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NFTs and cryptocurrency are two digital assets that are currently disrupting a number of industries.
With the first showing signs of revolutionizing ownership and the other threatening to replace traditional currencies, we can’t help but wonder if NFTs will ever be as versatile as crypto.
In order to provide a comprehensive answer to this question, we highlight some of the most important applications of crypto and NFT. To predict which technology will be most useful in the future, our team pitted them against each other using some core criteria of versatility. What we found was not what we expected.
How Versatile Has Cryptocurrency Been?
Since their mainstreaming, cryptocurrency has been closely associated with finance. There have been many hints that fiat currencies may be replaced by cryptocurrencies.
Their evolution has led to notable ones such as bitcoin usable in many online nichesFrom gambling to cross-border payments and even everyday ecommerce payments. Here are some of the use cases that crypto has seen so far.
Finance: Transactions – Purchases, Payments and Purchases
Crypto’s primary use case is finance. It is, after all, a currency.
Bitcoin, the first crypto, was created in 2009 to provide a legitimate peer-to-peer electronic cash system that wouldn’t rely on banks due to prevent the reoccurrence of the Great financial crisis2008
Its peer to peer nature has made it cheaper and faster than existing financial systems. It has been widely adopted for remittances, non-commercial money transfers and other financial transactions.
Follow the development of Decentralized Finance (DeFi)Crypto has also leveraged the use of smart contracts as a lending tool. DeFi exchanges also account for 60% of all retail crypto transactions, especially in ecommerce.
Crypto has proved to be a versatile tool for modern finance. It is now possible to use it to purchase a wide range of goods and services.
You can also find out more about the Governance of
Cryptography has been used in the past to control and monitor the direction of organizations. In the next few years, we may see it used in government.
Tokens can be created by many organizations and sold to their members in order to create a digital organization. The Decentralized Autonomous Organizations (DAO)A classic example is the venture fund launched through the initial coin offering in 2016.
Crypto facilitated a flat organizational structure in this venture, as token holders became stakeholders and voted on projects via the Ethereum blockchain’s smart contracts.
These applications suggest that crypto could be used for future elections. Members or citizens will be issued unique tokens for voting, and public voting systems will tally votes.
Some cryptocurrencies are used in real-world applications. They are not financial instruments that can be traded. They are purchased in exchange for cryptocurrencies such as Bitcoin and Ethereum. This allows users to access certain platforms or products.
For instance, Ethereum’s gas token is used to pay gas fees on the Ethereum blockchain network. Ethereum also owns the Ether currency, which helps those that stake their tokens earn even more ether.
Cryptocurrency plays a major role in the gaming industry’s evolution. It injects the reality of real world economics into games.
This application is an extension of crypto’s application as utilities because these games allow players to earn in-game crypto tokens for completing gaming tasks or outperforming other gamers. The in-game tokens can be traded for crypto or fiat currency by the players.
The development of P2E models (play-to earn) facilitates this application as many individuals now get paid for being a full-time gamer.
Crypto coins can also be used for online casino games in the same way that fiat currencies are. This allows gambling in places where it was previously prohibited, because crypto regulations differ from fiat.
As a further extension of its primary application, crypto can also serve as an investment.
In recent times, traditional investment instruments like bonds and stocks have been replicated in the cryptocurrency industries as security tokens — sister forms of utility tokens, if you wish. Security tokens represent ownership stakes in a business. Many of these were on display during the The 2017 initial coin offering boom.
The key to their use as investment vehicles is the potential for value growth over time. As a common example, Bitcoin – even though it wasn’t intended to be a security token— has increased in value compared to when it was first launched. Investors have preserved and acquired it as an investment.
Many crypto supporters also believe that crypto can hedge against the inflation, further substantiating it as an investment.
How versatile can NFTs ever be?
NFTs are not just for digital art or minted memes, as is commonly believed.
Their non-fungibility has a huge potential, as can be seen from the following use cases.
NFTs has contributed significantly to art. There are many possibilities.
They connect budding artists and established artists with new and untapped audience. As a result, art doesn’t have to be exclusive to the crème de la crème in high-end museums because artists who know How to sell NFT ArtCan sell it to anyone who bids the most.
Reputable institutions like the British Museum have taken this opportunity to create digital versions of their most precious works through tokenization using blockchain technology. This step could have enormous benefits in terms of ensuring authenticity of artworks, and protecting ownership of digital art.
In-game NFTs can be created by gaming developers and sold, traded and bought in exchange for completing tasks and outperforming others. They can also offer better earning opportunities to gamers as NFTs may appreciate in value based on perceived demand and perceived value.
Blockchain technology’s smart contracts facilitate this value transfer and appreciation.
NFTs allow for true ownership of in game tokens. Gaming is a growing industry.The best ways to earn NFTs by 2024. As a result, the lines between investment and gaming may blur in the future because NFT’s earning potential in gaming is attracting both traditional gamers and investors in the industry.
Collectibles & Memorabilia
Recently, NFTs has shown serious potential in the future of collecting unique digital objects. Digital art pieces are a common form of collectibles. However, they aren’t the only ones. Collectibles are anything that has sentimental value for an individual.
You might find a rare collectible only once in a life time. You can now secure these rare items and prove ownership, which will guarantee huge profits in the future. Former US President Donald Trump’s income statement shows huge profits from his collection.
NFTs can be used to represent the ownership of real estate. Property deeds are now tokenized into NFTs to make them easier to purchase on NFT markets.
If you are unable to purchase the properties outright, then you can buy fractions in order to share ownership or fractional ownership with others. The costs of property sales will be reduced by eliminating intermediaries such as lawyers and realty agents. Smart contracts will be used for these purchases and ownership transfer.
NFT real-estate eliminates the traditional property taxes, while still retaining the potential of capital gains. This is because real-estate always appreciates. It also solves the accessibility issue by allowing for cross-border trading.
A Side by Side Comparison of Crypto Versatility and NFT Versatility
The following areas are where crypto and NFTs can be widely applied.
Trading and Finance
Both NFTs as well as cryptocurrencies can both be traded.
However, while trading NFTs involves exchanging the NFT for a set value of fiat or cryptocurrency, trading crypto deals with the coin’s underlying value. This difference is due to the uniqueness of both. NFTs are non-fungible by nature, meaning that a unique entity cannot exchanged for another form. Cryptocurrencies, on the other hand are fungible. They can be exchanged for another entity with equal value.
This fact implies that crypto could have a wider financial application than NFTs. NFT sales and purchase are also powered through cryptocurrencies.
Both crypto and NFTs offer huge investment potential.
Many investors in gaming fund NFT games on the basis of the capital gains that the P2E model offers. The same is true for cryptocurrencies as many platforms have introduced in-game securities tokens.
Crypto may be a better investment than NFTs because their value is dependent on market forces, technological advancements, and regulatory changes.
Crypto has evolved into a standard instrument of finance in the last few years.
Purpose and functionality
Although closely related, NFTs and Cryptos have different purposes and functions.
NFTs can be used in a wide range of applications, including streaming services, digital art, gaming, etc. However, the ability of NFTs to serve as authentication certificates, proving uniqueness, is what makes them so popular in these niches.
Cryptocurrencies, also known as digital currencies, are a way to circumvent problems associated with traditional currency. Their ability for decentralized transactions puts them in the discussion, regardless of industry.
Crypto can be considered NFT’s older sibling, considering it was launched earlier. Crypto has, therefore, a wider range than NFTs. However, a deeper examination of their features reveals that time isn’t the only factor determining their versatility potential.
Crypto has branched out into governance and utilities but its primary application remains in finance. Its role in these niches is clear. NFTs were originally designed to ensure authenticity and digital rights in art and still photos. The ability to ensure authenticity has led the technology into gaming, real estate, and music.
Both have a wide range of applications and pitting them together only shows how well they do what they are designed to do.
The question of whether NFTs will become as popular as cryptocurrency has been is a bad one. A better question is: “How versatile can NFTs be?” The answer to this question is: “Only time can tell.”