Why NFTs Are So Misunderstood (And Why That’s An Issue)

NFT


when people think of NFTs, they usually think of expensive JPEG images that bizarrely sell for millions of dollars, and that’s a problem. This is akin to believing the internet is nothing more than a place to share memes and dismissing it as “Probably nothing.“Now that NFT collectible prices have plummeted, real innovation it can happen, and this stigma can be broken as better uses of NFTs are explored.

NFT, or “non-fungible Tokens, they are a type of cryptocurrency where each token is unique from the rest and contains an embedded URL that links to its unique content and metadata. NFTs are comparable to ownership deeds where the URL points to the thing that the token grants ownership of (supposedly, always check the fine print), which gives great flexibility in what NFTs can do and represent. Unfortunately, during the 2020-2021 cryptocurrency bull run, retail investors and speculators poured millions into collections of NFT profile pictures with no use cases, often paying between $100 and $1,000 to mint each token in hopes of getting the next million dollars of NFTs, which only incentivized more collections and various copycats to emerge as blatant copy-paste cash heists, understandably leading to the misunderstanding of NFTs today.

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Related: How the Ethereum September update could fix the NFT power issue

The overexposure of elite JPEG collections like Bored Ape Yacht Club and CryptoPunks brought the less exciting use case of NFT into mainstream awareness, resulting in outright confusion among non-cryptocurrency users. However, anyone who visits Open sea you’ll notice there are more sections besides collectibles, like NFT domain names for crypto walletsmusic, art and photography, sports, trading card games (for which NFTs are well suited), terrain and avatar gear for virtual worlds, and even “utility“NFTs. NFTs are particularly well suited to blockchain-based games and metaverse elements, enabling the existence of virtual property with real-world value. For example, virtual metaverse worlds Decentraland Y the sandbox both have NFT-based economies, with scarce NFT lands costing thousands of dollars. Players can create and sell their own NFT avatar gear in the in-game markets. Blockchain games and “GameFi“Industries also use NFT extensively, such as the lovable yield builder aavegotchi pets or the wildly successful axie infinity battle pets. These four examples are much more interesting than JPEG collectibles, but they get little attention outside of crypto.


NFT use cases are extensive and innovative

A powerful feature that is commonly underestimated is the ability to check a crypto wallet for particular NFTs as part of conditional logic. This feature is widely used for private Discord servers, where a bot is used to automatically approve and kick Discord users based on the NFTs they possess. NFT-based DAO governance communities use this ability to assign roles and voting power. Websites can check a visitor’s crypto wallet for NFTs, providing hidden areas/content for them to discover. NFTs can even be used to sell professional services online as tokensusing the free market economy to determine the price of that service.


The NFT source code is open source, allowing developers to experiment with new and exciting features for their NFTs. For example, the creation of non-transferable NFTs sacrifices value for utility, as Airdropping an NFT Demand to a Scammer’s Walletusing NFT metadata to verify authenticity and fight counterfeit products, or provide membership IDs. NFTs can also be used to represent real-world items and property titles, using the blockchain to record transactions and property data rather than private databases. These examples barely scratch the surface of what NFTs can do, and all of them are more interesting than collectible JPEGs.


NFTs are misunderstood thanks to the hype surrounding JPEG collectibles, which obfuscated the best use cases for NFTs under a mountain of speculative garbage. However, to list all the uses of NFTs for someone convinced that they are only “expensive jpegs“is as pointless as listing the benefits of the internet to someone convinced it’s just for sharing memes. Instead, people should stop thinking NFT they are collectibles and start thinking of them as a technology under which collectibles exist along with hundreds of more exciting use cases.

Next: Is OpenSea safe? Why you should (and shouldn’t) use the NFT website


Sources: Open sea, Decentraland, the sandbox, aavegotchi, axie infinity