TLTR (Too Long To Read): (99% of people don't have the patience to read this article through, but it can be guaranteed 100% that this article will change your perception of NFTs and help you explore new territories.)

NFTs, or Non-Fungible Tokens, represent uniqueness and scarcity. While we may possess many globally unique NFTs, they seem to hold little value. This logic may seem absurd. If they are globally unique, why do they hold no value? I cannot provide a definitive answer to this question, but I believe you may have your own opinions.

If we view NFTs as financial products, they might be seen as emotionless digital assets subject to market fluctuations. However, we must acknowledge that the prices of NFTs may fluctuate and eventually become worthless. This phenomenon is ironic. Despite the launch of the ERC-721 protocol nurturing many highly anticipated works, it has also produced a plethora of worthless pieces. Many people are not even willing to list their NFTs for sale on the market.

To be frank, nothing can save the NFTs you hold. Don't be naive to think your NFTs will appreciate in value, at least not in the current market. Because people only care about new things, and new things mean influx of funds, which means profitability. The NFTs lying in your wallet have already been plundered and won't attract anyone's attention.

However, we all overlook the hidden essence of NFTs. That is, the NFTs in your hands are just images; they prove that you have these pictures because they are stored in your wallet. Unfortunately, they not only have no price but also no value.

But, let me ask you a question: why is a bottle of water priced at 2 yuan on the Himalayas and 2000 yuan in the Sahara Desert? You surely have many answers, yes, the core of which lies in the different functions of the mineral water: the 2-yuan mineral water has the function of moisturizing the throat, the 200-yuan mineral water has the function of quenching thirst, and the 2000-yuan mineral water has the function of saving lives.

Some may ask, "Can I take my NFT to the Sahara Desert?" If you are the one asking this question, it may mean that you still do not fully understand the potential of NFTs. But it also marks that your cognition is changing. You begin to think about how to discover the value of NFTs, even if the NFTs in your hands seem worthless. Let me add that you may be concerned about the price of NFTs, such as the price of BAYC may reach 150E, while the NFTs in your hands are only worth 0.001E. The problem is that you are ignoring the intangible value of NFTs. This is not your fault but a problem of the entire industry (infrastructure), as this industry has failed to showcase the intangible value of NFTs.

Now, let's get back to the example of mineral water. The reason mineral water has different prices in different regions is that they have different functions. If NFTs also have the functions of "quenching thirst" or "saving lives," will their value change? The answer is yes.

Another example, what is the most expensive picture you have seen in the real world? Some say it's the Mona Lisa, some say it's Disney's princess picture, and some say it's the "Golden Arches" of McDonald's. Yes, these answers are all correct. "Mona Lisa" is a classic work by the celebrity Da Vinci, and its function is to showcase the painter's technical prowess; Disney's princess picture symbolizes a myriad of merchandise, from Airbus planes to commemorative badges, its function is to adorn and embellish; not to mention the function of "Golden Arches" is to tell you to come and buy delicious burgers. At the same time, I want to emphasize that we cannot ignore the "value," such as the photo of "the first footprint on the moon," "This is one small step for me, but one giant leap for mankind," its value is self-evident. The value of "Mona Lisa" is to showcase "wealth, art, and power," the value of the "princess picture" is to enhance brand influence, and the value of "Golden Arches" is to provide a new way of life (at the beginning of its establishment).

Now, please think again about the functions and values of the NFTs you hold. You may answer that the function of NFTs is to represent my avatar, its value lies in making me happy (or unhappy), or enabling me to participate in offline activities and make new friends. This is correct, you have distinguished the differences between function and value. Although these two concepts have always existed in NFTs, many people have failed to realize their differences.

Great, we can start looking for the value of NFTs now. But that doesn't mean you can send NFTs to the "Sahara Desert" to make money, because that's still a long way off. Let's recall the process of discovering value. Here is a classic case from business school: "Sell me this pen." If you have an MBA, you will know that there are countless ways to accomplish this task in class, and you can sell a pen that originally costs $1 for $10,000. The professor will tell students that the underlying logic of this case is not to sell the pen based on its function, because its manufacturing cost is $0.2, the market cost is $0.5, and selling it for $1 can not only achieve a 30% gross profit but also meet the buyer's need—writing, it can't get more expensive. If you get Jay Chou or Taylor Swift to sign the pen, you can list it on an e-commerce platform and price it at $100, and it's very likely to be sold within 24 hours.

At this point, you must realize that you need to discover the hidden value of the pen. In other words, you need to discover the hidden value of NFTs. But whether you are a student or a student at a business school, it is difficult to discover the so-called "potential value" unless you create or give new functions. This business school case tells us that the reason why the pen can be sold for $100 is because it is given a new function—signature, not just writing. The new "signature" function creates greater value—commemoration (the pen has been used by celebrities). This subtle difference is worth pondering. I want to inspire you: NFTs need to be given new functions and use new functions to create greater value.

However, I must point out that giving NFTs new functions and using them to create greater value is not easy, and it is more abstract than planning "how to sell this pen." Although I have seen some notable cases of NFTs, they take NFTs away from the Crypto world and put them into the real world. By collaborating with different companies, they turn NFTs into influential brands, profit through launching peripheral products, brand licensing, etc., thereby expanding the NFT community and driving up NFT prices. In this case, the NFT project uses the function of NFT visual display to attract fans interested in new things, thereby creating the value of market education and brand influence enhancement.

However, the native encrypted world operates under completely different logic. If the NFT project only cooperates with NFT and other projects for brand exposure, it cannot change the fact that NFT is "a pen." In other words, the new function should be what the blockchain needs and be faithful to the essence of NFT's "non-fungibility." Perhaps you don't think that the blockchain needs any new NFT functions, I want to share with you the new developments I know below, and I believe they will definitely inspire you and expand your horizons.

ERC-3525 gives NFTs new functions "value" and "slot" at the code level, the former allows NFTs to have representable numerical values, and the latter turns NFTs into "semi-fungible" (we do not discuss whether it "violates" the belief of "non-fungibility," just look at the new functions given). Taking props in the game as an example, perhaps it can better understand these two new functions. In a game, there are five categories of props: clothes, armor, helmets, weapons, and skill manuals, represented by "slots" 1-5. Armor belonging to "slot-2" has 500 types, each with different defense values represented by "value." In addition, similar props can be combined to form new props. More importantly, if there are 10,000 types of props, ERC-1155 needs to deploy 10,000 contracts, but now it only needs to add "slots" in one contract to achieve. Now, I think you understand what changes have occurred to NFTs. Another example, a decentralized gaming platform adds platform tokens, points, and proof of work to NFTs, giving players holding NFTs corresponding rights, NFTs can change through the transfer of value, in different scenarios, we can add different titles, levels, or expressions, etc., which can be used as a tool for income and also as a symbol of identity.

In addition, let's assume: if you want to play games on Arbitrum with NFTs on Ethereum, do you need to choose a cross-chain bridge to lock NFTs on the original network, and duplicate a new NFT on the new blockchain, and then destroy the original NFT? This process is very cumbersome and not safe. I think there have been countless news about cross-chain bridges being hacked and assets being stolen. If there is a new function that allows NFTs to achieve "cross-chain" without crossing chains, then whether it is NFTs on Ethereum or any NFTs on the second layer chain, can they become active? Polygon's NFTs can be displayed on OP, and BAYC on Ethereum can be used in games on ZK chain? You should realize that this will be a very, very important milestone for NFTs.

ERC-721, as the pioneer of NFTs, gave birth to classic NFT collections such as CryptoKitties. Then ERC-1155 appeared, turning props in games into encrypted assets. But what you don't know is that the teams participating in ERC-721, CryptoKitties, and NBA TOP SHOT projects launched such new functions at the beginning of 2023, called ERC-6551. Simply put, turn your NFT into a wallet with smart contract functions (Tokenbound account, TBA).

TBA has the function of storing any ERC tokens. You can turn your Azuki into a TBA, and then store $ETH or Doodle in Azuki. You can turn your DAO membership NFT into a TBA, and store your POAP obtained from work, rewards, etc., in the membership NFT. You can use TBA as your identity to log in to dApp instead of using your wallet to log in. This means that your NFT with TBA function can become your identity to enter the blockchain.

TBA has the function of interacting with Ethereum mainnet or any second layer chain. This means that you can send a transaction from Ethereum to OP through TBA, for example, you can use BAYC on Ethereum to enter a game on Polygon chain (no need for NFT asset cross-chain).

TBA has the function of programming. Combined with artificial intelligence technology, NFTs will become NPCs (Network Playable Characters). This means that NFTs can perform tasks you want to repeat, such as helping you buy 3 tokens with the highest heat in nearly 5 minutes, just like chatting with ChatGPT. In addition, you can authorize TBA to automatically sign transactions through the "off extension" function to execute repetitive behaviors.

Do you feel that NFTs are gradually being activated now? You can use NFTs to manage other NFTs, use NFTs to earn game coins in games, and even use NFTs as your AI agents. Undoubtedly, when you put your NFT avatar into a role-playing game, you will feel a sense of closeness, and this game character with TBA function will help you explore, upgrade, get married, reproduce new offspring characters, make money, and make equipment. These new assets will be stored in your game character NFT, and your NFTs will appreciate. This is just a small example I can imagine, and I believe you must have better examples than I can think of.

Okay, let's compare the "pen" with NFTs again. The NFT lying in your wallet now is like the pen itself, and its value is obvious—it's for writing or as an avatar picture (symbol of identity). If NFTs become game props, does it mean that the pen has become a signing tool? Is it the demand for celebrity signatures that makes the pen a signing tool? Is it new technology (ERC protocol, artificial intelligence, etc.) that makes NFTs into game props? By now, I think you fully understand the past, present, and future directions of NFTs.

No one can save NFTs except by giving NFTs new functions.

Author: www.twitter.com/clarckwang

TLTR (Too Long To Read): (99% of people don't have the patience to read this article through, but it can be guaranteed 100% that this article will change your perception of NFTs and help you explore new territories.)

NFTs, or Non-Fungible Tokens, represent uniqueness and scarcity. While we may possess many globally unique NFTs, they seem to hold little value. This logic may seem absurd. If they are globally unique, why do they hold no value? I cannot provide a definitive answer to this question, but I believe you may have your own opinions.

If we view NFTs as financial products, they might be seen as emotionless digital assets subject to market fluctuations. However, we must acknowledge that the prices of NFTs may fluctuate and eventually become worthless. This phenomenon is ironic. Despite the launch of the ERC-721 protocol nurturing many highly anticipated works, it has also produced a plethora of worthless pieces. Many people are not even willing to list their NFTs for sale on the market.

To be frank, nothing can save the NFTs you hold. Don't be naive to think your NFTs will appreciate in value, at least not in the current market. Because people only care about new things, and new things mean influx of funds, which means profitability. The NFTs lying in your wallet have already been plundered and won't attract anyone's attention.

However, we all overlook the hidden essence of NFTs. That is, the NFTs in your hands are just images; they prove that you have these pictures because they are stored in your wallet. Unfortunately, they not only have no price but also no value.

But, let me ask you a question: why is a bottle of water priced at 2 yuan on the Himalayas and 2000 yuan in the Sahara Desert? You surely have many answers, yes, the core of which lies in the different functions of the mineral water: the 2-yuan mineral water has the function of moisturizing the throat, the 200-yuan mineral water has the function of quenching thirst, and the 2000-yuan mineral water has the function of saving lives.

Some may ask, "Can I take my NFT to the Sahara Desert?" If you are the one asking this question, it may mean that you still do not fully understand the potential of NFTs. But it also marks that your cognition is changing. You begin to think about how to discover the value of NFTs, even if the NFTs in your hands seem worthless. Let me add that you may be concerned about the price of NFTs, such as the price of BAYC may reach 150E, while the NFTs in your hands are only worth 0.001E. The problem is that you are ignoring the intangible value of NFTs. This is not your fault but a problem of the entire industry (infrastructure), as this industry has failed to showcase the intangible value of NFTs.

Now, let's get back to the example of mineral water. The reason mineral water has different prices in different regions is that they have different functions. If NFTs also have the functions of "quenching thirst" or "saving lives," will their value change? The answer is yes.

Another example, what is the most expensive picture you have seen in the real world? Some say it's the Mona Lisa, some say it's Disney's princess picture, and some say it's the "Golden Arches" of McDonald's. Yes, these answers are all correct. "Mona Lisa" is a classic work by the celebrity Da Vinci, and its function is to showcase the painter's technical prowess; Disney's princess picture symbolizes a myriad of merchandise, from Airbus planes to commemorative badges, its function is to adorn and embellish; not to mention the function of "Golden Arches" is to tell you to come and buy delicious burgers. At the same time, I want to emphasize that we cannot ignore the "value," such as the photo of "the first footprint on the moon," "This is one small step for me, but one giant leap for mankind," its value is self-evident. The value of "Mona Lisa" is to showcase "wealth, art, and power," the value of the "princess picture" is to enhance brand influence, and the value of "Golden Arches" is to provide a new way of life (at the beginning of its establishment).

Now, please think again about the functions and values of the NFTs you hold. You may answer that the function of NFTs is to represent my avatar, its value lies in making me happy (or unhappy), or enabling me to participate in offline activities and make new friends. This is correct, you have distinguished the differences between function and value. Although these two concepts have always existed in NFTs, many people have failed to realize their differences.

Great, we can start looking for the value of NFTs now. But that doesn't mean you can send NFTs to the "Sahara Desert" to make money, because that's still a long way off. Let's recall the process of discovering value. Here is a classic case from business school: "Sell me this pen." If you have an MBA, you will know that there are countless ways to accomplish this task in class, and you can sell a pen that originally costs $1 for $10,000. The professor will tell students that the underlying logic of this case is not to sell the pen based on its function, because its manufacturing cost is $0.2, the market cost is $0.5, and selling it for $1 can not only achieve a 30% gross profit but also meet the buyer's need—writing, it can't get more expensive. If you get Jay Chou or Taylor Swift to sign the pen, you can list it on an e-commerce platform and price it at $100, and it's very likely to be sold within 24 hours.

At this point, you must realize that you need to discover the hidden value of the pen. In other words, you need to discover the hidden value of NFTs. But whether you are a student or a student at a business school, it is difficult to discover the so-called "potential value" unless you create or give new functions. This business school case tells us that the reason why the pen can be sold for $100 is because it is given a new function—signature, not just writing. The new "signature" function creates greater value—commemoration (the pen has been used by celebrities). This subtle difference is worth pondering. I want to inspire you: NFTs need to be given new functions and use new functions to create greater value.

However, I must point out that giving NFTs new functions and using them to create greater value is not easy, and it is more abstract than planning "how to sell this pen." Although I have seen some notable cases of NFTs, they take NFTs away from the Crypto world and put them into the real world. By collaborating with different companies, they turn NFTs into influential brands, profit through launching peripheral products, brand licensing, etc., thereby expanding the NFT community and driving up NFT prices. In this case, the NFT project uses the function of NFT visual display to attract fans interested in new things, thereby creating the value of market education and brand influence enhancement.

However, the native encrypted world operates under completely different logic. If the NFT project only cooperates with NFT and other projects for brand exposure, it cannot change the fact that NFT is "a pen." In other words, the new function should be what the blockchain needs and be faithful to the essence of NFT's "non-fungibility." Perhaps you don't think that the blockchain needs any new NFT functions, I want to share with you the new developments I know below, and I believe they will definitely inspire you and expand your horizons.

ERC-3525 gives NFTs new functions "value" and "slot" at the code level, the former allows NFTs to have representable numerical values, and the latter turns NFTs into "semi-fungible" (we do not discuss whether it "violates" the belief of "non-fungibility," just look at the new functions given). Taking props in the game as an example, perhaps it can better understand these two new functions. In a game, there are five categories of props: clothes, armor, helmets, weapons, and skill manuals, represented by "slots" 1-5. Armor belonging to "slot-2" has 500 types, each with different defense values represented by "value." In addition, similar props can be combined to form new props. More importantly, if there are 10,000 types of props, ERC-1155 needs to deploy 10,000 contracts, but now it only needs to add "slots" in one contract to achieve. Now, I think you understand what changes have occurred to NFTs. Another example, a decentralized gaming platform adds platform tokens, points, and proof of work to NFTs, giving players holding NFTs corresponding rights, NFTs can change through the transfer of value, in different scenarios, we can add different titles, levels, or expressions, etc., which can be used as a tool for income and also as a symbol of identity.

In addition, let's assume: if you want to play games on Arbitrum with NFTs on Ethereum, do you need to choose a cross-chain bridge to lock NFTs on the original network, and duplicate a new NFT on the new blockchain, and then destroy the original NFT? This process is very cumbersome and not safe. I think there have been countless news about cross-chain bridges being hacked and assets being stolen. If there is a new function that allows NFTs to achieve "cross-chain" without crossing chains, then whether it is NFTs on Ethereum or any NFTs on the second layer chain, can they become active? Polygon's NFTs can be displayed on OP, and BAYC on Ethereum can be used in games on ZK chain? You should realize that this will be a very, very important milestone for NFTs.

ERC-721, as the pioneer of NFTs, gave birth to classic NFT collections such as CryptoKitties. Then ERC-1155 appeared, turning props in games into encrypted assets. But what you don't know is that the teams participating in ERC-721, CryptoKitties, and NBA TOP SHOT projects launched such new functions at the beginning of 2023, called ERC-6551. Simply put, turn your NFT into a wallet with smart contract functions (Tokenbound account, TBA).

TBA has the function of storing any ERC tokens. You can turn your Azuki into a TBA, and then store $ETH or Doodle in Azuki. You can turn your DAO membership NFT into a TBA, and store your POAP obtained from work, rewards, etc., in the membership NFT. You can use TBA as your identity to log in to dApp instead of using your wallet to log in. This means that your NFT with TBA function can become your identity to enter the blockchain.

TBA has the function of interacting with Ethereum mainnet or any second layer chain. This means that you can send a transaction from Ethereum to OP through TBA, for example, you can use BAYC on Ethereum to enter a game on Polygon chain (no need for NFT asset cross-chain).

TBA has the function of programming. Combined with artificial intelligence technology, NFTs will become NPCs (Network Playable Characters). This means that NFTs can perform tasks you want to repeat, such as helping you buy 3 tokens with the highest heat in nearly 5 minutes, just like chatting with ChatGPT. In addition, you can authorize TBA to automatically sign transactions through the "off extension" function to execute repetitive behaviors.

Do you feel that NFTs are gradually being activated now? You can use NFTs to manage other NFTs, use NFTs to earn game coins in games, and even use NFTs as your AI agents. Undoubtedly, when you put your NFT avatar into a role-playing game, you will feel a sense of closeness, and this game character with TBA function will help you explore, upgrade, get married, reproduce new offspring characters, make money, and make equipment. These new assets will be stored in your game character NFT, and your NFTs will appreciate. This is just a small example I can imagine, and I believe you must have better examples than I can think of.

Okay, let's compare the "pen" with NFTs again. The NFT lying in your wallet now is like the pen itself, and its value is obvious—it's for writing or as an avatar picture (symbol of identity). If NFTs become game props, does it mean that the pen has become a signing tool? Is it the demand for celebrity signatures that makes the pen a signing tool? Is it new technology (ERC protocol, artificial intelligence, etc.) that makes NFTs into game props? By now, I think you fully understand the past, present, and future directions of NFTs.

No one can save NFTs except by giving NFTs new functions.

Author: www.twitter.com/clarckwang