$37B worth of NFTs was placed on NFT marketplaces in 2022 as of May 1. Collectors and NFT enthusiasts buy and trade different types of non-fungible tokens, but what is the difference between different types of NFTs? In this article, we will explore different NFT types and their characteristics.
Art
1. Digital artworks: Digital artists can mint NFTs from their artwork. Digital artwork is the most common type of NFT available on NFT marketplaces. Some specific marketplaces, such as Foundation and Nifty Gateway, focus solely on digital arts. The biggest NFT sale so far has been the sale of digital artwork “The Merge” for $91.8 million.
2. Music: Music NFTs have the ability to change the music industry landscape dramatically. Artists can tokenize their music and sell digital merchandise to create other sources of income. Platforms such as Royal facilitate the creation of music NFTs for artists. These NFTs provide perpetual royalties to their holders based on the streaming income of the song or album.
3. Photography: Photographers can turn their photos and collections into NFTs and sell them. Photographers can integrate royalty fees in their NFTs to make additional income when the photos are resold. The most expensive NFT picture was sold for more than $2 million in 2022.
Collectibles
4. Digital collectibles: Probably the most famous type of NFTs, thanks to collections such as Bored Ape Yacht Club and CryptoPunks. Cryptopunk#5822 sold for over $23 million, making it the highest collectible sold.
5. Memes: Memes have become a big part of social media entertainment over the last decade, and some of the most famous memes have been sold as NFT at eye-popping prices. For instance, the original image of Doge Dog was sold for $3.9 million.
6. Social media posts: Tweets, Instagram posts, or other social media content can be turned into NFTs. The most famous example of a social media NFT is the first-ever tweet of Twitter’s founder that was sold for $2.9 Million.
7. Sports NFTs: Trading cards and sports kits such as jerseys, clips, and memorabilia are all mintable on NFTs. NBA Top shot is a marketplace where users can buy clips of memorable events in the NBA as NFTs. A picture of LeBron James dunking is listed for 10,000 ETH (~$23M as of 16/05/2022) on OpenSea.
Gaming
8. Cosmetic: Cosmetics can change the look of a character or item (e.g., weapon) in games. This concept has existed in digital games via character & weapon skins that are purchasable with in-game currencies. It is estimated that $54 billion has been spent on in-game purchases in 2020.
The limitation of this model is that centralized authorities running these web2 platforms control every aspect of these items. For example, platforms like EA FIFA cracked down on secondary sales.
NFTs solve this problem by enabling players to convert their items to fiat or cryptocurrencies. For example, early adopters can buy or earn cosmetics in new games and sell them at a profit once the game gains popularity.
9. Game altering: These NFTs improve the player’s stats by improving its attributes such as health, power, or other elements. Axie Infinity, the most popular crypto game, has a dedicated marketplace for trading items where players can transact using Ether.
Utility
10. Community: Community-based NFTs provide the members of the community with certain rights or benefits. For example, MusicFund enables its community to vote each month on how the funds should be allocated. Flyfish Club NFT owners will have exclusive access to private dining clubs.
11. Domain names: A domain NFT is a one-of-a-kind domain represented by a single NFT. It combines two key concepts, crypto wallet addresses, and censorship-resistance websites. Domain names can be purchased from various NFT marketplaces. It is also possible to create your own domain name with the help of services such as Unstoppable Domains.
12. Fundraising NFT: Companies, startups, individuals, and NGOs can sell NFTs in order to fund their projects. UNICEF plans to use its NFT sale proceeds to support its various initiatives. Companies can also offer special access to their products when developed. For example, Ryder NFTs are redeemable for their product.
Source: CrowdFund NFT
13. License NFT: Software licenses or developer tooling can be distributed as an NFT token. They can provide time-limited or perpetual access. NFT holders will be able to use the software as long as they have the token and can transfer the access rights by just transferring the token. For example, ApesTogether provides access to its developer tooling to anyone who holds one of its NFTs.
14. Virtual land: Virtual lands are bought and sold through NFTs. When someone buys land, the NFT representing the ownership of that parcel is transferred to the buyer’s wallet. The largest virtual land purchase was done for $4.3 million.
NFT types are not mutually exclusive and can be a combination of different types. For example, music NFTs can provide VIP access to concerts, functioning as community NFTs.
Further reading
Top 7 use cases of NFTs.
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