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Louis de Jong
Louis de Jong

A Comprehensive Look At The Different Types Of NFTs

Artwork by Milad Fakurian

 

The public attention toward non-fungible tokens (NFTs) exploded in 2021. More than $700 million worth of NFTs was sold within 5 months. Although the NFTs market experienced record sales, little is known about their overall structure as well as the evolution of their market.

The spectacular rise in the demand for NFTs has resulted in the development of different forms and applications. Items exchanged in the non-fungible token market are structured in collections. Collections are vastly different in nature ranging from selections of masterpieces and sets of collectible cards to online games’ virtual spaces.

Keeping track of the various types of NFTs can be challenging. Read on to learn more …

Types of NFTs

The prominent list of the different types of NFTs includes the following:

  • Domain names
  • Gaming
  • Artwork
  • Collectibles/Trading cards items
  • Virtual Fashion
  • Big sports moments
  • Media and music
  • Real-world assets
  • Event tickets

Domain Names

Many people are increasingly considering domain names as of high value. Rapidly, they’re becoming a common commodity in the NFT marketplace.

By having domain names as non-fungible tokens (NFTs), domain owners have control over their domain by using private keys unlike with conventional domain names that need an external organization’s oversight. 

Additionally, domain name non-fungible tokens are linkable to crypto wallets meaning that you can transfer them as cryptocurrencies on the blockchain.

Last year, Unstoppable Domains announced that the ‘win.crypto’ blockchain domain NFT was disposed of for $100,000 making it the costliest NFT domain. The purchase highlighted the rising interest in the non-fungible token phenomenon outside digital art.

NFT domains such as ‘.eth’, or ‘.wallet’, or ‘.zil’, or ‘.dao’ or ‘.blockchain’ or ‘.crypto’ are the new web extensions. Their linking to the blockchain is through smart contracts. NFT domains are bought once and users don’t have to worry about renewals, unlike the conventional domains. 

An interesting trend, domain names within the crypto world are found as emoji strings. Want to learn more about this? Check out Unstoppable.domains or Ens.domains. Perhaps you could find and buy your blockchain-compatible domain name.

You can use non-fungible token domains as your;

  • Payment address for wallets
  • Website URL
  • Universal username across websites and apps

Gaming

Non-fungible tokens are the foundational module of blockchain-based video games. They make it effortless to tokenize, track, and transfer unique in-game items in a non-custodial mode.

Centralized publishers, with conventional online video games, have total control over the circulation, ownership, and features of in-game items that usually dictate the value of particular game outcomes and characters. If a publisher shuts down, a user loses access to all in-game items they probably spent time acquiring.

Non-fungible tokens not only make sure users boast total control over game items but also allow new gaming possibilities including the supply of randomized NFT rewards when it comes to blockchain-based games as well as the formation of an interoperable Metaverse. In the latter, users can use items from one game and trade in another.

Moreover, NFTs have expanded the development of the play-to-earn model whereby users monetize their effort and time from gaming by securing rare non-fungible tokens and disposing them to others.

Axie Infinity is a popular blockchain-based game that leverages non-fungible tokens. The game is a Pokémon-inspired universe that brings with it distinct fantasy creatures by the name ‘Axies.’ Every in-game Axie is tied programmatically to a non-fungible token that contains metadata on the creature’s ownership, appearance, and attributes.

Artwork

Among the most recognized or common non-fungible token use cases is the tokenized ownership of digital artwork. Through the tokenization of their work, artists can monetize their craft and tap into the global market of prospective clients that only need to be connected to the internet to buy it.

In comparison to the conventional art marketplace, which is often opaque, limited in discoverability, value-extracting, and needing huge listing fees, no-fungible tokens can be listed on worldwide, permissionless online platforms. Additionally, they can even offer revenue from different secondary sales.

One of the NFT art pieces that made headlines is that of the popular digital artist Beeple. Beeple’s piece Everydays: The First 5000 Days, which is a collage that features 5000 images and took 13 years to come up with, was tokenized as a non-fungible token on Ethereum and disposed of for more than $69 million.

By utilizing the popular ERC721 token standard, the artist not only monetized his digital artwork but also established cryptographic proof that the particular non-fungible token was the certified copy. His work is among thousands of numerous digital art collections released and disposed of throughout the world as NFTs.

A recent case touches on Johnny Deep who is selling more than 10000 distinct NFTs which are drawn from his paintings of personal heroes and friends. The actor’s one-of-a-kind non-fungible token verifiable digital assets are traded utilizing the blockchain tech under a collection name titled ‘Never Fear Truth.’ 

These portraits are developed from Depp’s original artwork, embellished and animated. They include the actor himself, Tim Burton, Lily-Rose Depp (daughter), Heath Ledger, Hunter S. Thompson, Elizabeth Taylor, Marlon Brando among many others.

Collectibles/Trading Cards Items

Just like collecting mail stamps or physical trading cards, non-fungible tokens empower a fresh type of digital collectibles. If you’re a collector, you can purchase digital objects which you deem valuable. Alternatively, you can signal your support for a certain artist, game, brand, or company.

Unlike the physical collectibles which are not only slow to transport but also costly to maintain, non-fungible tokens do not bring with them such restraints because they’re transferrable in seconds, entirely digital, and do not degrade in terms of quality.

CryptoPunks are among the most recognized and popular non-fungible token collectibles. This is a collection of around 10,000 unique 8-bit-style characters that are generated algorithmically meaning no two characters are alike. Each of these collectibles is owned by one individual on the Ethereum blockchain network.

Initially, they were reclaimable for free by anyone having an Ethereum wallet but over time, all the 10,000 of them were claimed quickly. Today, you have to buy them from someone through the marketplace that is embedded on the blockchain.

CryptoPunks was an inspiration for the ERC-721 standard which powers most collectibles and digital art.

Collectible non-fungible tokens continue to rise in popularity in how they’re being utilized as profile pictures especially on social media platforms such as Discord and Twitter. 

They provide a highly powerful signaling mechanism in such a way that like-minded folks can showcase their interest in a non-fungible token collection and be part of like-minded individuals.

Importantly, since the storage of NFTs is on the blockchain, it is effortless for users to cryptographically prove to other people that they’re the owners of the image being utilized on their profile picture.

Crypokitties is another example of online collectibles. Its popularity was so high in 2017 to the point of congesting the Ethereum network. Crypokitties are simply digital kittens boasting distinct features that make them favorable and popular compared to others.

Virtual Fashion

Do you fancy some designer sneakers? One thing we’ve learnt during the pandemic is that occasions to put on a fancy sneaker or dress or hat might be limited. So how about you purchase a pair for an avatar you’re utilizing in your favorite Metaverse or video game?

The fashion industry is now on the non-fungible token train. The connection between the fashion world and NFTs makes sense. No one purchases luxurious fashion items for their usefulness, but for the exclusivity, culture, and identity they represent. 

NFTs meet all these requirements since they’re not only scarce and exclusive but also represent a brand’s identity akin to a physical item.

Some of the virtual luxurious fashion items are costly just like their physical counterparts. A great example is this virtual hoodie or Gucci’s virtual sneakers. Gucci, an Italian luxury house, partnered with Wanna, a virtual sneaker app, to release its premier augmented reality sneakers. Every design of the sneaker is strictly virtual meaning you cannot purchase real-life counterparts to put on.

Big Sports Moments

Sports teams are presently jumping at the chance of creating their NFT collectibles. The NBA is the maiden sports organization that led the way in this regard. The NBA Top Shot enables fans to buy short video highlights of their preferred basketball team.

Countless NFT collections launches touch on different sports. Aside from the NBA, there’s one that touches on Formula 1 and boxing.

Media and Music

Composers and singers are also finding their way into the NFTs space. One year ago, King of Leon was the premier brand to release a non-fungible token album. From that progress, different musicians are currently searching for ways to monetize their art via NFTs and blockchain.

The developments in the music space courtesy of NFTs will completely transform the entire industry. Although a huge chunk of the revenue emanating from music presently goes to 3rd party intermediaries like record labels or distribution platforms, there might be a shift through blockchain to favor artists.

Notably, NFTs can allow for efficient and improved management of intellectual property rights as well as better distribution of royalties.

Real-World Assets

While it is challenging to find numerous NFT types that serve as tokens for items in the real world, the advancement in the NFT domain could make it possible. For instance, a huge number of non-fungible tokens currently focus on the tokenization of luxury goods and real estate. 

Basically, NFTs are simply deeds that can introduce the flexibility of buying a home or car with a non-fungible token deed. Consequently, NFTs that represent real-world assets have the ability to take advantage of the opportunities through cryptographic ownership proof.

Event Tickets

Event tickets are another promising addition among NFT types. These types of non-fungible tokens allow attendees of events like concerts and music festivals to verify their tickets and identity. Event managers can mint a certain number of NFT tickets on a chosen blockchain platform.

The tickets can be purchased via an auction and stored in wallets with effortless accessibility via mobile devices.

Why Verifiable Randomness of Non-Fungible Tokens is Important

Although non-fungible tokens like 1-of-1 digital artworks have all their properties predetermined prior to deployment on-chain, several NFT designs require an RNG (random number generator) to introduce extra clarity. 

Some instances of the application of randomness to NFTs include ensuring fair distribution for a limited edition, high-demand NFT drop, establishing in-game locations of all loot boxes dispensing non-fungible tokens, and assigning random attributes to non-fungible token artwork.

Unfortunately, if the randomness source can be manipulated, mischievous actors could exploit the random number generator mechanism to their advantage. 

For instance, they can mint themselves non-fungible tokens with direct lottery rewards or scarcest traits to an address within their control. Doing this has a negative effect on an NFTs value because users can’t verify that its distribution or attributes are genuinely random. 

Because smart contracts can’t generate a secure form of randomness, a verified oracle solution is necessary.

NFTs FAQs

What are some examples of NFTs?

NFTs can represent any asset digitally including real assets like real estate and digital artwork or online-only assets such as digital artwork. 

Other relevant examples include non-digital and digital collectibles, event tickets, domain names, and avatars.

How can I purchase NFTs?

You can purchase many NFTs with Ether. This means that owning and storing this crypto as a digital asset is often the first step. After that, you can buy non-fungible tokens through online NFT marketplaces such as SuperRare, Rarible, and OpenSea.

Are NFTs safe?

NFTs, which utilize blockchain tech just like any other crypto, are generally secure. The fact that blockchains are distributed in nature makes it difficult though not impossible to hack NFTs. 

A major security risk with non-fungible tokens is that you might lose access to your token if the host platform goes out of business.

Summary

The above entries in the list of different types of NFTs depict the huge potential that the NFT ecosystem boasts. NFTs, as a new category of tokenized or digital assets, are drastically transforming the traditional notions of asset ownership and usage. 

The different types of non-fungible tokens in circulation today indicate promising prospects for NFTs in the years to come.

Louis de Jong
Louis de Jong