With the aroused welcome NFTs have gained over the years, the proportion of people planning to launch an NFT collection has skyrocketed. Whether for leisure or hardcore business, people now see a way to bring out their creative finesse through non-fungible tokens. The market cap of NFTs is nearing 2.5 billion dollars, which stands as a testament to the fact that NFT adoption among individuals, startups, and brands is rampant. This blog emphasizes the different niches of NFT development that have immense potential to actually aid people in yielding monetary benefits. Tag along as we indulge in the various kinds of NFTs you can explore as a collector and a prospective business owner!
Popular NFT Development Categories in the Global Market
When speaking of categories of NFTs in the market, the space’s still-evolving nature must be taken into consideration. Remember that many new use cases of NFTs pop up even after all these years when the NFT market saw some historical highs and lows. NFTs can be divided into numerous classifications based on different factors that include the following:
- Based on use cases
- Based on the blockchain network
- Based on the token standard
- Based on interactive capabilities
- Based on rights and licensing
We will explore each of these in-depth as we progress through the blog.
NFTs based on use cases are a category that most people tend to associate with as they are strikingly visible. Think of profile pictures (or PFPs in NFT language), digital artworks, virtual collectibles, digital trading cards, NFT gaming assets, virtual land, video clips, memes, and even Web3 domains – all these are categorized based on their underlying use cases.
If you are planning to launch an NFT collection, knowing which use case your NFT will address is an essential point you need to decide. These NFTs can also be utilized to imbibe real-world use cases such as ticketing, memberships, and subscriptions that enhance how the relevant industries operate.
Gone are the days when Ethereum was the only blockchain that supported NFTs. While Ethereum remains the most popular network for NFTs due to its long history, numerous alternate blockchains have established themselves as leaders in the industry. Categorizing NFTs based on the blockchain network they belong to is required as the current community is split by blockchains.
Apart from Ethereum, layer-1 networks like Solana, Cardano, Algorand, BNB Chain, Flow, and Avalanche have considerable fanfare with notable NFT collections. Also, layer-2 networks like Polygon, Arbitrum, ImmutableX, Optimism, and Base have garnered a fair deal of attention as well.
While all NFTs follow the basic rules of non-fungibility, token standards (on some blockchains) present a more unique representation of NFTs. Token standards originated on the Ethereum network, bringing with it sweeping changes to blockchain technology through smart contracts. Now, multiple NFT standards exist on the network, including ERC-721, ERC-1155, and lately, ERC-6551.
- The ERC-721 Standard allows a token representing an asset to be non-fungible, enhancing its security, scarcity, and ownership value.
- The ERC-1155 Standard is the same, except multiple tokens representing the same asset can be created. This became useful for NFT gaming, where 10,000 skins differentiated only by traits are needed. In this case, it will be unfeasible to mint each NFT as an ERC-721 token. With ERC-1155, one can create unique NFTs of the same type (skins here) by specifying the differentiating factors (traits here).
- The ERC-6551 Standard expands the usefulness of ERC-721 NFTs. Here, developers can create a smart contract-based wallet for NFTs. Transactions made using these NFTs can be recorded on-chain using a permissionless registry. The standard elevates experiences for use cases like NFT gaming and loyalty programs due to its dynamic nature and on-chain identifiability.
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If you have been active for long enough in the NFT world, you might have come across NFTs being Static and Dynamic. Have you wondered how these words are associated with NFTs? Categorizing NFTs based on their interactive capabilities has become commonplace nowadays, as more use cases focusing on both spectrums keep cropping up.
- Static NFTs are the conventional NFTs that have been around for years. Most profile pictures, video clips, digital artworks, and domain names are static, as they cannot be edited or leveled up once minted.
- Dynamic NFTs are those digital assets that can be upgraded, bred, and levelled up even after minting. These are mainly used in NFT gaming, where characters can increase their skill sets, or multiple NFT accessories can be added to make up an NFT. The latter kind of NFTs are known as Layered NFTs and are still evolving in graphics-intensive games based on genres such as racing.
Right from the beginning of NFTs, intellectual property rights and licensing have been stated as concerns these tokens aim to address. While the way NFTs have evolved did a bit to answer the question, new concerns grew. Newer solutions did evolve that made the community categorize NFTs based on their rights and licensing.
- Creative Common (CC0) NFTs enable anyone from the NFT space to use an NFT for any purpose, whether commercial, entertainment, or infotainment. While dispute still lies around whether Creative Commons licensing is suitable for NFT collections that thrive around their holders, this type of licensing is still received very well.
- Open Licensing NFTs enable only the holder of the particular NFT to use it for any purpose, modify it, or distribute it for commercial or entertainment purposes. This type thrives on the fact that most NFT collections (especially PFP) value their holders highly. Closed licensing has its own disputes from the wider community that it closes the gates for creative freedom for the wider community to use NFTs reserved using this scheme.
- Closed Licensing NFTs entitle the holders to mostly zero rights on distributing and modifying an NFT, giving primary rights to the original creator. This type of licensing is beneficial for artistic creators like artists and musicians who can choose to preserve the originality of their works. Holders can still showcase their proud ownership of valued assets, which was the driving force behind the last NFT showdown.
- Partial Licensing NFTs enable holders to utilize their NFTs for limited purposes (such as limited modification or distribution) while some rights still rest with the original creator. These aim to preserve the integrity of NFTs while allowing holders to reap some benefits from them.
Conclusion: Is It a Good Idea to Launch an NFT Collection Now?
If you’re wondering whether it is the ideal time to launch an NFT collection, it surely is. Reason? While the NFT space is encountering severe price movements, adoption levels among real-world brands have skyrocketed to new levels, driving more of the general public into the digital world. NFTs come in all shapes, sizes, and categories we have seen in the blog for diverse utilities, ranging from static images to dynamic gaming. Starting out on NFT development might be a challenging endeavor for someone new to the space. At Blockchain App Factory, we understand the perspectives of any business enthusiast, irrespective of their knowledge level on NFTs, and strive hard to realize their novel venture idea. Contact us today by filling out the form below to initiate a business conversation with one of us!