The NFT world has come a long way, from its trivial roots where every NFTs are summed up as “pricey funny pictures” into the billion-dollar industry that launches rad and amazing projects, all with their specific and useful use cases that we’re seeing today! NFT’s are so different from what they were in the past, and this is good, because at the very least, this means the industry is changing.
All of this by the way, is being done while the whole cryptocurrency market is in disarray, following lots of crypto dramas from the past year, including CEX exchanges that failed to uphold promises and even played with user funds leading to huge losses and unrealized potentials, to governments showing disdain and utter hatred against this trillion-dollar industry.
But we’re not here to talk about cryptocurrencies are we? Let’s talk about something the NFT industry’s been cooking up all this month, 2 systems that will turn the whole NFT world upside down when launched and realized to its full potential!
Yes, we’ll talk about ERC-1155 and NFT Fractionalization, two of the most astonishing features we’ve seen in the industry, and how blockchain could help these two revolutionary features to flourish and create the wave of change that millions in the industry expected from them.
But what are they anyway? What do they do?
Fractional NFTs and its usage
Let’s talk about NFT fractionalization first and foremost. As its name implies, the whole thing about fractionalized NFTs is that they are divided, so more people can own it and get on the project that
As we all know, average NFTs in the Web2 Landscape only allow for a single person to own it, if you want the NFT someone holds, you gotta buy it from him, most of the time at the price he declares. If a deal is struck, you own the NFT, and if it’s a blue-chip project, or you’re an average NFT bro that doesn’t have that much of a bankroll to begin with, you’re most likely beat, because that NFT alone costed you your whole budget, and it may take time for you to flip it for profit, especially if it’s a generational project with great features that come after the sale of the first rendition of their NFTs.
This, as it may surprise you, is a big problem in the industry. The high price entry just bars people who wanted to get on the piece of that Blue-chip NFT pie, discouraging people who weren’t able to buy the NFT when it’s still at SRP from ever hoping to get their hands on awesome NFTs with amazing use cases.
Fractionalized NFTs aim to solve that issue, and a little more, by not only dividing the burden of paying for a single NFT and sharing the ownership, but also by allowing people to get into pricey projects, giving them a chance to turn a profit while keeping the main NFT intact, maximizing the profit potential for projects who integrate such system in their NFTs, and more! The world is your oyster when you use fractionalized NFTs, whether you’re an investor, or a creator!
But how do we make Fractionalized NFTs?
The process is a little simplistic, so to speak. Dividing your NFTs into workable assets requires two steps for the most part, which includes:
Acquiring the NFT you want to fractionalize, running it through special marketplaces or platforms that fractionalizes NFTs, where it would get divided depending on your liking.
From there, each divided part of your NFT is endowed with its own value called a “unit” that gives it uniqueness. This ensures that each Fractionalized NFT is recognizable, as useful as the main NFT itself, and valuable in terms of providing features to its holders just like the main NFT.
Each “unit” is then tokenized, and released in marketplaces specially made for Fractional NFTs, to be stored, sold, or transferred!
Why are Fractional NFTs important?
Despite the fact that it’s relatively new in the industry, Fractional NFTs solves a long-running issue in the NFT space that not a single project or concept was able to fix, which is letting average investors in on blue-chip projects with dizzying prices for entry!
On the other side of the rainbow, an equally game-changing concept is waiting for its spotlight. While still being relatively new to the NFT scene, the concept aims to solve the lack of versatility of mainstay NFTs in the industry today.
Let’s explore what ERC-1155 is, shall we?
What is an ERC-1155 token, Why should it be a thing?
You’re probably thinking, “The Non in Non-Fungible Token was there for a reason”, and I hear you, the concept stripped down to its core is a little silly. But the thing is, and this is what most people who are against this idea leave out to make it seem as though this feature is useless (even though it’s not) is the fact that ERC-1155 you don’t change the whole thing you’re just adding something into the mixture. It’s like cramping another awesome utility in the comfortable seat of your NFT in the blockchain. It’s still there, it’s still non-fungible by all sense of the word, and yet it’s made better!
So from that abstract metaphor of what happens when you have an ERC-1155-powered NFT, you can easily guess what goes on with this new token standard, and it’s awesome! But how do ERC-1155 Tokens work?
For starters, it involves these steps:
When a hybrid-token standard is made, the ERC-1155 token creation starts. Right there and then, your ERC-20 tokens and your ERC-721 tokens are put into a single smart contract, which are self-executing programs in the blockchain.
Simply putting both token standards isn’t going to cut it, you’ll have to provide distinction otherwise the system won’t recognize it and you’ll end up with a half-baked ERC-1155 that is buggy at best and a nightmare at its worst. So to avoid this, unique Token IDs are distributed per token which will give it the identity it needs.
Once all of this is done, your NFT is finished, and you can now use, sell, or hold it in an ERC-1155 supported wallet!
After this, you got yourself a freshly minted ERC-1155 token, complete with features, benefits and all that!
Why ERC-1155 and Fractionalized NFTs are important
There’s a long list of reasons why these two giant systems are so important in the industry nowadays, but the main reasons why it should be integrated in the current paradigm is because of two things: Innovation, and Future-Proofness.
These two systems solve the biggest problem in the industry, kind of like killing all the birds in the forest using two boulders. With how industry-wide the features they bring to the table, and how scalable they can make the industry, it takes little brain power to realize that these two are bound to shake the world of the NFTs, and it’s only fair they be given the chance!
Well, besides marketing tactics that this space has seen already, as well as information campaigns, we can look at another potential contributor, that’s been here in this industry since its birth!
Let’s talk about blockchain technology, and how it could revolutionize ERC-1155 and Fractional NFTs!
For one, Blockchain has every necessary infrastructure that these two standards require to flourish in the crypto industry, from the foundation where these standards are built under, to their features and reach, blockchain is a crucial ally that ERC-1155 and Fractional NFTs need to change the industry as they are intended to be.
Blockchain gives these two revolutionary concepts the canvas to paint on, and without it, we won’t even be here to appreciate these amazing feats. Thus, even if for some, blockchain technology plays a pretty minor role in the industry as the foundation upon which these awesome features are built under, it must be noted that without blockchain there’s no crypto, and if there’s no crypto, there will be no NFTs.
So with that being said, NFT Fractionalization and the concept of ERC-1155 are great and have the potential to change the world, especially when global adoption comes up, and thanks to blockchain, these two are just one step closer towards turning this into reality!
