scarcity of NFTs

Interoperability, transferability and scarcity of NFTs

When you digitally own an NFT using blockchain, you can broadcast it, meaning that the ownership of your digital asset can reach more people. Are you looking for a trading platform for easy NFT trading and transactions? Click at this Site.

However, some non-fungible tokens, like ERC-721 collectables such as CryptoKitties or CryptoPunks, may not be interoperable with other non-fungible tokens because they are not transferable. To be transferable, “ERC-20 tokens require a smart contract that acts as a controller for the tokens and their functions.”

For example, when you purchase with cryptocurrency, the money is transferred from your wallet to the seller’s. It can also occur for the trading of ERC-721 collectables where there are two parties involved in the transaction. However, suppose an ERC-721 token can only be traded within its platform or through another cryptocurrency (such as Ethereum or bitcoin) and cannot be converted back into fiat currency or other cryptocurrencies. In that case, it is not genuinely fungible.

This issue arises because some companies have created a blockchain that supports their NFTs. However, it means that an ERC-721 token is only transferable between the applications of a specific company. For example, if you own a CryptoKitties using the Ethereum blockchain but want to sell it, you need to go on the website of CryptoKitties and find someone who would like to buy it from you.

Scarcity of NFTs:

If you own CryptoKitties, it means that there an only a finite amount of them in existence. Because CryptoKitties are rare and valuable, people are willing to pay millions. Some investors even had to shell out $50 million for one CryptoKitties (and two or three people tried bidding for it).

Interoperability:

You can only interact with an NFT if you have the private key to that specific NFT. It causes interoperability issues because some blockchain ecosystems do not offer their native token to their users and instead rely on ERC-20 compatible tokens. Most major blockchain platforms, including Ethereum and EOS, support ERC-20 tokens. However, “ERC-721 tokens do not have access to all features on other chains.” Furthermore, “Interoperability is a key component of the value of any blockchain network.” When creating an NFT, there should be ways to move it between blockchains so that users can make purchases or trades within different ecosystems.

Transferability:

The transferability of NFTs is another issue concerning the value and scarcity of these non-fungible tokens. Some non-fungibles are only tradable between two parties through transactions on the same blockchain network.

Transferability is also essential for users who want to trade their CryptoKitties or CryptoPunks for cash. You can only sell your NFTs back to their ICO (Initial Coin Offerings) on their blockchain platform. You can also transfer your NFTs if the blockchain supports those specific tokens by sending them from a wallet to keep them within another company’s ledger. However, you cannot transfer them directly into fiat currency to purchase an item because that is impossible with some blockchain companies’ ecosystems.

To fight interoperability and transferability issues, some companies established a community of NFT holders who can meet and discuss blockchain-based games. The first NFT Summit was held in New York City at the Hammerstein Ballroom, where people played CryptoKitties and other blockchain-based games. The goal of the community is to bring together game developers and players to create standards for the next wave of digital gaming.

The ERC-721 protocol has been followed by several projects such as CryptoKitties, Gods Unchained, Etheremon and Decentraland. For example, in CryptoKitties, players purchase digital kitties, or the collectable versions of real cats, from a decentralized app (DAPPs) called Ethereum Kitty.

The kittens are created using a “non-fungible token” called ERC-721. The cats are unique to their owner because they all meet certain criteria, such as being born with a specific code and all having unique names. Players can browse through thousands of other cats in the Ethereum Kitty DAPPs and trade for them using a cryptocurrency like Ethereum or another blockchain currency like Bitcoin. CryptoKitties sold around $120 million worth of kitty cards in 2017.

As ERC-721 becomes an essential standard for NFTs, many people want to invest in non-fungible digital assets. However, only a few private companies create these tokens and their networks. As a result, the scarcity of NFTs will increase over time because NFTs that private companies create will be more valuable.

Therefore, scarcity and demand will likely increase over time because there is an insufficient supply of typical cryptocurrencies to satisfy the demand. In addition, because CryptoKitties is based on Ethereum, they will have access to services provided by the Ethereum network and can interact with other cryptocurrencies such as bitcoin or ether.

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