Will NFTs Ever be as Versatile as Crypto?

NFTs and cryptocurrencies are two new digital assets currently disrupting many industries.

With the first showing signs of an ownership revolution and the other threatening to displace traditional currencies, one can’t help but wonder whether NFTs could ever be as versatile as cryptocurrencies.

In providing a holistic answer to this question, we examine both sides, highlighting some of the key applications of cryptocurrencies and NFTs so far. To predict which one will have the most applications in the future, we compared them to each other based on several key criteria for diversity, and our findings were far from what we had imagined.

Read on to find out.

How diverse have cryptocurrencies become so far?

Cryptocurrency has had a close relationship with finance since it became mainstream. There have been several hints that it could replace fiat currency.

However, their evolution has led to the following notable ones: Bitcoin available in many online niches, from gambling to cross-border remittances and even everyday e-commerce payments. Some use cases for cryptocurrencies so far are:

Finance: Transactions, Purchases and Payments

The main use case for cryptocurrency is finance. After all, it is a currency.

Bitcoin, the first cryptocurrency, was created in 2009 to provide a legitimate peer-to-peer electronic cash system that did not rely on banks to prevent a recurrence. great financial crisis 2008.

Its peer-to-peer nature makes it faster and cheaper than traditional financial systems. As such, it has been widely used for remittances and non-commercial fund transfers.

Following development Decentralized Finance (DeFi) On the platform, cryptocurrencies also utilized smart contracts for lending purposes. Additionally, these DeFi exchanges accounted for 60% of all cryptocurrency transactions through retail activity, especially e-commerce.

So far, cryptocurrencies have proven to be a versatile asset in modern finance and can now be used to purchase many different types of goods and services.

rule

So far, cryptocurrencies have been applied to supervise and control the direction of organizations. We will likely see this in action across governments in the coming years.

Many organizations can now set up digital organizations by generating tokens and selling them to their members. that much Decentralized Autonomous Organization (DAO) The venture fund launched through ICO (initial coin offering) in 2016 is a typical example of such an application.

Cryptocurrency promoted a horizontal organizational structure in this venture as token holders became stakeholders and voted on the project through smart contracts on the Ethereum blockchain.

These applications mean the cryptocurrency could be used in future elections. Members or citizens are issued unique voting tokens, and a publicly accessible voting system tallies their votes.

utility

Some cryptocurrencies have specific real-world uses. It is not considered a tradable financial instrument. Instead, individuals purchase them in exchange for other cryptocurrencies, such as Bitcoin and Ethereum, to access specific products or services on the platform.

For example, Ethereum’s gas tokens are used to pay gas fees on the Ethereum blockchain network. Ethereum also has the Ether cryptocurrency, which helps people who stake their tokens earn more Ether.

gambling

Cryptocurrency plays an important role in the development of the gaming industry. Brings the realities of the real economy into the game.

This application is an extension of the Cryptocurrency-as-Utility application. Because these games allow players to earn in-game cryptocurrency tokens for completing game tasks or outperforming other gamers. Players can then exchange their in-game tokens for cryptocurrency or fiat currency.

The development of Play-to-Earn (P2E) gaming models facilitates this adoption as many individuals are now paid as full-time gamers.

Likewise, cryptocurrency coins can be used to bet on online casino games just like fiat currencies. Since cryptocurrency regulations are different from fiat currencies, these developments make gambling possible even in places where gambling was previously restricted.

invest

As an extension of their primary use case, cryptocurrencies also serve as investments.

In recent years, traditional investment vehicles such as bonds and stocks have been replicated in the cryptocurrency industry as security tokens (a sister form of utility tokens, if you will). Security tokens represent an ownership stake or stake in a company. We saw a lot of this during that period. 2017 ICO Boom.

The key to applying it as a form of investment lies in its potential to increase in value over time. A common example is Bitcoin, which was not intended to be a security token but has increased in value since it was first launched. In this way, investors have acquired and preserved it as an investment.

Many proponents also believe that cryptocurrencies can further prove their investment applications against inflation.

How many different uses can NFTs have?

Contrary to popular opinion, NFTs have applications beyond digital art and created memes.

Non-fungibility represents enormous potential, which can be seen in the following use cases:

Art

NFTs have delivered art in a big way. However, several possibilities can be explored.

They connect emerging and established artists with new and untapped audiences. As a result, art need not be limited to the best pieces in luxury museums. How to Sell NFT Art You can sell it across borders to the highest bidder.

Reputable museums such as the British Museum have embraced this possibility by creating digital formats of their most valuable works through tokenization with the help of blockchain technology. This step has enormous potential benefits in ensuring the authenticity of artwork and protecting ownership of digital art.

gambling

Similar to utility tokens, game developers can create in-game NFTs that can be sold, traded, and purchased to complete game tasks and outperform other gamers. Likewise, NFTs offer better monetization opportunities for gamers as they can be valued based on perceived value and increased demand.

Smart contracts in blockchain technology facilitate this transfer and valuation of value.

NFTs facilitate true ownership of in-game tokens. Best Way to Get NFTs in 2024. As a result, the lines between investing and gaming may become blurred in the future, as the gaming revenue potential of NFTs is attracting both existing gamers and industry investors.

Collectibles and Memorabilia

NFTs have recently begun to show serious potential as the future of collecting unique digital items. Digital artwork is a common example of a collectible, but it is not the only form. A collectible can be anything that has sentimental value to any individual.

Once in a lifetime, you may stumble upon the collectible you want. But with NFTs, you can secure these unique items and claim verifiable ownership that guarantees huge profits in the future. For example, former US President Donald Trump’s income statement shows huge profits from his collection.

real estate

NFTs can also be used to represent ownership of assets. Now you can tokenize real estate deeds into NFTs and easily purchase them on NFT marketplaces.

Individuals who are unable to purchase these properties outright can purchase portions to gain partial or shared ownership with other shareholders. This reduces the costs associated with buying or selling real estate by eliminating the need for intermediaries such as lawyers and real estate agents. Smart contracts are used to implement these purchases and transfers of ownership.

NFT real estate eliminates traditional property taxes while maintaining the potential for capital gains because real estate will always have value. And of course, it also solves accessibility issues by allowing cross-border transactions.

Side-by-side comparison of the diversity of cryptocurrency and NFT

The following are areas where cryptocurrencies and NFTs are widely applied:

trade and finance

Both NFTs and cryptocurrencies can be traded.

However, while NFT trading involves exchanging the NFT for a set value of fiat or cryptocurrency, cryptocurrency trading deals with the underlying value of the coin. This difference comes from the unique characteristics of both. NFTs are inherently non-fungible, meaning that one unique object cannot be exchanged for another format. Cryptocurrencies, on the other hand, are fungible and can be replaced by other entities of equal value.

This reality means that cryptocurrencies could have broader financial applications than NFTs. Moreover, NFT sales and purchases are done through cryptocurrency.

invest

Once again, both cryptocurrencies and NFTs have tremendous investment potential.

In the gaming sector, many investors fund NFT games based on the speculative capital gains presented by the P2E model. The same can now be said for cryptocurrencies, as many platforms have introduced in-game security tokens.

However, since the value of cryptocurrencies depends on market forces such as supply and demand, technological advancements, and regulatory changes, they may have an advantage over NFTs in terms of investment potential.

Cryptocurrencies have become a standard financial instrument over the past few years.

Purpose and Function

NFTs and cryptocurrencies are closely related but have contrasting purposes and functions.

NFTs are widely applied to games, digital art, streaming services, etc. However, the use of NFTs in these niche markets is underpinned by their ability to serve as certificates of authenticity, proving the originality of digital assets.

Cryptocurrencies are digital currencies that serve as a medium of transaction, bypassing the problems associated with traditional currencies. The ability to support decentralized transactions automatically puts you in the conversation, regardless of industry.

conclusion

Cryptocurrencies can be considered the older brothers of NFTs, considering they were launched earlier. As a result, it is not unexpected that cryptocurrencies have found a wider range of applications than NFTs. However, a deeper examination of its features reveals that time is not the only factor that determines versatility.

Cryptocurrencies have made inroads into governance and utilities, but their primary use cases remain in finance. And this is evident in the role it plays in these niche markets. NFTs, on the other hand, were launched to ensure authenticity and digital ownership of works of art and still images. And its potential to verify authenticity has led it to fields such as real estate, music and gaming.

Both are broadly applicable in different ways, and pitting them against each other only shows how good they are at the job they were designed to do.

Whether NFTs will become like cryptocurrencies may be the wrong question. A better question would be: “How versatile can NFTs be?” And the answer to that question is: “Only time will tell.”