From artwork to identity: the evolution of NFTs
In this article, we take an in-depth look at the transformations that non-fungible tokens – better known as NFTs – have undergone in the brief timeline of their existence and provide insight into ways they can help usher in a new era. Internet – which gives the user control over all the data they generate online.
A brief history of NFTs
The idea of NFTs started from the premise that certain characteristics of physical objects could be digitally recreated, thanks to the fundamental properties of blockchain. The first example, prior to the term ‘NFT’, can be found with Rare Pepes, a collection of ‘digital collectible cards’ stored via the counterpart protocol on the Bitcoin blockchain. The following year, 2017, CryptoKitties took the world by storm, with digital cats selling for thousands of dollars. CryptoKitties were so popular at one time that they represented the majority of transactions on the Ethereum network.
It wasn’t until around mid-2020 that NFTs really started to find a place outside of the usual crypto collector bubble, with big brands like the NBA, Marvel and Topps expanding into the market. space and attracting a new audience to blockchain. A digital art movement quickly developed around NFT markets like OpenSea, Rarible, and SuperRare, in which anyone could showcase their work and sell it to the highest bidder. That move culminated with artist Beeple’s March 2021 NFT sale for an incredible $ 69 million.
NFT Adoption Crypto Adoption Mirror
By May 2021, the art NFT market had exploded widely, with many art NFTs having lost 90% of their value in the previous month. Today, the use cases of NFTs have expanded to include in-game elements for video games, copyrights in musical compositions, and used as real estate deeds – in physical and digital form. It turns out that mimicking the qualities of physical collectibles is just one of the many potential applications of NFT technology, and what has happened so far is just the tip of the iceberg. NFT use cases.
The journey of NFTs so far has been similar to the original progression of blockchain and cryptocurrency. After the bursting of the initial crypto bubble in 2017, it was the projects with real utility that remained standing, their networks not phased by the disaster in the markets. This led to Bitcoin and Ethereum solidifying as the foundation of the crypto industry – a dynamic that continues to this day.
The importance of layer 2 solutions
Although it has made some headway into the mainstream, cryptocurrency has yet to be adopted massively by the industry, largely due to the limitations of the original technology. At the same time, the innate complexities of crypto remain a barrier to adoption, with many potential users still being put off by the idea of having to manage a crypto wallet; the majority not knowing how to acquire cryptocurrency in the first place. Many of those who overcame the barriers to adoption now find themselves at a lower price for using crypto, with transaction fees on Bitcoin and Ethereum making ordinary payments smaller through crypto simply unachievable.
To combat the congestion issues currently facing Ethereum – the blockchain platform of choice for most crypto projects – Layer 2 solutions have been developed to shift the burden of transactions from the Ethereum network to other blockchains. . Second-layer solutions like Polygon and Binance Smart Chain have already gone out of their way to address crypto’s scalability issues, providing users with ways to transact quickly and cheaply while remaining interoperable with Ethereum.
Enterprise level projects are now starting to enter the NFT arena with Layer 2 solutions. The underlying technology behind NFTs is proven, tested and feature rich, built on proven protocols. Such protocols are poised for the expansion of mainstream use of NFT and will provide the foundation on which a new generation of blockchain solutions will be built.
Soon to leave their less dimensional counterparts behind, next-generation NFTs are now on the way, powered by advanced smart contracts capable of interacting with external systems. Dynamic NFTs with enhanced functionality are already tied to external oracles, bridging the gap between blockchain and real-world data.
The future of TVN
Built on this next generation Layer 2 technology, Cirus intends to integrate user data profiles, histories and traces into a dynamic data NFT, or dNFT, the first of its kind. When integrated with Web 3.0, dNFTs can be used to fill gaps in the new Internet ecosystem. Such shortcomings, for example, include the ability to import a person’s activity history (similar to credit history) [DB1] in a way that allows it to remain secure and inaccessible to unauthorized parties. This can be used as a proxy to determine a person’s financial reliability online, [DB2] by giving them access to an advanced selection of blockchain-based financial services.
As Web 3.0 approaches, blockchain and cryptocurrencies will bring an element of anonymity and privacy that has until now been lacking in everyday internet use. The functionalities enabled by blockchain technology offer several advantages over traditional Internet use. On the one hand, trustless systems allow users to fairly interact with counterparties without needing to know anything about them. This is already being done to a limited extent, as can be seen with DEXs and token exchange services like Uniswap, proving that untrusted systems can work for at least basic transactions or interactions.
Data NFTs, such as those offered [DB3] by Cirus, can thus be used as a form of digital identity that strikes a balance between complete anonymity and confidentiality, allowing transactions to take place without the parties having to know everything about each other (such as the name, date of birth, address, etc.). DNFTs can also help service providers answer the following questions about their user base:
- Am I dealing with a bot or a real user?
- How long has the user been active?
- Does the user have a history of interacting with this ecosystem or others?
- What is the historical value of the user’s data track?
- What is the predicted future value of the user data track?
This type of analysis is already feasible in second layer systems where confidentiality is highly valued, but some level of verification is required.
Cirus believes that dNFTs will be the catalyst to usher in true enterprise-level adoption of NFTs and define[DB4] NFT development standards for decades to come. As the switch to Web 3.0 begins, they predict a massive push for ISP adoption of crypto and the hardware approach. The end result of this push will be that internet users will finally own and earn their own data – like the internet should have been in the first place. This new paradigm will lay the foundation from which data can evolve into a new asset class, and it looks like NFTs will open the door to that future.