The rise of the non-fungible token (NFT) was a sight to see as the market seems to be gaining more mainstream attraction with each passing day. To put into perspective how large this space has actually become, conservative estimates suggest that the amount of money that has flowed into this rapidly developing sector is currently over $ 500 million.
Another way to gauge the impact of NFTs on the global economy is to look at the diverse range of artists, celebrities, and musicians – basically almost everyone – who have adopted this technology. For example, thrash metal pioneers Megadeth recently became one of the newest users of NFTs, allowing backers to purchase unique collectibles that are officially endorsed by the band. This just goes to show how far the reach of this technology has gotten almost overnight.
What also makes NFTs so unique is the fact that they cannot be interchangeably exchanged for other tokens. This contradicts both the way most fiat systems work – i.e. a US dollar can be exchanged for a variety of goods – as well as the way most cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) work.
Because of this unique ability, NFTs can serve as excellent media of ownership, enabling individuals to seamlessly purchase a wide range of things, ranging from digital art to music to real estate.
Connected: How NFTs, DeFi and Web 3.0 are intertwined
NFTs need a more decentralized environment to be successful
As the market for non-fungible tokens continues to flourish, it is clear that more and more people are moving to the use of highly decentralized blockchains, which offer their users a high level of data transparency and flexibility when trading NFTs, especially when compared to centralized ones Solutions like Rarible, OpenSea, Binance NFT etc.
Nowadays there are Byzantine Fault Tolerant (BFT) cluster-based blockchains that are tailor-made for managing NFT database administration tasks. A decentralized database can provide users with optimized access to a data delivery network that provides high levels of protection from data breaches, network outages, and performance issues – all issues that are currently plaguing the global NFT ecosystem.
Connected: The role of decentralized networks in a data-rich, hyper-connected world
On a technical level, it should be noted that while most NFTs today are built on top of the Ethereum network, the ecosystem is currently facing serious congestion issues as well as issues related to high gas charges. Most recently, it was reported that the average price for facilitating a transaction on the Ethereum network (between late February and March) fluctuated in the range of $ 16-20.
Finally, it is important to note that most developers today still rely on centralized databases (like those from Amazon Web Services and Microsoft), but the fact remains that these databases have a centralized point of failure and are therefore susceptible to various attacks and third party threats.
The future looks bright for NFTs
With more and more money – be it retail or institutional – entering the NFT market with each passing day, many experts believe that this space will turn pretty quickly into a multi-billion dollar industry with use cases well beyond the scope from just going out becomes art and music possession.
Connected: Art rethought: NFTs are changing the collector’s market
It also stands to reason that in the future, NFTs could be used for a variety of everyday payment / transaction purposes – such as buying clothes, shopping in supermarkets, etc. – as these tokens have the innate ability to link the identity one person with their purchased items, making refunds and product exchanges easier and more hassle-free.
As the COVID-19 pandemic continues to rage around the world, many governments are already promoting the use of contactless technology within their borders. This could be another reason that the adoption of NFT could increase significantly in the coming months and years.
To outline the meteoric rise of these digital offerings, we can conclude that many prominent NFT marketplaces have recently seen record transaction volumes. For example, OpenSea’s monetary inflow and outflow volume has increased a whopping 1,400% year-to-date, while Rarible’s total trading volume has increased 634% in the past few months.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
Pavel Bains is CEO of Bluzelle – the decentralized database for the new Internet. Pavel is a digital media expert and has worked with Disney, Microsoft, Warners Bros and DreamWorks. Pavel also writes regularly for Forbes, Huffington Post, and Fast Company, and writes articles in the fields of finance and digital media. He was named a technology pioneer by the World Economic Forum.