</a>’ is gaining momentum.</p>



<p>The definitions of blockchain and crypto gaming will surely evolve over time, but here are the differences we have observed between these two concepts.</p>



<h2><strong>Blockchain Gaming</strong></h2>



<p>The term ‘blockchain gaming’ highlights the blockchain technology itself, independently of financial assets. Thus, the values of decentralization, true ownership, and resistance to censorship inherent to blockchain are promoted and presented as the only option.</p>



<p>Total decentralization is an enormous technical challenge as many questions are raised about its possible realization, for example:</p>



<ul><li>Do the rules of the game have to be written on the blockchain, thus making them immutable?</li><li>Do the graphics have to be generated by a central server or will one day each computer be able to provide some resources to host an entire MMORPG?</li><li>What is interoperability in a metaverse?</li></ul>



<p>‘Blockchain gaming’ aims to be as decentralized as possible. For blockchain purists, reaching this level of development is a real dream! At the moment, there are no such games available, but some are trying to get closer to it. As an example, we can talk about <a href="https://nonfungible.com/market-tracker/decentraland" target="_blank" rel="noreferrer noopener">Decentraland</a>-based games such as <a href="https://battleracers.io/" target="_blank" rel="noreferrer noopener">Battle Racers</a> or <a href="https://chainbreakers.io/" target="_blank" rel="noreferrer noopener">Chainbreakers</a> or, Decentraland itself.</p>



<p>Decentraland is probably one of the most decentralized projects to date. The LANDs metadata are hosted on Ethereum thanks to NFT and all the graphics are hosted on 13 servers kept by small DAOs all around the world. If one is shut down, players can still connect to the game using another server.&nbsp;</p>



<p>Even if Decentraland isn’t a video game, the way they achieved decentralized architecture is a good example of what can be done without the need of hosting everything on a blockchain.</p>



<h2><strong>Crypto Gaming</strong></h2>


<div class="wp-block-image">
<figure class="aligncenter size-large is-resized"><img loading="lazy" src="http://nfcms1/app/uploads/2022/07/crypto-gaming-1.jpg" alt="" class="wp-image-40627" width="512" height="288"/><figcaption>Crypto gaming is defined by a game that rewards players in crypto or NFT.</figcaption></figure></div>


<p>Crypto games are games in which a cryptocurrency is the financial asset in circulation on the blockchain. Therefore, the gameplay will utilize and payout using this cryptocurrency.</p>



<p>Those games reward their players in crypto or NFT. Your skills and the amount of time you invest in the game determine your odds of winning.&nbsp;</p>



<p>Even if, in the beginning, there were games that resembled the Flash games of the 2000s, the gameplay and the styles offered have evolved enormously.&nbsp;</p>



<p>One example of crypto gaming is the <a href="https://satoshis.games/" target="_blank" rel="noreferrer noopener">Satoshis’ Games</a> studio. They created many crypto games such as <a href="https://lightnite.io/" target="_blank" rel="noreferrer noopener">Lightnite</a>, a Fortnite-like game but would reward players with Bitcoin dust through the Lightning Network. Other games made by Satoshis&#8217; Games exist and are available through <a href="https://elixir.app/" target="_blank" rel="noreferrer noopener">Elixir</a>, an all-in-one app combining NFT marketplace and app store.</p>



<h2><strong>Different Terms for Varying Degrees of (De)Centralization</strong></h2>



<p>Despite a difference in the term used to designate two different concepts, blockchain and crypto gaming are often confounded. Yet one advocates decentralization while the other is essentially focused on the rewards obtained by playing.</p>



<p>The terms ‘crypto gaming’ or ‘blockchain gaming’ have therefore become marketing tools. Depending on how the game has been designed, it will be located in a more or less decentralized spectrum.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Alongside 'blockchain gaming', the term 'crypto gaming’ has emerged to define this booming gaming segment. The difference resides in their varying degrees of decentralization.

The Differences Between Blockchain and Crypto Gaming


<p>Since the gaming industry began, there have been various business models applied to their monetization with massively multiplayer online gaming (MMO) and smartphone technology only expanding these business models further.&nbsp;</p>



<h2><strong>Different Playing Models: Pay to Win, Free to Play, Freemium…</strong></h2>



<p>A &#8216;Pay to Win&#8217; game model is one that locks the player in at some point in the game and forces them to pay to keep moving forward.&nbsp;</p>



<p>This term is also used when there is too much imbalance between the players. In particular, where the access to paid content providing bonuses is too high compared to what can be obtained by playing the game for free. The players who bought these items (very expensive most of the time) have a strong advantage, especially in the context of Players vs Players (PvP). To remain competitive, it becomes mandatory to pay to win.</p>



<p>A declination of the ‘Pay to Win’ is the &#8216;freemium&#8217; model. This is common in mobile games where the first 2 weeks of play are extremely easy with the difficulty then increasing dramatically, eventually forcing the player to checkout to improve their character.</p>



<p>Another concern has arisen in the world of video games over time: the not always random distribution of ‘loot boxes’. The concept is simple: buy a box containing a randomly distributed mystery reward. The main criticism of this distribution system is that it approaches casino practices and this has been banned in some countries not for the ‘risky’ side but because of the resale of the items in a secondary market.&nbsp;&nbsp;</p>



<h2><strong>‘Play to Earn’: Revolutionizing the Gaming Industry</strong></h2>



<p>‘Play-to-earn’ (P2E) is also called ‘GameFi’ (the contraction of Gaming + Decentralized Finance).&nbsp;</p>



<p>‘Play to Earn’ is not that dissimilar to the ‘pay to win’ model in that the entrance to the game has no initial cost and games have some similar mechanics as the ones found in the ‘pay to win’ model. The crucial difference is that ‘play to earn’ models function through blockchain technology, which gives players true ownership of the digital assets they earn through participating in the game.&nbsp;</p>



<p>Excuse the pun, but ‘play to earn’ is a real game-changer, and the more you explore this model, the more exciting the possibilities become.&nbsp;</p>



<p>Participating in a P2E game rewards you for your time and skills. Being a loyal user and ultimately winning, gives you real ownership of digital assets. This may not sound like a particularly unusual set-up until you discover that these rewards are non-fungible tokens that you own. They are desirable and have a currency value on digital marketplaces where they can be sold. In addition, these NFT rewards commonly bestow on the holder in-game bonuses and access to special levels or rooms, making them even more valuable to players and therefore also showing an increased monetary value.</p>



<p>Giving gamers the ownership of digital assets not only benefits them but also brings value to the game itself by participating in the in-game economy. Players create value for other players and the game developers for which they are rewarded.&nbsp;</p>



<h2><strong>The Benefits of NFT Gaming</strong></h2>



<p>Players can sometimes earn in-game currency which is tradable in currency pairs on crypto exchanges. Games such as <a href="https://nonfungible.com/news/game/axie-infinity-from-video-games-to-wages" target="_blank" rel="noreferrer noopener">Axie Infinity reward $SLP </a>for putting your cute Axie monsters into battle tournaments and winning. The $SLP is also needed in-game to ‘breed’ your Axies further utilizing the in-game economy.&nbsp;</p>



<p>A more complex example is <a href="https://www.aavegotchi.com/" target="_blank" rel="noreferrer noopener">Aavagochi</a>, a game in which digital pets can ‘farm’ and ‘mine’ digital assets and crypto, which again can be sold on marketplaces.</p>



<p>In the current world of multiplayer online gaming, the ‘pay to win’ model means big bucks for the gaming companies but shelling out hard-earned cash to gain an advantage over your competitors has its issues.&nbsp;</p>



<p>For instance, dedicated players&#8217; time and energy are often superseded by wealthy players who don’t want to spend time grinding in the game and who prefer buying expensive upgrades or weapons. This creates an imbalance within online gaming communities.&nbsp;</p>



<p>One of the <a href="https://nonfungible.com/news/game/nft-advantages-risks-blockchain-gaming" target="_blank" rel="noreferrer noopener">benefits of blockchain gaming</a> is that a game can have its own in-world decentralized, peer-to-peer, trusted economy. Ultimately, players have ownership of the digital assets they have won or earned from gaming which, in turn, allows them to monetize their efforts independently of the game itself.</p>



<p>In a &#8216;play to win&#8217; environment, you are the one selling the wealthy gamer or collector their new upgrade, an upgrade earned from your time and skills playing in the game.</p>



<p>&#8216;Play to earn&#8217; is a form of human-based mining, where your personal time and skills spent within a game generate value both for the platform and for yourself.&nbsp;</p>



<p>With the rise of the ‘Play to earn’ ecosystem in 2021 thanks to Axie Infinity and their governance token AXS, the term &#8216;GameFi&#8217; appeared. This term is the combination of gaming and decentralized finance.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Participating in a ‘Play to Earn’ game rewards you for your time and skills. Being a loyal user and ultimately winning, gives you real ownership of digital assets.

GameFi / Play to Earn: Revolutionizing the Gaming Industry


<p>Collecting items requires being rigorous and setting clear goals before moving on to the purchase. This practice has existed since the dawn of time and has become a craft.&nbsp;</p>



<p>Thanks to digital scarcity made possible due to the blockchain, it is now possible to pursue digital collectibles like NFTs.&nbsp;</p>



<p>But what are NFTs Collectibles exactly?</p>



<h2>NFT Collectibles: Different from Art</h2>



<p>To avoid confusion with the “NFT Art” chapter of this Academy, it is necessary to clarify that collectibles should not be categorized as art. Although it is possible to collect works of art, the use of collectibles in the NFT ecosystem is far removed from what art is.</p>



<p>It’s a fine line, but it does exist. To fully understand what differentiates collectibles from art, we invite you to read our two previous articles in which we dive into NFT art:</p>



<ul><li><a href="https://nonfungible.com/blog/the-cryptoart-movement" target="_blank" rel="noreferrer noopener">What is the crypto-art movement?</a></li><li><a href="https://nonfungible.com/blog/art-of-nfts" target="_blank" rel="noreferrer noopener">Art and NFTs.</a></li></ul>



<p>If virtual collectibles are to be separated from art, it is for a reason: NFT collectibles have been created to be used and are usually attached to a project. Even if artists have previously worked on the visual aspect of the collectibles, the purpose of their existence is not solely to be considered art.</p>



<h2>Examples of Collectible NFTs</h2>



<p>We have seen several ways to develop projects around this segment: some have the sole purpose of serving as a collector’s item, others belong to other segments such as video games.&nbsp;</p>



<p>In 2021, shortly after the success of <a href="https://nonfungible.com/market-tracker/boredapeclub">Bored Ape Yacht Club</a>, LarvaLabs’ <a href="https://nonfungible.com/market-tracker/meebits">Meebits</a> project was also sold out in less than a day. These two sales were the prelude to a trend that would last all summer: <a href="https://nonfungible.com/news/collectible/collectibles-generative-profile-picture-fomo" target="_blank" rel="noreferrer noopener">Pictures for Profile (PFP)</a>.</p>



<p>Pictures for Profile (PFP) are avatars that have been generated through an algorithm. The characteristics that constitute each avatar are created upstream and can take several forms:</p>



<ul><li>Earrings</li><li>Glasses</li><li>Hat</li><li>Skin color</li><li>Tee-shirt</li><li>Pendant</li><li>Piercing</li><li>Species (alien, robot, zombie, etc..)</li></ul>



<p>Some of the features are rarer than others, so avatars that possess them will be more sought after. For BAYC and Meebits, the characteristics were defined randomly during the mint.</p>



<p>Before BAYC and Meebits, it was mostly <a href="https://nonfungible.com/market-tracker/cryptopunks" target="_blank" rel="noreferrer noopener">CryptoPunks</a> that served as Profile Pictures signifying OG status in the NFT space. Displaying these made it possible to publicly show your inherent belonging to the NFT community. But with the arrival of newcomers to the ecosystem since the 2020 lockdowns, the desire to &#8216;be part of an NFT community&#8217; has broadened. </p>



<p>Then came the “NFT Summer” with so much PFP-type project creation that the market became flooded. We were able to see in our <a href="https://nonfungible.com/reports/2021/en/q3-quarterly-nft-market-report" target="_blank" rel="noreferrer noopener">NFT Q3 2021</a> report the trend of selling, at a loss, some NFT projects such as collectibles.</p>



<h2>Collectible Cards and badges</h2>



<p>Collectible card NFTs have only one purpose: to be collected. They can represent players of well-known sports, key moments in life, or historical events.</p>



<p>On the Wax blockchain, for example, it is possible to find IPs known as Hot Wheels or MLB. On Ethereum, the <a href="https://curionft.com/" target="_blank" rel="noreferrer noopener">Oncurio</a> project offers collectibles from Mars Attack, Heavy Metal, or Scott Pilgrim vs. the World.</p>



<p>Badges are also collectible NFTs but have a different purpose than cards. They are usually used to reward users after completing a number of tasks. This is the case with the <a href="https://enjin.io/blog/microsoft-azure-heroes" target="_blank" rel="noreferrer noopener">Microsoft Azure program</a> that distributes NFTs to reward learning efforts on its platform. Before them, it was <a href="https://gitcoin.co/kudos" target="_blank" rel="noreferrer noopener">Gitcoin that was already doing this with Kudos</a>.</p>



<h2>Blockchain Games and Collectibles</h2>



<p>Generally, the NFTs that can be used in video games are equipment such as weapons or armor. There are, however, some NFT use cases related to the video game environment.</p>



<p>The best example is the trading card game <a href="https://godsunchained.com/" target="_blank" rel="noreferrer noopener">Gods Unchained</a>, where several card qualities exist:</p>



<ul><li>Meteorite: common</li><li>Shadow: uncommon</li><li>Gold: rare</li><li>Diamond: very rare</li></ul>



<p>The quality of the map will not change anything in the gameplay during the game. This feature is primarily for collectors.</p>



<p>Another interesting example of use comes from the game <a href="https://www.illuvium.io/" target="_blank" rel="noreferrer noopener">Illuvium</a>. It aims to be a Massively Multiplayer Online Role Playing Game (MMORPG) using NFTs and blockchain as the center of the game. For their presale, NFTs are promotional badges and emotes to use in the game!</p>



<p>Another form that NFTs can take as a collector’s item is &#8216;skins&#8217;. The appearances of certain weapons or characters are also assets to collect. In the game <a href="https://www.lightnite.io/" target="_blank" rel="noreferrer noopener">Lightnite</a> inspired by Fortnite, a marketplace allows you to exchange different appearances of weapons that can be used in the game. This is also the case for the Battle Royale-style game <a href="https://blankos.com/" target="_blank" rel="noreferrer noopener">Blankos</a> which has its own marketplace.</p>



<h2>NFT Collectibles: Your Digital Identity Takes Form</h2>



<p>It is important to remember that “real ownership” is a notion strongly rooted in the identity of the crypto universe. Collectors like to own things as diverse as they are varied, so it’s natural to find this behavior in the NFT ecosystem as well.</p>



<p>Collectible NFTs, therefore, take many forms and are not just randomly generated avatars. As we saw above, they can also be video game items. But one of the major things that makes a real digital identity is the personalization of your avatar, including NFT wearables.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Unlike artworks, NFT collectibles have been created to be used and are usually attached to a bigger project.

Collectibles


<p>In 2020, wearables were mainly tied to individual worlds, though cross-platform interoperability is being explored and will surely be a development soon enough. As things stand, wearables are a growing part of the NFT sector with a strong ratio between Primary and Secondary Markets sales attracting investors and collectors alike.</p>



<h2>Wearables X Metaverse</h2>



<p>Customization of&nbsp; avatars in online games have always existed. The importance of personalizing your digital identity has continued to grow as massively multiplayer games and social networks have developed.</p>



<p>In metaverses like <a href="https://www.voxels.com/" target="_blank" rel="noreferrer noopener">Voxels</a> or <a href="https://decentraland.org/" target="_blank" rel="noreferrer noopener">Decentraland</a> it is possible to buy and sell clothes or customizing elements of your avatar via NFTs. That said, there is very little NFT compatibility between multiple metaverses.</p>



<p>For example, a cap created for The Sandbox is not presently able to be warn in Decentraland. Interoperability between projects is progressing, though the necessary standards to coordinate different NFT actors is vigorously discussed.</p>



<p>Blockchain metaverses have explored different ways to create and monetize the sale of wearables. For instance, Voxels is a voxel-based world in which users can create and mint their own wearables with relative simplicity. The Voxels Wearables Market is packed with every conceivable kind of wearable style and quality you can imagine with relatively low prices for most items, except for the work of the most well-known and desirable creators.</p>



<p>On the other hand, in Decentraland the process of making wearables requires a high level of technical skill. Also, the ability to deploy wearables in Decentraland has been more controlled, firstly wearables were only licensed to established, knowledgeable community members and then more recently to those whose designs are approved&nbsp; via the Decentraland wearables committee.</p>



<h2>Wearables: Status and Sense of Style</h2>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img src="http://nfcms1/app/uploads/2022/07/61_Atari-sneakers.jpg" alt="Purple RTFKT x Atari Sneakers in Decentraland" class="wp-image-38354"/><figcaption><em>Purple RTFKT x Atari Sneakers in Decentraland</em></figcaption></figure></div>


<p>Wearables reflect a personal status when visible in-world and in your wallet. It isn&#8217;t just the most expensive outfit that counts though… The standout looks and styles that individuals create from a combination of wearables gain as much respect, if not more, than an avatar wearing a full, pre-bought outfit even if it is a super rare and expensive set.</p>



<p>At the same time, having participated in a brand’s launch event and being rewarded with a wearable (such as a pair of RTFKT Sneakers X Atari sneakers) leaves an unforgettable memory for the users. Years later, this pair of shoes will still exist and its owner will be certain of its provenance. If a person received these sneakers at the event and never sold them, the blockchain would be able to confirm this information!</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Wearables are specific NFT collectibles backed by in-game skins. These NFT clothes and accessories can be traded on digital marketplaces and ‘worn’ by your avatar in the metaverse.

Wearables


<p>Verifiable provenance and authenticity have been long-standing problems within the art world. Matters of copyright and ownership have also been traditionally difficult for both creators and distributors both to uphold and prove.</p>



<p>These various aspects, which were already problematic before, have worsened with the arrival of digital art. Indeed, any content can be duplicated endlessly on the internet. The need for ‘digital scarcity’ or ‘rare art’ has therefore increased over time&#8230; and blockchain can fix that.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img src="http://nfcms1/app/uploads/2022/07/besancia-cypherpunk.png" alt="besancia cypherpunk" class="wp-image-40522"/><figcaption><em><a href="https://codex-viewer.com/record/233743" target="_blank" rel="noreferrer noopener">Cypherpunk </a>&#8211; Besancia</em></figcaption></figure></div>


<p>Using blockchain technology immutability for creators to protect and track their work has been explored over the years to solve these issues, some blockchains being specifically created to that aim. It wasn&#8217;t until the rise of NFTs that a true solution was in sight.&nbsp;</p>



<p>Non-Fungible tokens have incited a crypto art revolution, enabling artists and creatives to build their careers in a decentralized space with true authenticity, traceable origin, ownership history, and no middle man. Furthermore, NFTs metadata enables the creation of truly unique rare digital artworks.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img src="http://nfcms1/app/uploads/2022/07/JessieJess-I-am-Node.jpg" alt="JessieJess I am Node" class="wp-image-40531"/><figcaption><a href="https://knownorigin.io/gallery/11353000-i-am-node-2020-series-e-punk" target="_blank" rel="noreferrer noopener"><em>I am node &#8211; Jessiejess</em></a></figcaption></figure></div>


<h2>A History of Digital &amp; Crypto Art</h2>



<p>Digital art in itself is not a new concept and has been a maturing part of the multiple billion-dollar arts market since technology has allowed it. The term Digital Art was first used in the early 1980s when a team of computer engineers created a program named AAron to ‘paint’ for the pioneering A.I. artist Harold Cohen. Since this time, as the technology developed, innovations at the intersection of computer-assisted art and traditional methods have evolved.</p>



<p>Not always the case but one of the issues with establishing a value for digital creations has been the lack of the work&#8217;s physical presence like a video installation or a file holding an artwork. Another issue is solved by minting your works on a blockchain: these digital creations can be easily reproduced and redistributed, maintaining copyright and validating rightful ownership.</p>



<p>Pioneered by the LavaLabs team, CryptoPunks forged the way for art on the blockchain. A set of 10,000 ERC-20 tokens were produced, each an individual AI pixel character offered for free to claimants. Some Punks are rarer than others with each having an individual set of metadata attributes, some more common than others. That was back in 2017 a market and community quickly developed around them and by 2021 CryptoPunks had reached iconic heights of both monetary value and status as digital antiques of the future.</p>



<figure class="wp-block-image size-full"><img src="http://nfcms1/app/uploads/2022/07/cryptopunks-collection-1.jpg" alt="" class="wp-image-40635"/><figcaption><em>CryptoPunks are a collection of 10,000 24×24 pixel art images.</em></figcaption></figure>



<p>Since these beginnings, the minting of artworks as NFTs on the Blockchain has become extremely popular with many different decentralized Marketplaces formulating.&nbsp;</p>



<p>Creators can either ‘mint’ their own works such as on <a href="https://www.mintbase.io/" target="_blank" rel="noreferrer noopener">Mintbase</a> or on digital art marketplace platforms where the artist is pre-vetted, such as on <a href="https://knownorigin.io/" target="_blank" rel="noreferrer noopener">Known Origin</a>, helping to promote the artist and giving them added legitimacy.&nbsp;</p>



<h2>What is the Future of NFT Art?</h2>



<p>The future looks bright for Art backed by a non-fungible token system, with many already established digital and traditional artists finding a new home in the decentralized system of now also belonging to the Crypto Art scene (for example, <a href="https://nonfungible.com/news/art/onboarding-major-artists-to-the-nft-space" target="_blank" rel="noreferrer noopener">Jose Delbo from DC Comics</a>)..</p>



<p>You can also explore our selection of <a href="https://nonfungible.com/news/art/the-cryptoart-movement" target="_blank" rel="noreferrer noopener">10 crypto artists to discover</a> to get an idea of what the crypto art movement is and why it matters so much.&nbsp;</p>



<p>Some controversial aspects go along with putting Art on the blockchain, especially regarding the metadata and where it is held. Some methods hold more information on-chain than others. Purely on-chain is completely immutable but with Ethereum&#8217;s gas prices so high, it can be very expensive to pay for the transaction to mint.&nbsp;</p>



<p>Other legitimate solutions involve using IPFS on a centralized server where files are held with only certain meta held on-chain. The purists are firm in their belief in things being as on-chain as possible whereas many simply don’t understand the difference and only see the reduced cost of off-chain hosting.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Although digital art has existed for a while, some of the vital differences with art that is held on the blockchain reside in its immutable data and in that it offers proof of ownership and origin.


<p>Growing in popularity in the crypto financial economy, the way governance tokens are distributed as rewards ensures that the platform community is consolidated.</p>



<h2><strong>DeFi and Governance</strong>&nbsp;</h2>



<p>Decentralized finance was one of the fastest growing sectors in the crypto space in 2020. According to the data from <a href="https://www.theblock.co/data/decentralized-finance/total-value-locked-tvl" target="_blank" rel="noreferrer noopener">The Block</a>, The number of deposits in DeFi protocols increased from US$19.72B in January 2021 to US$240B in January 2022.</p>



<p>As of yet, DeFi is not completely decentralized and governance tokens are a common part of DeFi projects, enabling them to gain a higher level of decentralization. Many governance tokens enable investors to influence the protocol&#8217;s decisions.</p>



<p>Governance tokens function as regular ERC-20 tokens issued on a suitable blockchain, invariably deployed on Ethereum, with the token main difference from others being that the issuing platform has created purpose-built applications for their use.&nbsp;</p>



<h2><strong>Voting/Governance</strong>&nbsp;</h2>



<p>Governance tokens come with certain rights regarding the project they are attached to, which often include the ability to vote on the project’s developments &amp; directions.&nbsp;</p>



<p>For example, individual games like <a href="https://www.aavegotchi.com/" target="_blank" rel="noreferrer noopener">Aavegotchi</a> issue their own non-fungible tokens enabling holders to vote on future developments in the game, meaning they have the power to shape the virtual world from within the ecosystem they use.&nbsp;</p>



<p>Decentralized Autonomous Organizations are increasingly keen to use these governance tokens to gather interested stakeholders around their innovative projects, enabling them to take a direct part in the future of the organization itself.</p>



<p>A governance token usually comes with 1 vote but project owners can choose different vote attribution systems based on their values and needs. They’re also able to create <a href="https://blog.aavegotchi.com/aavegotchi-governance-voting-as-a-member-of-the-worlds-most-active-dao/" target="_blank" rel="noreferrer noopener">voting attribution models for their governance tokens</a> that will favor an individual&#8217;s real commitment and engagement to a project over the wealthy collectors, who otherwise can centralize their voting with their large tokens portfolios.&nbsp;&nbsp;</p>



<p>Tokens can be staked to the platform and the user can vote on certain parameters within it, influencing the project&#8217;s future direction.</p>



<h2><strong>How to Obtain a Governance Token?</strong></h2>



<p>One of the central pillars of the DeFi ecosystem is the way in which projects go about distributing their native token. In this setup, the token is ‘earned’ by participation in the project. There are a few ways an investor can acquire a platform governance token.</p>



<p>This includes:</p>



<ul><li>Buying a governance token directly on crypto exchanges.</li><li>Earning a governance token via one of these 3 methods:<ul><li>Staking another currency on their platform.&nbsp;</li><li>Adding funds to the liquidity pool.&nbsp;</li><li>Participating in incentives for which you are rewarded.</li></ul></li></ul>



<h3><strong>Buying&nbsp;Governance Tokens</strong></h3>



<p>Governance tokens can be bought directly on crypto exchanges and traded just like any other fungible ERC-20 crypto token but their purchase implies becoming the owner of rights regarding governance tokens also has a direct relationship with the governance token’s native project.</p>



<h3><strong>Earning Governance Tokens</strong></h3>



<p>The most common ways to earn governance tokens are through staking tokens into the platform&#8217;s liquidity pools or by participating in the incentives of the platform.</p>



<ul><li><strong>Staking&nbsp;</strong></li></ul>



<p>Staking a token is when a user delegates a certain amount of token owned to a platform. This can be in the form of adding their native token into a liquidity pool or as part of a liquidity pair (or LP).</p>



<p>Liquidity pair tokens can be created on Decentralized Exchange platforms (DEX) like <a href="https://uniswap.org/" target="_blank" rel="noreferrer noopener">Uniswap</a> and <a href="https://balancer.fi/" target="_blank" rel="noreferrer noopener">Balancer</a> where you can stake equal amounts of two currencies like ETH and the governance token to the DEX and you receive Liquidity Pair tokens in exchange. Which you then stake back to the governance tokens&#8217; the platform to earn more.</p>



<p>You can also stake earned tokens back onto the project once claimed.</p>



<ul><li><strong>Rewards&nbsp;</strong></li></ul>



<p>Currently, not all Defi governance tokens have a defined rewards structure and there are also many different types of structures. </p>



<p>Examples of reward structures are types of stock buyback (where the token provider buys back some of his token) such as <a href="https://makerdao.com/en/" target="_blank" rel="noreferrer noopener">MakerDAO</a>. Interest earned on the MakerDAO stablecoin ($DAI) is used to purchase the MakerDAO governance token ($MKR) and an amount of $MKR is burned, diminishing the overall supply of the $MKR to increase its value.</p>



<p><a href="https://curve.fi/" target="_blank" rel="noreferrer noopener">Curve</a>, on the other hand, offers voting on which liquidity pool gets the most return to users who have staked.</p>



<ul><li><strong>Airdrops</strong></li></ul>



<p>Some platforms have incentivized the growth of their ecosystem by giving away or ‘airdropping’ a certain proportion of their native token to early supporters, foundation members, or for example during events or meet-ups on discord or in a metaverse like Decentraland or signing up early to their website.&nbsp;</p>



<h2><strong>On-Chain vs Off-Chain Governance Token</strong></h2>



<h3><strong>On-Chain</strong></h3>



<p>Where governance decisions are made through programmable interfaces on the blockchain, with the on-chain governance model much of the process is automated for instance with votes being processed through validator nodes in the blockchain.</p>



<h3><strong>Off-Chain</strong></h3>



<p>Off-chain governance uses already existing compliance and regulatory mechanisms separately from a blockchain and incorporates the results on-chain. For instance, certain compliance actions might be manually processed. It can make scaling an issue and also coordinating certain voting can be more complex with off-chain instances.</p>



<h2><strong>Governance Tokens: a Bright and Innovative Future?</strong>&nbsp;</h2>



<p>Unlike traditional centralized governing bodies and organizational structures, a project using a Governance token has a much more adaptable structure.</p>



<p>Governance tokens are still in their infancy, with project owners still searching for new methods of distribution and monetization of their tokens. So far, some projects have failed, have been corrupted, or have ended up being scams. </p>



<p>Nevertheless, the number of use cases for these governance tokens continues to grow.&nbsp; There’s no doubt that in the coming years, we will discover new impactful and <a href="https://nonfungible.com/news/opinions/from-social-tokenization-to-nftranshumanism" target="_blank" rel="noreferrer noopener">mind-blowing usages for governance tokens</a>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Governance tokens are cryptocurrencies that offer holders a direct stake in the token's native DeFi platform. Attached to projects, you earn them through participation in the platform.

Governance Tokens


<p>NFTs are not just used for collections, artistic or gaming purposes. Project owners are also finding new inventive ways to use NFTs to make our lives easier. These NFT use cases are called &#8216;utility’. This segment of NFT projects ranges from event ticketing to diplomas, digital badges, or even parcel tracking. This segment is one of those we hear the least about but nevertheless covers a very wide field of application. In the coming years, we can expect more utility NFTs projects to emerge and change the way we go about our lives.</p>



<p>Here are a few utility project types to keep an eye on.</p>



<h2><strong>Decentralized Domain Names</strong></h2>



<p>Decentralized domain names are NFTs that have simplified wallet addresses when sending cryptocurrencies. On Ethereum, wallet addresses are a sequence of 42 randomly generated characters.</p>



<p>This complexity leads to errors if the recipient&#8217;s address is handwritten or hacks that replace the recipient&#8217;s address when copying and pasting. To prevent these errors, it is possible to register a domain name (for example, nonfungible.eth) which will redirect to the address 0x841f3a12D45651C21EcfA26546C9E77F5Ff4Fe80.</p>



<p>On Ethereum, two services offer to register a decentralized domain name: <a href="https://ens.domains/" target="_blank" rel="noreferrer noopener">Ethereum Name Service</a> and <a href="https://unstoppabledomains.com/" target="_blank" rel="noreferrer noopener">Unstoppable Domains</a>. They make it possible to resolve not only Ethereum addresses but also addresses on other blockchains or a website.</p>



<h2><strong>Internet of Technology (IoT) and Artificial Intelligence</strong></h2>



<p>We already live in a time where our physical identity exists in tandem with our digital personas, from banking to social media, dating, gaming, and education. Many people&#8217;s lives exist in a dual digital/physical hybrid which is only set to expand in the future.</p>



<p>Bringing the physical, real-world onto the Blockchain through tokenization is revolutionary in many aspects.</p>



<p>Blockchain technology brings trust and accountability into an Internet of Technology (IoT) system. Non-Fungible Tokens in the ERC-721 standard can manage IoT devices and offer secure authorization and authentication for IoT devices.</p>



<h2><strong>Ticketing NFT</strong></h2>



<p>One of the concerns faced by event organizers relates to ticket fraud. There are ways to counterfeit certain tickets and it is difficult to have full visibility of the exchanges that take place on the secondary market.</p>



<p>Thanks to NFTs, it is possible to identify and track each ticket in a tamper-proof way. In addition, it is possible to destroy or create non-transferable tickets once used.&nbsp;<a href="https://near.org/" target="_blank" rel="noreferrer noopener">Near Procotol</a> or <a href="https://nonfungible.com/news/utility/future-of-ticketing-get-protocol" target="_blank" rel="noreferrer noopener">Get Protocol</a> have developed several solutions around event ticketing, online or in real life.</p>



<h2><strong>Delivery Tracking / Supply Chain</strong></h2>



<p>One of the recurring problems encountered in the delivery industries concerns the losses surrounding parcel tracking. Thanks to NFTs, <a href="https://ownest.io/en/" target="_blank" rel="noreferrer noopener">Ownest</a> has been offering a solution to this problem since 2017.</p>



<p>Each package is connected to an NFT but rather than attaching the physical package to the NFT, it is the transfer of responsibility from one delivery person to another that is highlighted. This way, each person who transmits the package also transmits the NFT to prove that he has transferred the package to the next person in the logistics chain.</p>



<p>Another example of NFT used as part of supply chain tracking is the <a href="https://www.breitling.com/us-es/news/details/breitling-becomes-the-first-luxury-watchmaker-to-offer-a-digital-passport-based-on-blockchain-for-all-of-its-new-watches-33479" target="_blank" rel="noreferrer noopener">luxury watch brand Breitling</a>. In 2020, Breitling took a close interest in NFTs to guarantee the traceability of its watches. By downloading a ‘digital passport’, it was possible to see all the exchange history of the watch as well as the warranty and its origin.</p>



<p>Here, NFTs were solely used for their traceability of information.</p>



<h2><strong>NFT Diplomas and Certification</strong></h2>



<p>In 2020 we saw more and more real-world players taking an interest in the potential of Non-Fungible Tokens. The path has been paved by video games and art, but today more and more countries and companies are starting to adopt this technology for uses as diverse as they are varied:</p>



<ul><li>Vietnam now delivers its diplomas thanks to <a href="https://medium.com/tomochain/tomochain-partners-with-vietnams-ministry-of-education-to-secure-millions-of-diplomas-on-the-c18cebfe22e8" target="_blank" rel="noreferrer noopener">Non-Fungible Tokens on the TOMOchain blockchain</a>.</li><li>Luxurious watch brands like <a href="https://techcrunch.com/2020/10/15/luxury-watch-maker-breitling-issues-digital-certificates-on-the-ethereum-blockchain/?guccounter=2" target="_blank" rel="noreferrer noopener">Breitling</a> or <a href="https://presslounge.vacheron-constantin.com/vacheron-constantin-certifies-its-entire-range-of-watches-using-blockchain-technology/" target="_blank" rel="noreferrer noopener">Vacheron Constantin use NFTs</a> to ensure the traceability and authenticity of their watches.</li><li>Investing in real estate through the purchase of fractional shares is made possible thanks to the startup <a href="https://realt.co/" target="_blank" rel="noreferrer noopener">RealT</a>.</li></ul>



<p>In the field of document certification such as diplomas or contracts, NFTs or even the use of blockchain have also found their place.&nbsp;</p>



<p>For the certification of documents as well as contracts, the startup <a href="https://www.woleet.io/" target="_blank" rel="noreferrer noopener">Woleet</a> has found a solution that does not require NFT to be effective. Indeed, thanks to the possibility of a signature on the blockchain, Woolet will timestamp the document directly on Bitcoin without the need to send a transaction. The digital file is hosted on a server.</p>



<p>This way, the public information is that of the signature but the content of the document remains confidential.</p>



<p>This is also the solution proposed by <a href="https://verisart.com/" target="_blank" rel="noreferrer noopener">Verisart</a> but with a specialization in artworks. A timestamp containing the various public information is recorded by a signature on the Ethereum blockchain and the certificate of authenticity is then accessible from his account on the site.</p>



<p>Regarding diplomas, Vietnam has partnered in 2020 with <a href="https://tomochain.com/" target="_blank" rel="noreferrer noopener">TomoChain</a> to deliver diplomas to university students. Since then, the idea of using <a href="https://nonfungible.com/news/opinions/nfts-and-higher-education-part-1" target="_blank" rel="noreferrer noopener">NFTs in Higher Education</a> has continued to spread in the United States</p>



<h2><strong>Decentralized Identity (DID)</strong></h2>



<p>The issue of digital identity is increasingly central. Whether it is an authentication validation from your phone, a magic link sent by email, or since 2020, a health pass, digital identity can take several forms.</p>



<p>All these solutions are stored on a central server managed by a third party. The idea of a decentralized digital identity would allow everyone to remain in possession of the data that belongs to them and decide exactly what data will be shared with others.</p>



<p>For the developers of these projects, a balance must be struck between what will be publicly available and the data that will have to remain confidential.&nbsp;NFTs will have a role to play in the future of decentralized identity.</p>



<p>In 2022, Ethereum creator Vitalik Buterin co-authored a paper on a new type of token, <a href="https://vitalik.eth.limo/general/2022/01/26/soulbound.html" target="_blank" rel="noreferrer noopener">Soulbound Tokens</a> (SBT). Unlike NFTs, SBTs will not be made to be transferred or exchanged once they have been created. In this way, they can be used to identify the user publicly while keeping personal data private.</p>



<h2><strong>Proof of Attendance Protocol (POAP)</strong></h2>



<p>There are several ways to prove your attendance at a physical event. Photos, videos, concert tickets, friends&#8230; so many elements that allow you to keep a memory and proudly say &#8220;I was there&#8221;. In the digital space, this is now possible thanks to NFTs.</p>



<p>The <a href="https://poap.xyz/" target="_blank" rel="noreferrer noopener">Proof of Attendance Protocol</a> (POAP) is a token to claim during an event that proves its presence at a given time. Customizable, this token serves as a souvenir as well as irrefutable proof of presence at an event. It also can act as a community builder as it can be seen which wallets attended and these wallets can be airdropped future marketing NFTs or gifts.</p>



<h2><strong>Physical Sales</strong></h2>



<p>Whether it&#8217;s to reach a larger customer base, modernize or simply try new experiences, the idea of associating an NFT with the sale of physical assets charms more and more people. For example, the NFT may take the form of a certificate of authenticity for a painting, a way to receive figurines, or the possibility of claiming a bottle of rare wine.</p>



<p>However, associating an NFT with a physical asset has two major flaws: the authenticity of the physical asset and the automation of the transfer of the NFT when selling the physical asset.</p>



<p>Since there is no way to remotely verify that the physical object that was sold was not a counterfeit, the original seller will has to be fully trusted.</p>



<p>For a painting, for example, it will be necessary to have absolute certainty that the physical work is really authentic before minting the NFT. Then, even if the first sale goes smoothly, the first seller will no longer have any visibility or control over the transfer of the painting in case of a sale on the secondary market.</p>



<p>For the example of a <a href="https://nonfungible.com/news/collectible/nfts-and-traditional-life-series-part-2-wine" target="_blank" rel="noreferrer noopener">rare wine bottle linked to an NFT</a>, if the NFT contains a one-time code to claim the bottle, a buyer of the NFT on the secondary market will not be able to know in advance whether the code has already been used or not.</p>



<p>Linking an NFT to a physical object can therefore create a feeling of false security induced by the tamper-proof nature of a blockchain.</p>



<h2><strong>Exclusive Membership</strong></h2>



<p>Owning certain NFTs such as <a href="https://themetakey.com/" target="_blank" rel="noreferrer noopener">Metakeys</a> or the <a href="https://www.sandbox.game/en/snoopdogg/" target="_blank" rel="noreferrer noopener">Snoopverse</a> member pass serve as a pass to access bonuses or exclusive events. Bonuses can have several forms: access to private rooms in a Discord, touch airdrops, access WhiteLists to interact with NFTs before others&#8230;</p>



<p>This is also used in metaverses. During the <a href="https://nonfungible.com/news/metaverse/first-metaverse-festival-decentraland" target="_blank" rel="noreferrer noopener">Metaverse Festival in Decentraland</a>, an entire building was dedicated to Metakey and only those who had it in their wallet could enter to talk with other users but also claim exclusive wearables.</p>



<p>Regarding the <a href="https://nonfungible.com/news/metaverse/mint-snoop-dogg-avatar-the-sandbox" target="_blank" rel="noreferrer noopener">Snoopverse Early Access Pass</a>, it allowed owners to attend a festive evening in The Sandbox but also an invitation to the opening of the Cozomo art gallery and a reward multiplier for the stackers of the token of The Sandbox, the $SAND.</p>



<h2><strong>NFT Gift Boxs</strong></h2>



<p>For lovers of chance, it is also possible to find NFTs that reserve surprises. This is for example the case with the NFT Boxes where the famous collector Pranksy allowed buyers to receive artistic creations from well-known artists in the NFT sector.</p>



<p>Once the NFT Box was purchased, it was not possible to resell it until the artwork had been sent. The artistic NFTs were sent at the end of the month and the NFT box then became exchangeable and transferable.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><a href="https://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener"><img loading="lazy" width="88" height="31" src="http://nfcms1/app/uploads/2023/03/CC-BY.png" alt="" class="wp-image-288164"/></a></figure></div>


<p class="has-text-align-center">This work is licensed under a <a href="http://creativecommons.org/licenses/by/4.0/" target="_blank" rel="noreferrer noopener">Creative Commons Attribution 4.0 International License</a>.</p>


Project owners are finding inventive ways to use non-fungible tokens to make our lives easier. These 'utility' NFT use cases range from event ticketing to diplomas or even parcel tracking.

Utility

Non-Fungible Tokens (NFTs), being certificates of authenticity, can be used to prove the ownership of any digital asset: concert tickets, video game items, artworks, or even digital properties. This section will help you to understand and explore the different ways you can use NFTs.

NFTs can be used in many ways and the potentiel of their usecases will make them part of our digital future.

NFT Applications

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