This year the whole world is fascinated by it, because the blockchain has promoted a surge in activities in the cryptocurrency and decentralized financial fields. Governments and multinational companies are eager to understand the emerging economies that this wave of innovation is driving. But the most powerful tool for reshaping the global economy is still in its infancy: irreplaceable tokens, or NFTs.
Most of the current blockchain use cases are focused on the transfer of monetary value. Store-of-value cryptocurrencies like Bitcoin can prevent fiat inflation; stablecoins focus on borderless financial transfers and prevent volatility. Many other cryptocurrencies focus on the privacy aspects of digital currencies, some of which are used to manage and maintain value in a decentralized financial ecosystem (called DeFi). Like the currencies issued by the central bank, each of these assets are fungible: they can be swapped with other coins of the same type.
But a large part of the economic value is irreplaceable. Think of all the unique assets that make up the basic components of so many markets: houses, cars, art — and the debt and other financial instruments that underlie them and allow them to be traded. In order to emerge a truly decentralized economy, smart contracts that manage tokens, such as the digital asset Ether of Ethereum, must also be applied to these irreplaceable assets. They must be tradable, divisible, and customizable-the blockchain must adapt to all the ingenuity and flexibility of traditional finance.
Welcome to the future of NFT.
Customizable NFT can help build a new economy
So far, most compelling NFTs are related to digital art. But this is just the skinny of what the technology can do. NFT effectively makes the tokenization of any asset possible-allowing transactions to be executed through smart contracts, greatly improving efficiency and reducing the risk of malfeasance or human error. But even this cannot understand their true abilities.
NFT does not have to be static. Current techniques can be subdivided, multiplied, or added to any given NFT—remixing them into almost unlimited iterations, permutations, and derivatives. This means that coordination at the corporate level can be broken down to the individual level. With the help of blockchain-driven NFT, we can create a multi-functional, flexible and personally chosen global economic paradigm for companies and their consumers. We can build an economy of everything.
Flexible NFTs can facilitate the creation of new types of ownership. For example, token splitting allows multiple entities to own and trade portions of a single tokenized asset (imagine owning and trading 1% of Monet). In addition, NFT can create a hierarchical ownership structure that splits a single asset into multiple groups of tradable rights.
For example, consumers can purchase redeemable delivery tokens, which will enable them to choose the delivery service they want to ship the items they buy—providing them with cheaper or more sustainable options. There is no limit to the degree of customization that NFT-based tradable rights can support.
The world has only just begun to grasp the full potential of how NFTs can completely change the ownership and acquisition of products and services. No matter what someone buys or uses in the digital world, it can be boiled down to tradable ownership represented by NFT: redeemable tokens that can be exchanged and used in the blockchain-based global economic structure.
Photo: Chestnut/Getty Images
Market based on interoperable NFT
NFT-based tradable ownership is a way to connect various products and services in the digital world, thereby creating a more open, accessible and customizable market. People can directly transfer NFTs representing specific rights instead of transferring funds through an intermediary in exchange for ownership contracts.
This process reduces friction by eliminating intermediaries: NFT-based transaction flows do not rely on third-party payment processors, but take advantage of the speed and transparency of smart contracts. All of this makes the flow of value through the market safer and more trustworthy.
The tokenization of tradable rights can also create efficient, blockchain-based secondary markets for goods and services. These secondary markets are beneficial to many parties. For example, the use of smart contracts means that companies will reduce the need to keep goods and information on behalf of customers, thereby reducing risk and compliance costs. The company has benefited, and other consumers are also seeking limited supply of products and services in major markets.
Crucially, the infrastructure that supports the NFT-based economy does not have to be technically challenging. Tokenized infrastructure tools already exist, and value can be transferred seamlessly through tradable rights: for end users, this process can be as simple as a traditional e-commerce transaction.
The complete application of NFT technology in the global market is only limited by our imagination. Using tradable rights based on smart contracts, we can create a fairer, safer and more flexible economy. By atomizing the true meaning of access and ownership, we can return power to consumers and small businesses.
(Victor Zhang is the project leader of AlchemyNFT, which uses TokenScript technology to realize the remixing of NFTs, including digital signatures on artworks)
