Key takeaways:
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NFT technology allows you to obtain incorruptible proof of ownership of almost anything.
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Institutions and individuals utilize this ability in several ways. These projects feature NFTs and support it with extra technologies so that they can serve a particular purpose. These purposes can range from simple asset ownership to proper personal identification.
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The different types of NFTs are designed to work on different fronts and still maintain the same level of security and immutability that blockchain-based systems are known with. This makes it possible for NFTs to penetrate almost any sector.
Different NFTs serve different purposes, and the unique tokens at their core (ERC-721, BEP-721, or their equivalent), enable different projects to utilize the decentralized proof of ownership system to suit their projects. Some notable types of NFTs include art NFTs and NFTs associated with decentralized games, with fashion NFTs making the headlines in mainstream media.
Let’s find out more about the different types of NFTs, how they work, and notable examples of each type.
Art NFTs
Source: Christie’s Images LTD/Beeple
Definitely the frontrunner among other relatively popular types of NFTs. NFT art currently eclipses other types of NFTs in terms of popularity, application, and even potential. Creating a proof of ownership for unique arts is one of the earliest use cases for NFT technology. Art NFTs can range from representational diagrams to very rare digital graphics. NFT art collectibles can be AI-generated pictures and photographs minted on the blockchain and sold on NFT marketplaces.
NFT art enjoyed reasonable success as the rest of the crypto space gravitated towards everything it claimed to offer. The advent of NFT arts saw prominent mainstream artists flock into the space to stamp the ownership rights of their art on the blockchain. Artists also explored the chances of creating a value system for these arts by selling the associated digital signatory, which worked very well.
Apart from the overall huge trading volumes generated by NFT arts and collections, single art NFTs have sold for jaw-dropping figures. A popular example is Beeple’s “Everydays: The First 5000 Days” and “Human one” which sold for $69 million and $29 million respectively. CryptoPunks and Yuga Labs’ Bored Ape Yacht Club (BAYC) NFT also claim the top spot value rankings of NFT art collections, with the CryptoPunks selling for over $23 million.
Thanks to the NFT art bubble, A-class celebrities like football superstar Cristiano Ronaldo and basketballer Dennis Rodman have released self-themed art as NFTs. They join a band of mainstream figures (including former United States President – Donald Trump) who have dived into the NFT space.
Identity NFTs
Next on the list and a relatively less popular type of NFT is identity NFTs. For a while, the existence and proper mode of operation of identity NFTs has been speculative. Sequel to the release of the whitepaper for soulbound tokens (SBT) by Vitalik Buterin, the idea of developing identity systems using NFT technology has generated substantial interest.
Identity NFTs are designed to bear verifiable information about their holders. This includes the holders’ qualifications and even personal engagements. In the whitepaper released by Vitalik and his co-authors, they described the soulbound token as an NFT that depicts holders' abilities, qualifications that they have earned, and other characteristics peculiar to them. soulbound tokens are likened to a badge, which displays these qualifications and features and presents easy means to verify them.
Unlike other types of NFTs, soulbound tokens are not transferable and therefore cannot be traded. In case a soulbound token holder loses their NFT, they can only be recovered by the issuing entity and a selected community of trustees.
A similar technology is Verus’s self-sovereign identity. Like soulbound tokens, The self-sovereign identity technology creates digital identities that function as permanent, resolvable namespaces in the Verus ecosystem. They can be used to represent individuals, organizations, or assets, and they can be configured with provable single or multi-sig certificate capabilities. Verus IDs utilize ZK snarks to provide conditional privacy for user information.
Verus claims that its self-sovereign IDs cannot be replaced or duplicated but can be transferred. A major difference between Ethereum’s soulbound tokens and Verus’ self-sovereign identity is that the latter has a simpler process of revoking or recovering the identities in case the holder loses their private keys. Verus IDs can also be traded on ID marketplaces.
Music NFTs
Music is art, a unique form of it. And like graphic art, music has also found a home in the NFT space. Musicians and other sound designers can generate signatures for their music and uphold them as proof of ownership. Sound artists have successfully devised means to trade these assets and generate income. Embracing this idea, mainstream artists and cryptocurrency projects have collaborated on programs that utilize NFT technology to improve the ownership system, economy, and the general atmosphere for individuals who ply their trade in the music industry. The mutuality in these collaborations has seen music NFTs rise in prominence as well.
Forj (formerly Bondly), through its partnership with Bandsintown, adopted NFTs as a means to reward music fans and give up-and-coming artists a chance to gain a new audience and generate income. As part of the “Big Break” program, music fans will be able to access exclusive content from new artists. However, Bondly didn’t issue proper music NFTs until it partnered with Canadian hip-hop star – Tory Lanez to sell three unreleased tracks as NFTs. As reported by the Bondly team and the musician, these tracks generated about $400,000 as proceeds from the NFT sales.
Similar NFTs have dropped since this time and more musicians have released their songs as NFTs. Legendary musician Whitney Houston reportedly sold one of her earliest unreleased songs as an NFT and generated over $900,000 from the sales. Musicians have started becoming significant forces in the NFT space. Artists like Snoop Dogg and Nas have been notably involved in NFTs, with the former releasing XYZ as an open edition NFT. Grammy-nominated artist Steve Aoki also raised over $4 million from the sale of his Dreamcatcher NFT collection, which featured unique soundscapes accompanied by animations.
Game NFTs
One of the factors that motivated Vitalik Buterin to create the Ethereum blockchain was the idea of gamers being in full custody of their in-game assets. Regardless of whether this factor was a major contributor, game NFTs is the reality of these thoughts. Game NFTs are vital for decentralized games. Decentralized game developers adopt NFTs to define the characterization and overall structure of their game(s); therefore game NFTs range from simple game characters and items to the gaming environment itself (lands).
Game NFTs can be motion NFTs or digital art which are unique to the game. The NFTs’ attributes usually translate to character features and gameplay privileges. Players can purchase these NFTs for use in game, or earn them as rewards while playing the game. Game NFTs can also be traded in-game or on NFT marketplaces like OpenSea and LooksRare.
Game NFTs are well-used by metaverse projects where they serve almost the same purpose – characterization and ownership. Popular cryptocurrency projects using gaming NFTs include Axie Infinity, Decentraland, Gala games, and My Neighbor Alice. A rising trend is free to play NFT games, where players don't require any NFT assets to start playing.
Meme NFTs
Memes are fun conceptualizations of reactions, events, or reputations. They are meant to add humor to funny situations or as a form of euphemism or “trolling.” The most popular memes are developed from this basic concept, with some accidentally attaining this fame. The “Success Kid” and the dog “Kabosu” where the latter’s picture has been branded into Dogecoin's logo, which is instantly recognizable as one of the most famous cryptocurrency logos. These photographs are in fact considered digital art and some of them have been minted as NFTs.
Notably, the dog image used as DogeCoin’s logo has been sold as an NFT to PleasrDAO. Dating back to thirteen years ago, the Kabosu image and the DogeCoin community have pioneered memes in the cryptocurrency space, even giving birth to an entire category of cryptocurrency – meme coins. Thanks to the heroics of DogeCoin and its community, the Doge image was auctioned as NFT for an impressive $4 million. PleasrDAO has since sold it as a fractional NFT, splitting the ownership rights of the NFT to allow as many people as possible to get a share of the art’s ownership.
Beyond Kabosu's image, the “Success Kid” meme mentioned earlier has also been sold as an NFT for about $20,000. Other popular memes following this trend include the “Disaster Girl” meme, selling for $500,000 in an NFT auction.
NFTs like this constitute the meme NFT category. While their ownership might be controversial and complicated due to being already in wide use before being minted as NFTs, the owner(s) of meme NFTs reserve certain usage rights and hold proof of ownership.
Fashion NFTs
Fashion is a way of life, and now, it’s also starting to integrate into technology. Big players in the fashion industry are diving into the NFT space. This isn’t restricted to just mainstream firms; traditional cryptocurrency projects combine fashion and NFT technology in a goal-oriented manner. For mainstream fashion firms like Gucci, NFT technology is a medium to create proof of ownership for uniquely dressed animations and art, and auction these digital assets to NFT collectors.
Gucci’s partnership with Superplastic for the SuperGucci NFT saw both projects create fashion-centric digital arts, raising over $20 million in the initial NFT auction. The collection has traded over 6,000 ETH in volume on OpenSea and is owned by over 400 NFT collectors.
Iconic fashion brands Adidas and Nike have also sold exclusive NFTs. Adidas’ NFT sale was notably one of the biggest events in the NFT space in the last quarter of 2021, while Nike is one of the highest earning brands when it comes to NFT sales. These projects are also striving to integrate their fashion arts into the metaverse.
For traditional cryptocurrency projects, fashion NFTs are just fashion…in the virtual sense. Fashion NFTs for these projects are basically clothing for NFT characters. Fashion NFTs are commonly used in decentralized games as simple clothing or enhancement assets for avatars, where they may come with certain attributes.
Sports NFTs
NFTs are also a growing topic of interest amongst sports fans. They double as a reward system for sports fans and a new revenue source for the organization. Sports stars have also launched NFT collections for unique self-themed art and ‘rare’ images.
As a reward system, sports teams are partnering with cryptocurrency projects and developers to develop fan loyalty programs that utilize NFT. A good example is MoonPay’s partnership with the legendary Brazilian sports team – Flamengo – to issue NFTs to fans. These NFTs can be redeemed for selected rewards or allow their holders certain privileges.
Stars of different kinds of sports are also offering their fans an opportunity to own their NFT art or photographs. Owning these NFTs qualify the holders for perks like a live meeting with the star and other such privileges.
Access NFTs
To verify the ownership of the digital asset attached to an NFT, the holder only needs to present the NFT’s smart contract address. Like transactions on the blockchain, an NFT’s originality can be verified using at least one of its unique parameters. This feature is used by projects to identify holders of a certain NFT and provide them with access to certain privileges. NFTs like this are generally known as “Access NFTs.”
Access NFTs are emerging and are relatively less defined. They include everything from NFT tickets to special gaming NFTs that allow holders access to exclusive playing arenas. Access NFTs will do just as well as an alternative to the current ticketing technology. NFTs as event tickets will present an immutable and easily verifiable means to identify spectators who rightfully paid for a seat at the event.
Devin Finzer, CEO of popular NFT marketplace – Opensea – reflected on the potential of NFTs to replace traditional paper tickets.
“As far as what I wish people would make, I wish we would see more done with concert tickets. With Covid, it hasn’t caught on but tickets seem like a natural fit to me.”
Other types of NFTs may also double up as access NFTs, like the Bored Ape Yacht Club, where the token also doubles as a membership to a members-only space with features like a graffiti board.
Domain NFTs
Domain NFTs are quite popular, but they’re usually more often used as simple wallet names rather than a proper internet domain. Domain NFTs utilize NFT and smart contract technology to turn cryptocurrency wallet addresses into names that can be easily memorized. They allow cryptocurrency investors to choose a fun name to represent their wallet addresses and proceed to register these names as domains that can be translated into wallet addresses and internet resource sites. These domains bear crypto-centric extensions like .eth, .btc, .crypto, and so on.
The domain names are minted as ERC-721 standard NFTs, which can be transferred from one wallet to another and are trackable. Domain NFTs addresses can be transferred like proper NFTs and easily used on decentralized applications (DApps), Web3 applications, and traded on supported NFT marketplaces. Ethereum Name Service (ENS) and Unstoppable Domains are some popular examples of domain NFT projects.
Redeemable NFTs
Redeemable NFTs aren’t a sort of ‘new tech’ NFTs; rather they are NFTs with a real commodity exchange program. Redeemable NFTs are just about any of the aforementioned NFTs, the only difference being that holders can swap them for tangible assets. A good example of this is Uniswap’s Unisocks NFT.
Uniswap issued 500 socks tokens as a 1:1 representation of real socks. Socks tokens can be actively traded on the decentralized exchange. If redeemed for a proper sock; the socks token is burnt and the owner receives an NFT as proof that they own a real Uniswap sock. Over 180 sock tokens have been redeemed so far.
The redeemed socks can be delivered to the owner in any part of the world. Uniswap's socks NFT are not just proof of ownership, they are proof of redemption for socks tokens as well.
A simpler instance of redeemable NFTs is Redeemable NFT, an NFT project based on the Ethereum blockchain that issues linen designs as NFTs. The NFT holder can redeem these NFTs for real beddings and have the fabrics delivered to them in their locations. Redeemable NFTs might see the light as the number of projects like this continue to grow.
NFT Collectibles
Collectible NFTs are quite popular; they are variants of a specific theme. That is, NFT collectibles are a collection of static or motion graphics of a particular entity. This entity could be animals, personas, geographical locations, or just about anything!
Creators of collectible NFTs design different appearances of these entities and accord them special attributes. The value of any variant of a collectible NFT depends on the uniqueness of its attributes and how many copies of that particular design exist (rarity). They may overlap with other categories of NFTs, such as art NFTs.
Some examples of NFT collectibles are Azuki, Bored Ape Yacht Club (BAYC), and CryptoPunks. Azuki NFTs are a collection of anime-inspired avatars, BAYC is a collection of varying graphics of an ape looking bored, and CryptoPunks are pixelated art of ruffian personas. In the case of Azuki and BAYC, ownership of these collectibles also grant access to exclusive clubs.
Final thoughts
NFT technology is evolving fast and even at this stage of its evolution, the above list is non-exhaustive. We have listed several types of NFTs, but it is important to note that these are only based on contemporary applications, and there may be new types of NFTs developed as the scope of NFTs continues to expand.
Potential NFTs applications like subscription systems, ticketing systems, and real estate might usher in a unique type of utility NFTs that are more advanced than what we have currently. As an NFT enthusiast, it is important to stay abreast of the changes in the space and related technologies.
Having said this, do note that this article is purely educational and no part was meant to be financial advice. Remember to do your own research before investing in any NFT or cryptocurrency project.
Joel is deeply interested in the technologies behind cryptocurrencies and blockchain networks. In his over 7 years of involvement in the space, he helps startups build a stronger internet presence through written content. Follow the author on Twitter @agboifesinachi
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