The rise of the non-fungible token (NFT) market in 2020 made NFTs one of the most discussed topics around the globe. As a continuation of the trend, 2021 was the year of non-fungible tokens. The volume of trades on the NFT market topped $23 billion during the year, making the $100 million from 2020 look like a drop in the bucket. This growing class of crypto assets is expected to have another interesting year in 2022, as new use cases emerge continuously. One of the latest use-cases brings us to the next chapter of the NFT saga: Utility based NFTs.
NFTs are here to Stay, Thrive, And Rule
The first ever NFT marketplace, CryptoPunks, was launched in October 2017. This was the first place to sell “rare digital art” and introduced the world to NFTs. At the time, they were the only non-fungible tokens that were barely known outside the blockchain community. In 2020, approximately 30,000 to 80,000 NFTs traded every week. Like CryptoPunks brought a new approach in the NFT space, similarly Tiamonds NFT marketplace by LCX will give users the opportunity to trade Diamonds. With the launch of Tiamonds that is on 22/02/2022, the community will be able to use the marketplace and trade seamlessly.
However, the real boom begins in 2021. More than $2 billion was spent on NFTs in the first three months of 2021, a 2100% increase from the fourth quarter of 2020.In the first two quarters of 2021, NFTs generated about $2.5 billion in sales; $1.2 billion of that was generated in July 2021 alone. A total of $49 million was traded each day on Aug. 1 on the OpenSea NFT marketplace. In 2022, the community will also see Tiamonds on the OpenSea NFT marketplace, which will increase the value of this data.
A brief overview of the NFTs
Here’s a quick primer for those of you who haven’t heard of NFT: An NFT is an abbreviation for a Non-Fungible Token. An NFT is a digital asset representing real-world objects such as art, music, video, and in-game items. Ethereum and bitcoin are built using the same kind of programming, but there are significant differences between the two.
Cryptocurrencies and physical money are fungible, which means they can be traded or exchanged. As far as value goes, one dollar will always be worth another dollar; one bitcoin will always be worth another bitcoin. A blockchain transaction can be conducted with trust because of cryptocurrency’s fungibility. NFTs are different from other technologies. NFTs have a digital signature, which prevents them from being exchanged or being equal to one another.
What are utility NFTs?
The next step in NFT evolution is utility NFTs which are NFTs that offer utilities as well as scarcity and uniqueness, offering intrinsic values to buyers. Utility NFTs can be purchased for the purpose of receiving a physical piece of art that resembles the NFT purchased. Purchasing utility NFTs offers attractive, redeemable perks that make them even more attractive to buyers. Tiamonds is the most prominent example of utility NFTs as an important facet.
By nature, utility NFTs go beyond the scarcity imposed by traditional NFTs, and on account of their utility-driven nature, they could end up becoming a game-changing advancement.
The following are the categories of utility NFTs:
- Community NFTs
- Fantasy Sports NFTs
- In-game NFTs
- Social NFTs
- Gambling NFTs
Community NFTs: Owning exclusive NFTs gives you access to exclusive fan communities. Ownership of these NFTs can be transferred if desired.
Fantasy NFTs: Fantasy NFTs are non-fungible tokens that are used in the Play-to-Earn game and are treated as characters within the game’s fantasy world.
In-Game NFTs: In-game NFTs are used in a gaming universe. Users compete for these special NFTs that are dropped as perks for their activities.
Social NFTs: NFTs that can be incorporated into social media like GIFs, emojis, badges, profile pictures, and comment embeds.
Gambling NFTs: These NFTs are created on the blockchain, with the primary goal of providing utility in the gambling industry.
Utility NFTs revolutionizing Next Generation Asset Class
Adoption of Blockchain technology in the precious metals industry is limited, as the industry is predominantly run using traditional methods. However, some new players have been attempting to incorporate blockchain technology into the diamond industry, Tiamonds. Diamonds are rarely used for asset diversification due to their lack of fungibility. A diamond is best known for its gem qualities and is widely admired as a beautiful stone for jewelry. However, it’s time to realize the real value of diamonds.
LCX has launched a project called Tiamonds with the purpose of showcasing the promise of tokenized assets, educating consumers about tokenization through gamification and establishing a community-driven token economy. Tiamonds by LCX is transforming diamonds by introducing tokenized diamonds via NFT technology.
Tiamonds are uniquely generated NFTs on the Ethereum blockchain, with the primary goal of providing utility to investment-grade diamonds. Tiamonds are based on the ERC-721 standard, which underpins ownership of real-world diamonds with the utility of physically redeeming these real-world diamonds.
Conclusion
It is evident that utility NFTs are the future of NFT technology, with use cases such as Tiamonds showing how much innovation can be achieved with blockchain technology. With Tiamonds, the asset tokenization industry landscape may undergo a paradigm shift towards a more decentralized future.
