Understanding the different types of NFT
Digital tokens are not something new in the world of technology. In fact, NFT began to attract the attention of the whole world only after the digital artist Biple sold his works at Christie’s auction in March 2021. Such popular names as the head of Twitter, Jack Dorsey and Elon Musk, also expressed their opinion in favor of NFT.
Interestingly, the first NFT was released in 2014, and only six years later, the market capitalization of NFT is almost $2 billion, only in the first quarter of 2021.
In 2020, according to Coinmarketrate.com, the total sales amounted to almost $250 million. NFTs are simply digital or cryptographic tokens that you can find in the block chain with the ability to preserve uniqueness. NFTs can be tokenized variants of real assets or completely proprietary digital assets.
General categories of NFT
However, the association of NFT with art is one of the important factors that can confuse many beginners. In fact, these tokens are not limited only to the field of art. You can discover different types of them with unique characteristics and distinctive use cases.
The main classification of NFT types belongs to general categories. The three common types of NFT include:
- The original or a copy of the work, documented in the blockchain or DLT network
- Digital NFTs that have ownership rights to the work that makes up the NFT.
- NFT metadata that provides representation of ownership rights to metadata files related to the Internet.
The general types of non-interchangeable tokens offer a broad description of the criteria used in the classification of NFT. In the case of the original NFTs, they are created in the block chain network, and the tokens remain in the block chain network. Digital NFTs are assets that involve the issuance of these tokens to several persons who have ownership rights to the asset.
The NFT metadata is another important pointer for classifying non-interchangeable tokens, since they mainly include a reference to the metadata for the NFT. As a result, you do not get ownership rights to the NFT, but only the rights to use it.
What types of NFT are there?
Various assumptions about the potential of NFT, as well as the cost and risks associated with them, have become quite important topics for discussion.
Non-interchangeable tokens are able to display the true origin of an asset with blockchain functions. NFTs can help in withholding, restricting or denying access to human rights to their assets, thereby ensuring exclusivity.
The developing infrastructure and growing opportunities for innovation in the field of NFT can contribute to their application in various sectors. Thus, we can expect the appearance of new types of NFT.
At the moment, you can take a look at some well-known types of NFT that are currently popular. The most notable in the list of non-interchangeable tokens will include the following:
- Collectible items
- Pieces of art
- Event tickets
- Music and Media
- Virtual items
- Real assets
- Domain names
Let’s look at these different variants of non-interchangeable tokens or NFTs to understand their meaning.
- Collectible items
A vivid example of NFT appeared with the development of Cryptokitties, which are collectibles on the Internet. In fact, crypto-cats are the first time that people use NFT. Interestingly, in 2017, Cryptokitties became so popular that they overloaded the Ethereum network.
Cryptokitties is one of the bright additions to the list of non-interchangeable tokens in the category of digital collectibles. In fact, these are digital kittens with distinctive features that make them more popular and favorable than others.
- Pieces of art
Works of art are also another outstanding candidate for NFT. The general types of non-interchangeable tokens in this area relate to programmable art, which is a unique combination of creativity and technology.
Currently, there are many limited-edition works of art in circulation that can be programmed under certain conditions. The use of oracles and smart contracts can help artists in creating images that are presented in blockchain networks. NFTs in the field of digital art also stimulated the opportunities for participation of representatives of the traditional art industry.
Tokenization of real assets and works of art can help in encouraging the adoption of NFT. The possibilities of combining blockchain and the Internet of Things can offer interesting prospects for scanning code or stickers on assets.
For example, you can buy a cryptocurrency on WallBTC or BitTeam and buy a picture. But how will you prove your ownership of it?
NFT types in works of art can ensure that users can easily register ownership of real works of art on the blockchain network. Subsequently, users can also find out the full history of the work of art, such as previous ownership and the prices at which they were sold in the past.
- Event tickets
Another promising addition among the types of NFT will relate to event tickets. These tokens allow people attending events such as music festivals and concerts to verify their identity and tickets. Event managers can issue a certain number of NFT tickets on the selected blockchain platform. Customers purchase tickets at the auction and store them in their wallets with easy access via mobile devices.
- Music and Media
In the field of music and media, there are also experiments with NFT, which leads to another category of NFT. You can link music and multimedia files to the NFT, thereby allowing the person who has the true ownership to access the files. Two well-known platforms that help artists release their songs as NFT include Rarible and Mintbase.
While artists get the benefits of directly reaching out to their subscribers and a new audience, listeners get an excellent experience. The growth of the number of music NFTs in the list of non-interchangeable tokens can offer reliable prospects for solving the problems of music piracy and intermediaries.
The usual types of non-interchangeable tokens in the field of games are primarily focused on in-game items. NFTs have aroused great interest among game developers. They can offer the functions of recording the ownership of in-game items, thereby contributing to the growth of the in-game economy. Most importantly, NFT in the gaming sector also focuses on providing players with a wide range of benefits.
While in-game collectibles were a common requirement for a better game experience, NFTs can change their value. In-game items, such as NFT, can easily help with a refund by selling them outside of the game. On the other hand, game developers or creators who produce NFT could receive royalties for each sale of items on the open market.
- Real assets
Despite the fact that you can’t find many types of NFT serving as tokens for real items, progress in this area can do this. For example, many NFT projects are currently focused on tokenizing real estate along with luxury goods.
They, in fact, can provide flexibility when buying a car or a house using an NFT document. Therefore, tokens representing real assets can use the capabilities of cryptographic proof of ownership.
One of the most important features of non – interchangeable tokens is a shortage. Each NFT is unique and cannot be replaced by another token. In the case of identification NFTs, the work is similar to the work of NFT tickets for events. They can serve as unique identifiers, thereby providing reliable support for identity management systems.
Common applications of identity-based NFT may be evident in certification and licensing. Obtaining certificates and licenses, as well as NFT for confirming and verifying identity records, can change the identity information management sector.
In addition, identity-based NFTs can also ensure that people can store proof of their identity without the risk of losing it.
The most significant achievement in the field of NFT recently is the sale of memes as NFT. Being a part of popular culture and instantly becoming a favorite of Internet users, memes have also been associated with NFT.
Selling memes as NFT demonstrates the potential for unique meme creators to participate in an evolving futuristic ecosystem.
- Domain names
The answer to the question “what types of NFT are there?” also applies to domain names that have recently become popular. Decentralized domain name services, such as Unstoppable Domains and Ethereum Name Service (ENS), are the best examples of NFT domain names. ENS can help translate long and complex user addresses into a flexible and convenient environment for users with an easier connection.
The existing entries in the list of non-interchangeable tokens clearly reflect the potential of the NFT ecosystem. Being a completely new category of digital or tokenized assets, NFTs are changing traditional ideas about the use and ownership of assets.
This way, you can find common types of non-interchangeable tokens, focusing on what you really get with NFT. First of all, you can create an original NFT and save it in the block chain.
The second type of NFT refers to digital abstractions, in which several NFTs serve as part of the ownership rights to certain assets.
The third category of NFT offers access only to NFT metadata, thereby allowing you to use NFT instead of ownership allocation.
The various types of NFT that are in circulation today, such as works of art, music and media, domain names, memes, also show promising prospects for the future of NFT.