Blockchain NFTs - properties, value proposition and applications
And while the craze over NFT collectibles has certainly brought a lot of attention to the digital asset space
the value proposition of the technology is not all that clear.
Fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, where each unit is indistinguishable from any other unit. Tokens that are created with the same asset ID are considered fungible tokens. These tokens can be exchanged and carry the same value as any other token created in the same asset ID.
It is possible to create non-fungible tokens by creating tokens that have unique asset IDs. These tokens can represent unique qualities such as seat numbers or other details for things such as in-game collectables or other such items.
- NFTs are inherently indivisible, like an item of furniture that can’t be divided into smaller parts and retain its initial qualities. This makes them different from fungible assets, like a pound note, which can be subdivided into one hundred pence, each penny the same as the next.
- Like other blockchain tokens, an NFT is minted by an entity, after which it can be sold to a new entity who then becomes the owner of that token. Unlike fungible tokens, smart contract rules can be used to prevent or limit subsequent transfers of the token, based on a set of criteria.
- Although an NFT is minted with a specific set of properties (a state), these could be updated over time via smart contracts as certain conditions are met. Think of the ‘pass the parcel’ game, where a package loses one layer of wrapping each time the music stops, or the ‘head, torso, legs’ game, where a figure is completed with each participant drawing another section of the body.
- NFTs can be created on top of an existing blockchain via a token protocol. There’s no need to build your own blockchain or mint a new cryptocurrency.
- Provenance: the item’s ownership record, all the way back to its minting authority
- Original and added properties: as the ‘state’ of an NFT can be updated by smart contracts, the initial and all subsequent changes of state will be recorded and verifiable
- Dynamism: smart contracts can be implemented to alter the NFTs original state to utilise these tokens as in-game items that gain or lose properties, or artwork that develop over time.
Current and potential NFT use cases
Omniscape - 3D NFTs linked to the real world
Omniscape platform is an XR Metaverse platform which aims to merge the real world and the digital world, and NFTs are a key to achieving this goal.
By using NFTs, Omniscape links tangible items to a virtual or digital twin to fuse the real world with AR and VR.
Eventually, every 3D object in Omniscape will be tokenised as an NFT on the BSV blockchain. Omniscape’s XR Metaverse will be made of billions of 3D NFTs that can be exchanged or redeemed for real-world physical assets, products, merchandise, coupons, special offers, vouchers, etc.
