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A new kind of crypto asset has appeared that you need to know about, and that’s the non-fungible token (NFT). These tokens are unique in that they have unique characteristics, known as metadata, which makes them different from all other tokens on the blockchain. This can be great news for some people and bad news for others; it depends on how you want to use them. In this article, we’ll look at what NFTs are, why they’re important, and why they might be so useful in 2022.
What are non-fungible tokens (NFTs)?
A non-fungible token is a digital asset that is unique in some way. In other words, it’s different from another instance of that same type of asset. For example, if you had a gold coin and I had a gold coin, they would be considered fungible because there would be no discernable difference between them—they could both be traded for $1 coins and wouldn’t be worth more or less than any other gold coin in circulation. But if I were to give you my high school class ring as collateral for a loan, that ring would become non-fungible. What makes NFTs so important is their ability to prevent issues like item duplication or fraud.
Why you need to know about NFTs
In 2022, we’ll see a market shift that will change how designers and consumers interact with fashion. The purchase of clothes as we know it will be replaced by crypto fashion, or clothing purchased via crypto tokens on a blockchain. More specifically, NFTs—or non-fungible tokens—will turn your clothes into smart objects. To explain why NFTs matter for 2022 and beyond, let’s take a look at what they are, how they work, and why they are such an important part of our future.
What is the potential of NFTs?
NFTs don’t hold as much value as a digital asset as, say, BTC does. NFTs are also not as easily transferable because of their unique nature. What they do offer is an opportunity for artists and creatives to be rewarded directly for their work by locking up a digital copy of it in what is called an asset contract on Ethereum. That contract can then be sold in exchange for ETH or any other cryptocurrency. This method differs from how popular crowdfunding sites like Kickstarter or GoFundMe operate because these sites take a percentage of funds raised in order to cover costs such as credit card processing fees and customer service costs related to returns/cancellations. The profits are then shared with creators who create projects on these platforms.
How will fashion change with the introduction of blockchain?
Fashion is one of those industries that have been dominated by centralized business models. The industry relies on a handful of brands who design their own styles and use traditional marketing strategies to make sure they are making enough profit on each product. Consumers have never had much choice when it comes to fashion, but blockchain could change all that. Many brands have started using NFTs (non-fungible tokens) in order to take power away from companies and hand it back to consumers. This means consumers can now choose exactly what products they want and how much they are willing to pay for them, rather than having a limited number of choices. Blockchain gives power back into our hands.
The non-fungible nature of NFTs leads to a decentralized collectibles ecosystem where individuals are free to purchase, sell, trade, and curate their personal collections without any intermediary—there’s no need for an Amazon or an eBay when you have hundreds of independent marketplaces with verified listings. NFTs will unlock a level of true decentralization and independence we’ve never seen before in digital marketplaces. The first step is making sure people know about them.