It becomes harder and harder to meet a person who doesn’t know what the Blockchain technology really is and how it affects the modern day world. But if you are a newbie in tech and didn’t have any previous experience with crypto, here is a quick guide from IBM on what Blockchain is and how it evolved over the past decade.
NFTs are another product of the digital era that originated from Blockchain technology and are widely used in digitalization of art and tokenization of different types of assets from homes to stocks.
In this article, we will try to focus on what NFTs and Blockchain have in common as well as on their differences to help you understand the basics and how these two technologies are different from one another.
Blockchain and NFTs in Simple Words
Blockchain is a way of secure storing information while NFTs are unique digital assets that exist on some blockchain. Think of blockchain as a notebook and NFT as a drawing: everyone can see the page but only the owner of the notebook owns the drawing. There are centralized and decentralized blockchains that differ by who controls everything including transactions and gas prices. On top of blockchain technologies there are NFTs and cryptocurrencies. For example, there’s Ethereum blockchain that can hold various NFTs as well as stablecoins such as USDT and USDC that are widely used for transferring funds in 777fun games and other online businesses.
NFTs are like drawings: each one represents a unique asset that can be transferred, traded and sold but never can be copied. When you buy an NFT, you’re buying proof of ownership for a piece of digital art, a song, a video. This can even be an in-game item that allows game publishers to create a market of in-game assets and increase their profits by taking a margin from each trade or transfer. Although this is not widely spread across triple-A titles, incorporating NFTs into gameplay can be a next big thing in the future especially if blockchains like ImmutableX are used.
How NFTs Help Blockchain Technology Evolve
There were two huge hype waves for NFTs that started with Crypto Kittens and ended with the previous market cycle. Some investors say that NFTs have zero potential as technology and won’t cause the 3rd wave. However, the crypto community still believes that NFTs aren’t just something that sits on top of blockchain and brings no value. NFTs are actually helping push blockchain technology forward in many ways.
During the first and second NFT hype waves, the traction around NFTs were causing an increase in crypto adoption among younger audiences. And now we see so many crypto enthusiasts that came to the market with minting and trading NFTs as their first steps in crypto. Any hype cannot be underestimated in terms of positive effect on crypto adoption. Like memes coins that made Solana blockchain famous during 2023-2024, NFTs cause the growing popularity of Ethereum. And as a result of high gas fees in the Ethereum blockchain, other Layer 2 solutions like Polygon and Arbitrum arose and became popular.
NFTs also made many blockchains to start supporting smart contracts that are a necessary basis for minting NFTs. This was a big technological step towards for each blockchain that wouldn’t happen without the hype on NFTs.
Real-World Use Cases
Blockchain is used in many real-world industries starting from logistics and trade and ending with education and agriculture. One of the most popular uses for NFTs is in digital art and digital collectibles. Digital artists and creators now have a new way of monetizing their artworks where they need no gallery or middleman to sell their work. This has helped many artists make money online and keep control of their work. Collections like Bored Ape Yacht Club or CryptoPunks are good examples even despite their price has fallen dramatically over the past few years. But who said traditional arts can’t lose the same during uncertain times of economic downfalls.
Each NFT is stored on a blockchain, which proves it’s original and shows who owns it. That’s why NFTs are widely used in Metaverse projects to become a basis for the inner economy. The Sandbox and Decentraland allow players to own in-game land as NFTs. This means they can buy and sell it just like real land and make profit out of it. This makes metaverses even more interesting for both players and investors because of freedom over what they earn or collect in a game.
Future Challenges
Despite the fast progress and steady development, blockchain and NFTs are still struggling with global adoption. Being used in game worlds and minor processes in real-world industries is not enough for these two technologies to realize their full potential. Both technologies continue to grow together but face similar issues with resistance because of the impact they cause to the environment. Many Tier-1 blockchains like Ethereum switched to more ‘eco-friendly’ protocols and now use “proof of stake” that helps cut the electricity consumption and preserve nature by lowering the use of fossil fuel.
But after one challenge finishes, there comes another and it’s called regulatory pressure. As you already know, blockchains are used to store value and art. When people start using blockchain to transfer money or store their savings, this means governments have close to zero access to such funds, can’t regulate them or make people pay their taxes. That’s why most of countries see blockchain, crypto and NFTs as a threat and try to ban it in any possible way you can imagine: from not allowing banks to process fiat-to-crypto transactions to putting people in jail if they own and actively trade cryptocurrencies.
However, many crypto enthusiasts expect this to change in the nearest decade because it’s always better to facilitate something and make profits in a form of taxes of it rather than spend taxpayers’ money on this endless battle of preventing people to use crypto and NFTs.
