NFT 101丨What are the common types of NFT?

The emergence of NFT enables us to tokenize anything of value and trace the ownership of the asset, realizing the intersection of information and value and forming a new form of value carrier. This gives NFT a very broad application scenario. The most mainstream NFT application is personal social avatars, also known as PFP NFT, followed by digital art works, in addition to game props and land on the chain, etc.

This article will introduce several common types of NFTs.

Profile Picture

Profile Picture, abbreviated as PFP, personal profile picture. This type of NFT is also called avatar NFT and is currently the most widely used category in NFT applications.

PFP NFT is often ridiculed as a "worthless little picture". In fact, apart from the artistic value of the picture itself, the greatest value of PFP NFT lies in identity recognition. People who buy PFP NFT actually want to find people who share the same consensus through a similar NFT. Especially when this NFT is worth a lot of money, its role can be equivalent to a luxury item, a symbol of identity and status. The consensus in this circle is that you can only use the NFT you own as your avatar.

Many social media platforms are currently planning to adopt PFP NFT in their applications. For example, Twitter allows users to use their own PFP NFTs as profile pictures after verification, and will display them with a special hexagonal outline, which allows other users to easily distinguish whether the user of the picture is a real Holder, and also gives Holders social capital to show off.

Art work

Another area where NFT is widely used is artistic creation.

NFT can represent a painting, a song, a patent, a video, a photo, or other intellectual property works. In this field, NFT plays the role of a patent office, helping each unique thing to register copyright and identify patents.

Artists in the traditional physical world use signatures to indicate authenticity. In order to identify the authenticity, experts need to participate, which costs a lot. However, there is no such problem in digital art carriers such as NFT. Because NFT cannot be forged. Artworks in the physical world may be forged, but in the field of NFT, it cannot be tampered with. Any artist's digital work, as long as it exists in the form of NFT, is unique, and even the creator himself cannot tamper with or copy it. It has unique scarcity.

In addition to physical objects on the chain, there is also a form of NFT art native to the chain, the most representative of which is generative art. Generative art refers to the generative artist designing based on a series of rules and parameters, creating a generation script through a smart contract, and the final work generated can be a static image, a 3D model, or an artwork with interactive functions. After the collector purchases the artist's work, the artwork will be output through the script, which will be encapsulated in an NFT and sent to the collector.

Generative art on Art Blocks

game

Games may be the first field where NFT assets are widely used, because most of the equipment, skins and even characters in games are non-homogeneous, and some high-end scarce game assets are naturally very suitable for NFT. Since NFT is unique and naturally scarce, NFT can be used to create personalization and scarcity, which is very suitable for application in games.

For example, the earliest CryptoKitties used NFT technology to give each cat a special mark number, making it a unique cat; and later Axie Infinity brought the financial attributes of NFT to the fullest, leading to a wave of "Play to earn", that is, users can use or trade NFTs in the game to obtain financial returns. This play-to-earn model was very popular among players and successfully attracted the participation of many non-Web3 users at the time.

In addition, NFT game props can be confirmed and reused across scenes, servers, and even games, so that the game assets themselves are no longer limited to an isolated island, but may become a truly universal hard currency within the game ecosystem.

Virtual Land

Virtual land NFT generally refers to digital land areas owned by users on the Metaverse platform.

Virtual land generally relies on the metaverse. The project party divides the space in the metaverse into small plots of land and then sells them on the market. When users purchase NFTs associated with specific plots of land, it represents unique ownership of the land.

These lands are similar to the game "Minecraft", where users can create freely. The difference is that in "Minecraft", the land and the user's work are owned by Microsoft, while virtual land NFT is completely owned by the user. When users own the land, they can use it to enjoy online experiences, display content or make profits in the game, such as being able to use NFT land for advertising, social networking, games and work, etc.

Currently, many brands have used virtual land as an important tool for their publicity and promotion. For example, fashion brands such as Gucci and Adidas have purchased virtual land in The Sandbox to showcase their products and provide interactive space for users' virtual avatars.

Decentralized Domain Names

A decentralized domain name is the user's "identity card" on the blockchain. By utilizing the uniqueness of NFT, the domain name NFT is bound to the user's address, turning a long string of addresses into a concise domain name, greatly facilitating a series of usage scenarios that require address interaction.

For example, users can use domain names to send and receive transactions instead of using lengthy and error-prone wallet addresses; they can also use domain names for identity management and logging into applications, etc.

The representative project of domain name NFT is ENS, which is currently the most famous decentralized domain name service platform. It is developed based on the Ethereum network and has technical and financial support from the Ethereum Foundation. ENS currently only supports the Ethereum network, and the registration period is limited. After the expiration, it needs to be renewed to continue to retain the rights of the corresponding domain name. For example, we often see some user names with xxx.eth on social media such as Twitter, which are ENS domain names.

Physical asset proof

In the field of physical assets, other physical assets such as houses and other real estate can also be tokenized using NFTs and then used in financial markets such as asset circulation.

NFT assets have higher liquidity than traditional assets. In reality, it usually takes dozens of days to complete the change of real estate. If the property ownership is identified by NFT assets, the transfer of assets can be achieved in seconds. For example, by issuing houses on the chain through NFTs and tokenizing real estate, it allows people to easily use tokenized assets to raise funds for real estate investment, mortgage loans, etc. This method not only brings huge liquidity to the market, but also opens up this channel for acquiring assets to everyone, balances the liquidity of all assets, and makes it as easy for us to buy and sell an apartment as it is to buy and sell a cup of coffee.

In addition to the scenarios mentioned above, NFT can also be used for record keeping and identification to verify identity and birth certificates, such as driver's licenses, certificates, etc., which can be safely stored in digital form to prevent abuse or tampering; it can also be used for invoices, orders, insurance, bills, etc., turning these financial documents into NFTs, which are suitable for a wide range of transaction scenarios. Many DeFi projects currently have similar application cases.