NFTs Explained: How They Work, Marketplaces, Use Cases And More

Non-fungible tokens, better known as NFTs, have been on a rollercoaster ride the last few years. The market corrected sharply after bursting into the mainstream consciousness in 2021 with headline-grabbing sales.

But don’t count out NFTs just yet – they remain a fascinating use case of blockchain technology with a promising future. Let us explain precisely what NFTs are and some of their most exciting applications in 2024.

What are NFTs?

At the most basic level, an NFT is a unique digital asset stored on a blockchain. Unlike fungible cryptocurrencies like Bitcoin, where each coin is interchangeable, NFTs are one-of-a-kind.

They can represent ownership of all digital content – art, music, videos, and in-game items. Buying an NFT is like getting a digital certificate of ownership and authenticity for that specific asset. The key properties of NFTs are that they provide verifiable uniqueness and scarcity. This unlocks a new world of digital ownership. Suddenly, a JPEG of digital artwork isn’t just an easily copyable image file – it’s a provably rare asset that can be bought, sold, and traded. NFTs turn digital content into collectibles and give creators exciting new ways to monetize their work. With NFTs, a whole digital economy is emerging.

Best NFT art marketplaces

  1. OpenSea
  2. Blur
  3. Rarible
  4. NBA Top Shot
  5. Nifty Gateway
  6. SuperRare
  7. Binance NFT Markteplace

Specialized NFT marketplaces have sprung up for digital artists and collectors to facilitate the buying and selling of tokenized art.

OpenSea is one of the oldest and most established, offering a vast selection of art, music, photography, trading cards, and more. It supports multiple cryptocurrencies and has an intuitive interface, making it an excellent choice for those just getting started with NFT collecting.

Blur is the main challenger to OpenSea. It charges a competitive 0.5% royalty fee, offers bulk purchases, and has a clean user interface.

Rarible is another popular option. It allows users to buy and sell a wide variety of NFTs using several different tokens.

For basketball fans, NBA Top Shot is the go-to destination. Officially partnered with the NBA, this marketplace lets you own video highlight NFTs of your favorite players and moments. Prices can get steep for the most iconic clips, but it’s thrilling to feel a sense of ownership over the history of the NBA.

Nifty Gateway has hosted some of the most high-profile and expensive NFT art sales, including Beeple’s $69 million collage and Pak’s $91.8 million “The Merge”. Focusing on top artists and celebrities, it’s a premier venue for collectors seeking the most sought-after pieces.

The 3 biggest sales in NFT history…

1. Everydays: First 5000 Days by Beeple – $69.3 million
2. Human One by Beeple – $28.9 million
3. CryptoPunk #5822 – $23.7 million pic.twitter.com/z2LJfdj3v5

— APE G4NG (@ape_g4ng) August 3, 2023

SuperRare also positions itself as a high-end art marketplace with a highly selective approach to choosing which NFTs get listed.

For a more comprehensive experience, Binance’s NFT marketplace covers everything from art to gaming assets to collectibles. As the largest crypto exchange in the world, Binance brings a level of credibility and reach to the NFT space that is attractive to many.

NFT gaming applications

NFTs are a natural fit for video games. They allow for actual ownership of in-game assets like weapons, skins, characters, virtual land, and more. Instead of those assets being locked into a single game controlled by the developers, NFTs grant gamers sovereignty over their digital goods. They can be freely bought, sold and even used across compatible games.

This new model, often called play-to-earn or P2E, rewards players with NFTs and tokens just for playing and progressing. Axie Infinity, an adorable monster-battling game, is one of the early success stories here.  At its height, people in Central and Southern Asian countries were earning a living playing Axie.

Gods Unchained, a polished digital trading card game, has also effectively implemented play-to-earn. The open economies enabled by NFTs in gaming are revolutionary. Suddenly, all that time and effort spent grinding for an epic item could pay off—literally. Games become not just entertainment but income streams.

Gods Unchained: Tides of Fate
Gods Unchained: Tides of Fate

Virtual worlds like Decentraland and The Sandbox are taking this even further, enabling players to monetize their creations and land within expansive metaverses. The future of gaming is collaborative, creative, and economically empowering.

Collectible NFTs in 2024

Beyond artwork and gaming, NFTs are perfect for digital collectibles. We’ve seen everything from meme-able PFP (profile pic) projects like Bored Apes and Pudgy Penguins to former President Trump’s one-of-a-kind trading card NFTs. Like physical collector’s items, rarity, and cultural significance drive value.

In 2024, more big brands and iconic IPs are expected to get into the NFT collectibles game. The NBA has found some success in tokenizing video highlights of incredible plays. Expect other sports leagues to follow suit with NFTs of memorable moments, letting fans own a piece of history.

Music NFTs from major artists containing extras could become the new backstage pass. Maybe Hollywood will even get in on the action with official NFTs for beloved characters and props. The collectibles market has always been about passion. People love to own a representation of the sports teams, artists, shows, and cultural moments that are meaningful to them. NFTs open up a whole new world of digital collecting. The same psychology that’s driven the market for physical memorabilia is now applied to the metaverse. Don’t be surprised to see some record-breaking NFT collectible sales in the coming years.

NFT use cases

The applications for NFTs go far beyond art, gaming, and collectibles. These unique digital assets can represent all kinds of real-world ownership and access rights.

Event Ticketing

NFT tickets provide a secure, fraud-resistant way to handle event admissions. Coachella, for example, used NFTs in their 2022 festival and again in 2024., offering exclusive perks to token holders.

Real estate

NFTs can represent fractional ownership in physical properties, making real estate investment more accessible. Propy has already facilitated the sale of homes via NFT deeds.

Intellectual property

Creators can use NFTs to assert ownership and monetize their digital works. Musicians like Kings of Leon and publications like TIME magazine have generated significant revenue through NFT sales.

Gaming

As already discussed, many video games now feature unique NFT assets like skins or characters that can be bought and traded. Axie Infinity is a prime example, with its economy built around NFT creatures.

Certificates and diplomas

NFTs enable secure, tamper-proof credential issuance and verification. From universities like Duke in the US to governments in India, institutions are exploring NFT-based certification.

Fashion and Luxury

Brands like Nike, Gucci, and Louis Vuitton are experimenting with NFTs as digital collectibles and companions to physical products.

As awareness grows and the technology develops, expect to see even more innovative applications of NFTs across various industries. This unique digital asset class has the potential to transform how we approach ownership and value in the digital era.

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