Technology develops in fits and starts. It skims under the surface for some time, and then it seems everyone is talking about it. It’s the same case with NFTs. It went unknown in the mainstream media for years. Then from 2021 onwards, NFTs started getting the attention we’re now familiar with. Blockchain and cryptocurrencies feel complicated to the masses. But, when it comes to NFTs there is some sense of innate familiarity.
We’re now on the threshold of NFT 2.0. You need not worry if you missed NFT 1.0. Let us first understand what NFT 1.0 meant for us.
Properties of NFT 1.0
NFT 1.0 was about testing how the market would react to the concept of digital asset ownership. Some notable projects include CryptoPunks and Bored Ape Yacht Club. These NFT projects focused on creating unique digital characters stored on the blockchain. Buyers of these NFTs are happy to spend money based on the novelty of owning digital assets. They could be images, videos or texts. NFT 1.0 introduced us to the below properties.
- Immutability: NFTs cannot change themselves once generated. All NFT transactions link to each other like a continuous historical record. Anyone can find out who owns how many digital assets.
- Real Ownership: Blockchains can verify the ownership status of any digital asset. There is no room for any dispute or forgery, unlike in the real physical world.
- Conditionality: Smart contracts can ensure automatic payments based on certain conditions. For example, NFT artists are able to gain a percentage of future sales.
- A true creator economy: NFTs work on decentralized technology. This means creators are independent to make their own creative or financial decisions. They do not need to depend on a centralized platform.
What is NFT 2.0?
NFT 2.0 is the next evolution in NFT technology.
NFT 2.0 is about embedding more utilities and features into NFT assets.
NFT 1.0 felt about appreciating and speculating about static digital assets. NFT 2.0 will inject new capabilities into static digital assets. In a nutshell, NFT 2.0 is about creating new digital asset markets with more utilities.
Properties of NFT 2.0
NFT 2.0 will allow users to interact and play around with the digital asset they’ve purchased or earned. Here, the digital asset could be anything. Think about it like this. We had ‘phones’ which were ‘dumb’ talking machines. Now, almost everyone has a ‘smartphone because the phone is able to use data in a meaningful way. NFT 2.0 is about making ‘smart’ and realistic NFTs.
There are four key properties we need to learn about.
- Generativity: the ability to create algorithmic randomness into digital assets. Users can select the NFT that most resonates with them. Artificial intelligence can embed personalization and emotional connect for users. This makes NFTs more relevant among people, like a consumer product.
- Composability: the ability to customize an asset or create a new digital asset. Before, NFTs were only bought and sold on exchanges. Composability means that they are multi-faceted. They can draw upon the abilities of many NFTs. They can support many use cases and applications.
- Interactivity: this property makes assets ‘smart’ and intelligent. Digital assets can take input from users and other sources. Based on the type of inputs, they get modified to suit their current status. Think of it like an NFT that evolves with time and data, like a real human being.
- Experientiality: due to the above explained properties, NFTs capture true user experience. Think, collectible ticketed experiences as NFTs which grant more utilities to the holder. Or, generating NFTs based on how a user interacts with the application. The gaming industry is already one of the many who want to leverage NFT 2.0.
Each of the above-mentioned properties enables new use cases. They can combine with each other to create a mesh of interlinked applications. We will see founders and developers come together to use these tools to build their NFT projects. At this moment, we cannot even begin to imagine how NFT 2.0 will play out. But, one thing is for sure. It will be way bigger than NFT 1.0.
NFTically is a global B2B Saas hub with customized solutions for enterprises, brands, artists, gamers, and other creators, to build and launch their own NFT marketplaces. The team consists of blockchain developers & business executives who love to solve real-world problems.
It was March 2021 when Beeple’s collage of 5000 digital images sold for a mind-boggling $69 million. Undoubtedly, that opened the floodgates for Non-Fungible Tokens (NFTs) to go mainstream. Today, artists, brands, celebrities, and even…
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