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Role of NFTs in SocialFi

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NFT (non-fungible tokens) are digital representation of both real world or virtual properties which provides an immutable and provable way for asset ownership transfer and assignment. By design, NFTs are different from fungible cryptocurrencies such as bitcoin, ether, tether etc. 

Fungible cryptocurrencies can be traded or exchanged for one another, but one non-fungible tokens cannot be exchanged for another, this is because of their unique identities. Each NFT has a unique digital signature or code and so they cannot be exchanged like fiat.

From GameFi to SocialFi

NFT has played and continues to play a huge role in the growth of blockchain-based games. Popular crypto games with NFTs are Axie Infinity, Splinterlands, Crabada, and DeFi Kingdom etc.. In GameFi, NFTs opened a new opportunity of gaming for users globally where anyone could create, own, control and earn from their in-game items. And it is obvious that this new opportunity is being created and received based on the adoption rate and earnings reported by crypto gamers in the Philippines playing the Axie Infinity.

But aside from  crypto games, there is SocialFi.

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SocialFi Platforms and NFTs

SocialFi (Social Network + Finance) integrates crypto mechanics into social media platforms, connecting people, and creating and exchanging value on a global scale. Using SocialFi projects provides opportunities for users to earn when using such platforms.

Just as NFTs played a huge role in crypto gaming, it’s also a major element needed in the creation of SocialFis. Such projects include Futurepia, Carbon, Chingari, and StepN. And here are some of the functions NFTs will play in these new systems:

Fosters Ownership

The current trends of most social media platforms do not guarantee full ownership of any asset by creators. A video on YouTube might be the creation of a YouTuber but ultimately be in the control nest of YouTube. In the case of NFTs and SocialFi, any asset introduced into the platform belongs to someone already. And that owner can choose to do whatever with it following the rules of the platform.

This is possible because of the immutable nature of blockchain, the underlying technology behind cryptocurrencies – NFTs. Even if anyone can have a lookalike of an NFT when assessed the true ownership signature can be traced to one wallet address at a time. Hence, no two persons can own an asset.

Asset Transferability

Since SocialFi incorporates community with some activities like content creation and gaming, users of these platforms will have a lot of assets as NFTs that they own. Apart from owning them, they will be able to transfer these NFTs from platform to platform depending on their goal.

Unlike in Web2 platforms where in-game items couldn’t be moved from one ecosystem to another, Web3 and in extension, SocialFi possesses the characteristics that make this history. Gamers can now make use of their NFTs outside any project. Thanks to the smart contract and interoperability systems that will drive this.

Asset Authenticity

In SocialFi, NFTs will also foster authenticity for the entire ecosystem. For creators, each NFT created has a unique record based on blockchain technology. And this attribute enhances the value held by holders of each NFT released on each platform.

Another way this can be applied is when creators decide to create limited versions of whatever NFTs they create, introducing scarcity into the system. The immutability possessed by NFTs in SocialFi platforms proves their authenticity too.

Creation of New Digital Economic Opportunity

NFTs in SocialFi bring more direct and robust earnings as royalties can flow back to originators for life. Instead of just giving exposure to content creators, NFTs in SocialFi platforms will enable creators to earn more for whatever they create as they connect with their friends, family and fans globally.

And beyond the initial profit or earnings that come from selling content or from participating in any SocialFi platform, royalties come back uninterrupted to these creators creating a more sustainable stream of income for them. As each NFT is re-sold, a percentage of the profit goes back to the creators.

Enhance Diversified Growth

With NFTs in SocialFi, the growth of each economic sector relative to tokenization becomes limitless as it presents the opportunity for any sector to participate. For example, while an artist can create an NFT as a piece of art to connect with fans, it can also be used to represent a real-life ticket for an event that only holders can attend.

The real estate industry also presents a good insight on how NFTs will help maximize growth where real-life properties can be represented as NFTs which are exchangeable for fiat.

Conclusion

NFTs has found application in many disciplines and will help to own authenticate and transfer value in newer ways. Although there are still challenges to overcome, it will help to unlock a multi-billion dollar industry accessible by anyone from around the world.

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