If you’ve spent time dabbling in the crypto space, then you already know how revolutionary blockchain technology is. We can do things with money that we never could do before. We can pay for goods and services with the ease of mouse click or camera shutter, with no middle man to interfere.
But money is not the only thing that has benefited from the technology that brought about the mighty Bitcoin and its kin. Smart contract protocol built from the Ethereum network framework has given rise to a new way to game, as well as buy and sell goods.
In 2017 umbrella company Axiom Zen released a game called “CryptoKitties” via Dapper Labs, which used blockchain technology to tokenize game assets, giving users the ability to collect, buy, breed, and sell virtual cats. These tokens are called NFTs, or “Non-Fungible Tokens”.
CryptoKitties is the first major use case for NFTs, but it’s certainly not the last. So, what are NFTs exactly? First off, what is called fungibility is the characteristic of goods or commodities where each unit is interchangeable and indistinguishable—value is consistent for each unit. Let’s take the humble $10 bill. If Jane has a $10 bill in her wallet, it is exactly the same thing as the $10 bill in James’s pocket. They both hold the same value and thus are interchangeable and indistinguishable.
If Jane has a rare collector’s card, however, it possesses intrinsic value, when compared to the collectible card that James kept from high school. The items that Jane and James possess are examples of non-fungible items.
In the case of CryptoKitties, each kitty has a unique signature or private key that only the owner of said kitty possesses. This private key, which is confirmed by the blockchain network on which NFTs run, cannot be duplicated. Essentially, each kitty is its own value-holding asset.
CryptoKitties was met with great success. So much in fact that it is reported that a single CryptoKitty token (named Dragon) sold for 600ETH, which translates to roughly $170,000. With figures like that, it’s no wonder that the NBA has been working with Dapper Labs (CryptoKitties’ new parent company as of 2018) to form Top Shot, which allows users to “collect and trade Moments of the game’s season, complete sets of dynamic plays and win challenges.” (LedgerInsights)
NBA Top Shot is the blockchain network’s answer to trading cards. Instead of collectible cards, users buy and sell virtual packs which contain “moments”— think NBA highlight GIFs. The market for these packs is huge, with some packs going for as much as $100,000.
“…The trading card business is worth $5-$6 billion annually … I don’t see why we can’t get to a place where this business is grossing $1 billion alone.” (NBA Canada)
And it just might. If you’re looking to purchase a pack, they’re all sold out on the NBA Top Shot website, currently the only place where you can do so. The market for this “trading cards 2.0”, is booming.
Non-Fungible Token capabilities are not only limited to games and virtual packs. Domains that use the .eth extension, for example, can be bought and sold on the blockchain, as well—some for upwards of $500K.
We can even apply NFTs in the DeFi space, where they can be used as collateral for P2P loans. An NFT would be used to represent a piece of art or even real estate whereby it could then be borrowed against.
We are seeing a world completely changed by cryptos, and it begs the question: Is there any limit to what blockchain technologies can do?
Contributed by Garrett S.