[Xangle Originals]
By Ponyo
Translated by LC

Summary

• NFTs can be categorized into seven different types according to their purpose and usage: Artwork, PFP, Membership, Music, Game Items, Tokenized Variants of Real-World Assets, and Identity

The foremost advantages of non-fungible tokens, or NFTs, are 1) in the proof of ownership on-chain, 2) exclusivity, and 3) P2P trading (cross asset swapping with another counterpart), and because of these advantages, NFTs are garnering attention from various industries. Over the course of 2021, NFTs evolved into various forms according to their purpose and usage after witnessing the NFT market explode. Then what are the different types of NFTs? As of now, there are seven notable NFT types, and these different types are often used interchangeably. Let us take an overview of these different NFTs to understand their significance.

1. NFTs for Artwork

 Artwork collected and traded on SuperRare and Foundation, or the collection of unique Bored Ape NFTs, fall into this category. Putting a price on digital artwork is tricky since art is subjective, but the popular NFTs are sold with extremely pricey price tags.

The reasons for collecting digital art are the same as for collecting traditional art, such as the aesthetic value, exclusivity, a sense of prestige, and representation of social status.

2. NFTs for Profile Pictures (PFP)

A profile picture, or PFP for short, is a type of NFT that has grown in popularity starting in the latter half of 2021. The two most well-known PFP NFTs are CryptoPunks and BAYC, of which digital collectibles are currently being traded at big bucks. People own a PFP NFT as a means to express themselves, even to show off, while having fun. However, very few NFTs are used only as PFP NFTs; most are used for membership or artwork.

3. NFTs for Proof of Membership

In many cases, NFT holders hold membership rights that would allow them to participate in various events or community channels held by the foundation or project. NFTs with membership rights are important in that the community and the members are directly connected to the NFT value.

BAYC is one of the successful cases in this area. The Bored Ape NFT doubles as membership cards and grants access to the exclusive community consisting of Stephen Curry, Post Malone, Jimmy Fallon, Steve Aoki, and other high-profile celebrities. BAYC membership is of great value as the holders get exclusive access to member-only yacht parties, clubs, and games. 

Flyfish Club (Link), the world’s first member’s only private dining club, opened recently, and the premium Flyfish Omakase costs 5.5ETH per NFT.

4. NFTs for Music

NFTs are taking off in the music industry as they have created a new model for artists to reach out to fans and make profits. Various music NFT marketplaces and platforms came out recently, such as Arpeggi, Sound, Royal, etc. (Music NFT example: Link)

5. NFTs for Game Items

Also high on the NFT spectrum is games. When game items are sold as NFTs, the NFT asset will be unique and exclusive to one buyer and is interoperable between games. Game avatars (Aurorian, Axie), items (Gods Unchained), and lands (The Sandbox, Decentraland) are among the popular game NTFs. The current market worth of the traditional gaming market implies that NTF sales and blockchain games are anticipated to continue the surge.

6. NFTs for Tokenized Variants of Real-World Assets

Another trend is the bridge between NFTs and the offline world, which means that an NFT holder can tokenize real-world items to receive them. Walmart recently announced plans to enter the metaverse with its own NFTs and crypto (Link), so such NTFs are expected to go big in the offline goods market. Also, NFTs can help verify the digital ownership information of luxury items like gold, making the trading process much simpler by just exchanging the NFTs and, in turn, increasing liquidity.

7. NFTs for Identity

In the case of identity NFTs, they can serve as unique identifiers, thereby serving as reliable support for identity management and verifying records of an individual. Identity-based NFTs are significant in that they lower the risk of Single-point-of-failure (SPOF) of the existing centralized database and allow the individuals to hold and manage their identity. With identity NFTs, holders no longer need to sign up for a membership on different websites and can use the NFT to log in while maintaining full control of their personal identification information.

Final Thoughts

The early NFT marketplace started with just game items and memes in the beginning, but with continuous evolution, the entries in the NFT list have expanded to different areas with added features. Although many different types of NFTs have gone mainstream, we’re still at the tip of the iceberg. As time goes on, the list will continue to grow, so it is no exaggeration to say that more forms of value will be represented by NFTs.