While DeFi Gets The Headlines, NFTs Are The Real Story

It is interesting to watch the stages of innovation of cryptocurrency. What a wild ride it was so far.

We all know the ICO craze of 2017. This really put Ethereum on the map. That was the blockchain that mostly benefited from the massive amount of ICOs that appeared. Of course, this all came to a crashing halt.

The fact that the regulators started stepping in meant that a return to those days is gone forever.

Here we stand now, 3 years later, and there is another enormous cryptocurrency craze taking place. The idea of Decentralized Finance (DeFi) is catching on. A few billion dollars was put into this arena with Ethereum, once again, taking the bulk of the activity. Unlike the ICO craze, this is something that is not likely to disappear.

In fact, it is very possible that we are at the beginning of an entirely new financial structure. Decentralized finance could end up obliterating most of the centralized system over the next decade.

Nevertheless, while DeFi gets the headlines, it might not be the biggest breakthrough of the year.

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Non-fungible tokens (NFTs) hold the greatest promise of anything developed in the crypto world thus far. The early stages have seen the potential only briefly scratched. The next few years could see an explosion bigger than anything we witnessed thus far in this industry.

NFTs offer a few features that cater to a number of markets. The fact they are rare, unique, and indivisible means that they can offer enormous value, both in financial and technological terms.

CryptoKitties gave people a glimpse of the potential a couple years ago when that game seized up the Ethereum blockchain. The popularity grew so quickly that it locked up all the transactions. That said, it did not diminish the value people placed on the assets, with some "kitties" selling for over 100,000.

We are about to see a number of different industries completely disrupted by the advent of NFTs. Gaming, art, identity, real estate, and collectibles join the creations in the virtual world as markets that will see extensive NFT usage.

When a NFT is tied to a blockchain, a clear channel of ownership can be established. This means that works that are typically counterfeited can now be validated. Imagine the possibilities with things such a rare handbags, diamonds, and sports memorabilia. With a NFT, one can easily authenticate if something is real or not.

The real story here is the fact that we are about to embark upon hundreds of trillions of dollars being created. Present, real world assets of this nature are not liquid at all. This makes the buying and selling of them difficult let alone realistic price discovery.

With the recent Twitter hack, this brought into play the idea of ownership of digital assets and security. Most do not typically think of a Twitter handle as a digital asset but that is exactly what it is. However, due to the rules of the centralized platform, people are not allowed to sell or transfer ownership of their account. Yet, as we know, these accounts can have enormous value.

NFTs can help people to realize the full financial potential of their accounts. Of course, this does not excite the centralized platforms such as YouTube, Facebook, and Twitter. Here is where we are likely to see a potential conflict going forward. Nevertheless, anything that exists in the digital realm can be tokenized for ownership using NFTs. It is here where we enter an unlimited world of creation and innovation.

This is an idea that is catching on. We see the expected growth explode in 2020 as compared to past years.

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Presently, we are in need of infrastructure to handle all the NFTs that can be created. Ease of use is something that the industry really needs. Nevertheless, we can expect development over the next couple years to focus upon this market. There simply is too much money at stake to ignore what is going to happen.

As infrastructure expands, the growth of this segment of the industry should explode. NFTs are truly contingent upon the innovation and creativity of people. This should evolve into individuals tokenizing many things that we are not even considering at the moment.

Ultimately, this could lead to billions of dollars more in wealth creation.

For all the money generated from the ICO craze, it pales in comparison to the potential that exists with NFTs. Where the regulators were able to step in and go after those who put them together, the world of NFTs is going to be completely different. The fact that we will likely see much of this created and traded on decentralized platforms makes it harder for them to target. At the same time, NFTs do not have to apply to assets sold. For example, people can earn them through in game activity. Over time, a skin or weapon can increase in value as the game gains in popularity.

The monetization of the digital world is just beginning. My guess is we see NFTs as being central to this endeavor.

It is the real story that is taking place in the world of cryptocurrency and one that is not receiving a ton of attention.

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Posted Using LeoFinance