Fungibility is the key to blockchain’s future. It plays a pivotal role in the functioning of a blockchain. A fungible object can be easily replaced by another entity that performs the same function. For instance, money is fungible – it is effortlessly exchangeable and interchangeable. Divisibility is also another crucial aspect of fungibility. Like cash, cryptocurrencies can also be divided into smaller fractions – after making a purchase; you can receive segments of a bitcoin back the same way you would get change from cash. These are fungible tokens. This means that if you send a bitcoin to someone, they will send you one back – and it need not be the same bitcoin. Bitcoin and other cryptocurrencies popularly use blockchain technology.
Things get interesting here when blockchains store non-fungible tokens—the technology caches or points to the indivisible information. The NFT has unique properties and is not interchangeable, unlike fungible tokens. The ERC-721 standard was the first to evolve the NFT, which defines the primary interface, security, metadata, and ownership of the particular token. This is mainly required for the distribution of gaming tokens. People who created the ERC-20 smart contract also innovated the ERC-721. The ERC-1155 standard took the concept further, lowering transaction and storage costs for batching different types of NFTs into a single contract. Again, there was this blockchain-based game Cryptokitties that popularised NFTs. In this space, players bred and collected digital cats, and each of these animals had unique features, appearances and digital genetic characteristics. It was reported that in 2017, sales of this NFT reached a whopping US$ 12 million, where a single cryptokitty was sold for US$120,000. The value of the NFT is determined by its ability to dissipate rich meta data about the asset.
Even with some difficulties in performance, Cryptokitties demonstrated the feasibility of seamless trade and exchange of NFTs across the blockchain.Today, Non-Fungible tokens have grown to become cryptographic assets with unique identification codes and metadata that are distinctive from one another. These cannot be exchanged or traded for their equivalent, unlike cryptocurrencies. NFTs, thus, form the basis for a commercial transaction for an entity with individual identity.
While the evolution of cryptocurrency is relatively simple, modern financial systems involve sophisticated trading and loan for various assets such as real estate, lending contracts and artwork. NFTs are a step forward to reinventing the infrastructure and enabling digital representations of physical assets. While the idea is not new, combined with a blockchain, these concepts become powerful forces of transformation.
Physical assets are fractionalised with NFTs, thus democratising investments in real estate. Division of digital real estate is much easier than a physical one amongst owners. However, tokenisation by itself need not be confined to real estate alone.
Currently, the digital art and collectables world is taken over by NFTs. The lives of physical and digital artists at that have been transformed thanks to these non-fungible tokens. While NFTs can be used to represent the ownership of any unique asset, here are some of the best examples:
Taco Bell GIFs
The fast-food giant Taco Bell created a series of GIFs, which they designed based on the dishes on their menu. These were later sold online as NFTs. Sold out within minutes of its launch, Taco Bell donated the proceeds to the company’s charity organisation Taco Bell Foundation.
NBA Shots Sports Collectibles
Videos of NBA moments are bought, sold and traded on Top Shot, an NFT marketplace carrying the slogan “Own NBA’s Best Plays”. At one point, it sold the highest-earning asset for $387,000 – this was Le Bron James taking a dunk against the Houston Rockets.
“Everyday: The First 5000 Days” by Beeple
This digital artwork belonging to Beeple was purely digital and was the first NFT to be sold at an auction house. A bidder bought it at a Christie’s auction for $69 million.
William Shatner’s Collectibles
Actor William Shatner created personal memorabilia of his 60-year-old acting career and released NFT collectables. He sold the collection, including a photo of Leonard Nimoy and Shatner hugging, some early headshots and an x-ray of his teeth in about 9 minutes.
In an online auction, the Nyan Cat’s crypto version sold for $590,000. It was creator Chris Torres’s first NFT foray. Clearly, he was surprised by the success and was glad that he had opened a new crypto meme world economy.
Jack Dorsey and his first tweet
Twitter was launched in 2006, and that was also the day when CEO Jack Dorsey sent his first tweet. Transformed into an NFT, the tweet sold for close to $3 million. However, the money would be converted to bitcoins and donated to GiveDirectly, a charitable organisation.
William Grant and Son created NFTs of 15 super rare 46-year-old Glenfiddich whiskey bottles. The tokens sold for $18,000 a piece, accompanied by the bottle’s NFT artistic impression. This acted as a counterfeit-proof certificate of possession and allowed the owner to exhibit their purchase.
Digital Sneakers by RTFKT
In March 2021, RTFKT and Fewocious co-created a series of virtual sneakers. These NFTs paired up with players’ online gaming avatars and sold for up to $10,000 a pair. Their total collection was about $3.1 million.
Users of Minecraft and Decentraland can now buy furniture NFTs from the virtual world. Created by Argentinian designer Andrés Reisinger, these pieces can be costly. The most expensive was at about $70,000.
Warnymph by Grimes
“Death of the Old” proved to be the highest-selling asset. This one-of-a-kind video sold for around $389,000. Singer and Songwriter Grimes invested in the NFT gold rush and sold 10 NFTs of his artwork for approximately $6 million.
NFTs are also secure like fungible cryptocurrencies, mainly due to blockchain’s distributed nature, making it impossible to hack.