10 Ways Non-Fungible Tokens Will Change the Way You Interact With The Blockchain
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June 15, 2022
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The world of blockchain is a fast-moving, ever-changing space with new innovations coming to the forefront on a regular basis. Even within such a dynamic environment, we’ve seen non-fungible tokens become one of the most talked about new advancements in blockchain technology. Non-fungible tokens are essentially unique digital assets that have properties and identifiers that make them stand out from other tokens. They come in all shapes and sizes from in-game items like CryptoKitties to entire virtual worlds like Decentraland. There are many advantages to using non-fendible tokens over traditional fungible ones, especially when it comes to your interaction with the blockchain. Keep reading for 10 ways non-fungible tokens will revolutionize the way you interact with the blockchain.
Double-Layer Protection in Asset Storage
A standard token is usually purchased and used for its intended purpose. Once the transaction is complete, that token can be transferred, sold, or traded among users. However, a token’s fungibility makes it vulnerable to being stolen or lost. If a token gets stolen or lost, there is no way of retrieving it. To prevent this from occurring, non-fungible tokens can be used to store assets like money, property, or other valuable items like crypto collectibles. When you store assets like these in non-fungible tokens, you are ensuring that they are only used for their intended purpose. This doubles the protection to make sure that the token remains in your hands. On top of this, the blockchain will always keep track of where these tokens are stored. This way, if one of the non-fungible tokens gets lost or stolen, you can easily identify and remove it from the blockchain. This level of protection is not possible with standard fungible tokens, making non-fungible tokens the ideal choice for storing assets.
Freeing Up Storage Space for Transactions
When you use non-fungible tokens for storing assets, the blockchain does not need to keep a record of the assets themselves. This means that the information about the assets does not take up any storage space on the blockchain. On the other hand, a transaction involving the storage of the assets themselves does take up storage space on the blockchain. This can become a problem when you start dealing with large amounts of assets. For example, if you’re an art collector who is storing all of your art pieces on the blockchain, the blockchain will have to keep track of all of that data. If you’re interacting with the blockchain frequently with large transactions, this will consume a lot of space and slow down the entire network. With non-fungible tokens, only the information about the token itself will be stored on the blockchain, resulting in more space for legitimate transactions.
Limiting Token Access Only to Those Who Own It
When you use a standard fungible token, anyone can access the token and use it. As mentioned above, non-fungible tokens are unique and are only used for their intended purpose. This means that only the owner of the token can use it. While you can use a fungible token as many times as you want, a non-fungible token is used for only a single transaction. This means that once you’ve used a non-fungible token, it is no longer available to you. This will prevent you from accidentally spending the same token twice. This makes it easy to keep track of how many tokens you’ve spent, reducing the likelihood of error. While this might not seem like a big deal for a single transaction, it can add up when you’re dealing with multiple parties who are all using non-fungible tokens to track their transactions with you.
Proving Ownership With Non-Fungible Tokens
Anyone can use a standard token to interact with the blockchain. This means that anyone can claim ownership of a token regardless of whether they really have the right to it or not. With a non-fungible token, you’re able to prove ownership of it, allowing you to only transact with parties you trust. Let’s say that Bob is a contractor who offers his services via smart contracts on the blockchain. He can use non-fungible tokens to prove ownership over his services. When he delivers his services to someone, he can generate a non-fungible token that represents those services. This token will have all the information about his services as well as his information. When the contractor receives his payment, he can generate another token that represents the payment. This token will have all the information about the payment and the person who paid him. All parties are able to keep track of the completed transactions through the use of non-fungible tokens.
Verification of Authenticity of Assets & Identity
With fungible tokens, there is nothing to prove that a transaction is legitimate. While there are ways to track and trace transactions, you can only track the address of the person who sent the tokens. There is no way to prove who the actual person is behind the address. With non-fungible tokens, you’re able to prove the authenticity of an asset and the identity of the person behind it. Let’s say that you purchase a painting from an art gallery that is doing business with a fungible token. The gallery sends you the token and you’re able to verify that it was sent from the correct address. However, there is no way to prove that the painting itself is legitimate without an authentication process. With non-fungible tokens, you can use the token to prove not only that the painting is real, but that it has been verified by an expert. This ensures that you’re always getting authentic pieces of artwork.
Provenance Tracking and Supply Chain Management
When you purchase goods and services, you want to make sure that they’re authentic and ethically sourced. While you can verify the authenticity of a non-fungible token that represents a painting, you can’t verify the authenticity of other types of goods like food. With non-fungible tokens, you’re able to keep track of the provenance of all goods that are delivered via the blockchain. The token can record the source of the goods, take biometric measurements of products like electronics, and even capture the temperature in the shipment. This is a great feature for luxury goods and items that are food-grade. You can also use non-fungible tokens to track the supply chain of your goods. When you purchase raw materials from a supplier, you can use a non-fungible token to record the quality and quantities that were delivered. You can then use the token again when you manufacture your goods to record the quality and quantity of the raw materials that you used. This makes it easy to track the entire supply chain of your goods, ensuring that you’re only getting the highest quality materials.
Virtual Reality and Gaming Benefits
With the rise of virtual reality and gaming, we’ve seen the need for non-fungible tokens grow significantly. VR and AR environments are fully digital, meaning that all of the assets are stored as non-fungible tokens. This makes it easy for users to check their inventory, customize their items, and trade them with other users. When everyone is using non-fungible tokens, it’s easy to check the balance of someone’s account. If someone is trying to steal or hack your items, they’re unable to use them because they don’t have access to them in the first place. This makes it much easier to police VR and AR environments while providing a seamless experience for the users.
When you use non-fungible tokens, you’re able to double-layer protect your assets, free up space on the blockchain for transactions, limit token access only to those who own it, prove ownership of a token, prove the authenticity of goods, track the supply chain of goods, and benefit from virtual reality and gaming. Non-fungible tokens are a great way to interact with the blockchain, resulting in a more seamless experience for all parties involved.