"Tokenizing Real-World Assets"
Updated: Oct 19, 2020
Bitcoin has opened up a door to infinite possibilities, and with the creation of Ethereum, an entire ecosystem was born. Ethereum created the ecosystem of tokens that have revolutionized the crypto world. The first known tokens called ERC-20 tokens are done with the use of smart contracts. Digital coins that have the ability to be programmed to have particular features and are traded in the crypto market.
Tokens were being used with decentralized Apps (dApp).
“Decentralized applications (dApps) are digital applications or programs that exist and run on a blockchain or P2P network of computers instead of a single computer and are outside the purview and control of a single authority.”
Cryptokitties was one of the world’s first dApp game built on the Ethereum blockchain. A digital game where kitties are collectibles; people can buy, sell, or trade them. This dApp launched in November 2017, and by late 2018 already 250,000 people have played this game; more than 500,000 digital cats have been sold. These digital cats can breed, creating a new unique DNA on the Ethereum blockchain, and sell it later. Every digital cat is unique and can't be copied.
The idea that digital kitties were being considered collectible for many felt the internet was going crazy; how can a digital cat become so valuable? Simple, literally anything can have this success if enough people believe it has value.
Because of the benefits of dApps; most importantly, its ability to run globally, tokens make a perfect match because the tokens also run on a decentralized network that can be accessed anywhere in the world. Like everything in crypto tokens have had an evolution, new standards have been created, such as Non-fungible tokens (NFT). The most popular standard used for these types of tokens is ERC-721.
What are NFT’s?
“A non-fungible token (NFT) is a type of cryptographic token on a blockchain that represents a unique asset. These can either be entirely digital assets or tokenized versions of real-world assets. As NFTs are not interchangeable with each other, they may function as proof of authenticity and ownership within the digital realm.”
Each unit created has a unique identifier, making all units different from each other, this being the main difference from an NFT to a regular token. Why is this important? When you purchase a token, everyone who owns that particular token owns the same thing depending on how much the person invested. Still, when you sell a piece of artwork or any sort of collectible in the real world, artwork and collectibles are valuable depending on specific characteristics such as how many exist in the world. The scarce a collectible or piece of artwork, the more valuable it gets. This seems to be the logic behind these new tokens NFT’s.
“If you are looking to store and gaze upon the beauty of your NFTs, you can do that in Trust Wallet. Just like other blockchain tokens, your NFT will exist on an address. It’s worth noting that NFTs can’t be replicated or transferred without the owner’s permission – even by the issuer of the NFT.”
“NFTs can be traded in open marketplaces, such as OpenSea. These markets connect buyers with sellers, and the value of each token is unique. Naturally, NFTs are prone to price changes in response to market supply and demand.” link
NFT’s have jumped into creating tokens to represent real-world items/assets. What items or assets? I believe it can be anything that can be tokenized, being creative, and with the power of token's such things are possible, from selling virtual land to a real-life photograph. Have you been thinking about investing in NTF's or maybe creating one? It is growing fast, and I know I am having my FOMO moment.
By: Carolina Pérez