NFT is an abbreviation for Non-fungible token. But what does it mean?
A single euro, dollar, or bitcoin is no different from another euro, dollar, or bitcoin. These currencies are fungible. Most tokens in the cryptocurrency market are also fungible. That is, you can exchange one token for another one of the same kind without losing value.
With NFT, as the name implies, this is impossible - each NFT token is unique. Even among NFTs of the same name issued on the same blockchain under the same protocol, there are no two tokens with the same value and the same properties. In other words, NFT is more similar to certificates of ownership of a particular object rather than to currency.
This the main areas of NFT application rather obvious:
- Tokenization of assets. This is one of the most popular and most financially promising topics in the crypto community. However, the traditional approach allows you to tokenize only fungible assets (such as shares). But NFTs open up opportunities without limitations - you can tokenize real estate, land plots and any other unique objects and assets.
- DeFi and Yield-farming. NFTs are already used to insure investments in digital assets.
- Art market. Digital art auctions have become one of the main areas of NFT market development at this stage - with the help of non-fungible tokens, it becomes possible to organize the efficient transfer of rights to music, art or any other work of art. And NFTs provide reliable copyright protection on top of it.
- Tickets. The use of NFT solves the problem of counterfeit tickets completely and makes it possible to create a civilized and digitized secondary market.
- Gaming. The entire blockchain gaming industry was launched due to NFTs. The infamous Cryptokitties were nothing more than non-fungible tokens. However, traditional gaming has not been left out: NFT allows developers to breathe new life into players auctions and improve monetization. With NFTs, they can organize an adequate market for any in-game objects: from items to bases and allies.
- Collectibles. The already developed market for collectibles (from figurines and models to commemorative coins) will also gain a foothold in the digital world thanks to NFT.
These are just the main areas of NFT use that are actively being developed today. It goes without saying that the list is not complete and finalized. Hence, the interest of investors is obvious: NFTs solve critical issues in a variety of areas where huge money can be made. And accordingly, they can potentially bring huge profits.
In addition, today the NFT market is still at the very beginning of its development and it won't be saturated in the coming years. Thus, it is relatively easy for new projects to find their niche in the market.
In addition, the NFT market is now experiencing a clear lack of infrastructure, first of all - a shortage of marketplaces. It is impossible to trade unique tokens on traditional crypto exchanges - they do not allow you to evaluate the unique properties of an individual token.
So the NFT market provides investors with incredible prospects: from the opportunity to invest in promising assets to the chance to influence the creation of the market itself.