What are NFTs used for?
It can be hard to wrap your head around the value or utility of NFTs.
Right now in 2022 NFTs are mostly digital art in the form of pictures on Opensea.
It’s usually a couple of thousand pieces generated with attributes of different scarcity.
People mint and buy these NFTs and use as profile pictures (mainly on Twitter) or display in their wallets.
- Being part of a community
- Having a specific identity within that community.
- Flexing wealth
- Proving ownership
To not get hacked and lose your NFTs it’s a good idea to use a Trezor hardware wallet (affiliate).
Different from tokens you have a specific identity which is the picture you own. With Dogecoin for example people were part of the movement but they couldn’t differentiate within the movement.
A picture is also a lot less complicated than a cryptocurrency.
Flexing wealth is no different than showing off a lambo in real life or on social media.
But with an NFT as your profile picture you can simultaneously seem like you’re down with new tech and a sophisticated art collector.
The power of this technology is that you can prove ownership and originality of a digital item.
NFT-flippers and collectors try to buy the right NFTs early to make a profit.
NFTs in DeFi
NFTs also have a few use-cases within Decentralized Finance. However these are still in their infancy. For example on the decentralized exchange Uniswap v3 users who supply liquidity receive an NFT for their position.
What are gaming NFTs?
NFTs are used in a lot of crypto games.
Here the NFTs are mainly used to represent characters and items. Like the popular game CS:GO has a lot of skins for weapons that players trade on a marketplace provided by steam in this case. Valve ultimately owns all these items and can create more or remove a players account if they so choose.
In crypto games these items are NFTs hosted on the blockchain. Players hold the NFT in their wallet and they actually own it.
What is NFT art?
NFT art is just digital art. NFTs just made it possible to monetize and speculate on the digital art in a simple way.
Some genres of NFT art:
- Video with audio
NFTs are currently swamped with generative PFPs (profile pictures). After the huge sucesses of CryptoPunks and Bored Ape Yacht Club a lot of other projects copied that playbook.
- 2D pictures are generated by an algorithm from a set of predetermined traits.
- Usually released in collections of 10 000.
A lot of the early NFT art on Opensea and Rarible is 3D art as pictures, videos and GIFs.
To create their pieces artists use software like:
- Cinema 4D
Don’t forget you need to pay taxes on NFTs as well as crypto. We use Koinly as our crypto tax software.
Though many of them may seem pointless they are used to:
– Show ownership.
– Show status.
– As utility in games.
There can be many reasons but here are some examples:
– To be part of a community.
– To speculate.
– To own a piece of digital art.
– To show that they are rich.