NFT

Introduction to the Seven Major Types of NFTs! Besides art collectibles and in-game items, what other uses can they have?

share
Introduction to the Seven Major Types of NFTs! Besides art collectibles and in-game items, what other uses can they have?

2021 has been the year of NFTs in the crypto industry, from NBA Top Shot at the beginning of the year to the mid-year craze of CryptoPunks and BAYC, and now the recent integration of NFTs with play-to-earn games. With a growing variety of NFT types, each has its own unique applications. To help everyone understand the differences, a16z partner Chris Dixon compiled a list of the 7 most common types of NFTs on Twitter yesterday. Let's take a look at each one.

Table of Contents

Seven Major Types of NFTs

1. Art

This category includes collectibles such as CryptoPunks and Bored Ape Yacht Club (BAYC), as well as 1/1 digital artworks on platforms like Foundation and SuperRare. People are drawn to collecting digital art for the same reasons they enjoy physical art, fashion items, and baseball cards ─ NFT art is a blend of aesthetics, patronage, status, collecting, and social interaction.

2. Music

Music holds significant importance in the realm of NFTs, as musicians have historically received minimal compensation in the Web2 world. There have been many new music NFT projects launched recently, including arpeggi.io, Sound.xyz, and royal.io.

3. Access

NFTs make ticketing more convenient and interoperable, potentially replacing traditional tickets. A more native use case is digital access, such as entry to private Discord servers or online courses.

4. In-Game Items

In the Web2 world, gamers spend approximately $40 billion annually on virtual items, but these items are not truly owned by the players; the game companies retain ownership. Additionally, these items lack support for cross-game applications and combinations.

The emergence of NFTs allows players to truly own in-game items. The future of gaming will revolve around users owning NFT items, instead of relying heavily on the game itself during gameplay. Web3 gaming pioneers like Axie Infinity and NBA Top Shot have already sparked a frenzy, with more similar games expected in the future.

5. Redeemable Physical Goods

Unisocks is a visionary example of this type of NFT use case, where token holders can redeem tokens for physical items. This mechanism can be applied to a variety of offline goods.

For instance, many top collectors of physical items keep their collections locked in safes. Collectors can create a digital token representing their collection and showcase and trade it in this form. This not only eliminates intermediaries but also enhances user experience.

6. Identity

The way Web2 handles personal information has proven to be a failure, with sensitive personal data being hacked numerous times, and password management being a mess. Companies have long been able to change privacy policies and terms of service at will.

In contrast, blockchains like Bitcoin and Ethereum have never been hacked. In the Web3 world, users are responsible for their own personal information, with no central database to be hacked and sold.

Today, this means better ways of logging in and using systems like ENS Ethereum Name Service to interactively identify oneself. In the future, NFTs can be used to store and selectively reveal various aspects of personal identity information, such as records, credentials, and reputation.

7. Web2 Databases

By using encryption and decentralized data storage, NFTs can transform any content stored in centralized Web2 databases. This can range from simple things like viewing preferences to more advanced content like a user's social graph.

Having control over one's data is a key part of the Web3 vision.

"This year, we've seen explosive growth in innovation around NFTs. This could continue for many years as it is still early days in the development of web3." - Chris Dixon

NFT