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Saturday, 26 December 2020

The importance of Non-Fungible Tokens for Bitcoin Cash ecosystem

I'm sure many of you are familiar with NFTs in general, mostly from the famous CryptoKitties game back in 2017. Simple Ledger protocol (SLP) has a separate definition for NFTs in Bitcoin Cash however, it is highly under utilized. There are no proper wallet support and developer tooling and tutorials for making these type of tokens is not much available to regular developers. In this post, I like to briefly talk about why we should take NFTs seriously in BCH and how they can become a winning ticket for Bitcoin Cash adoption.

Debunking the myth

When it comes to NFTs, I can say many people even in crypto doesn't take it seriously. They think it's only for games or selling art. There were even some people arguing they don't need to pay for an image if they can just save the file from the browser! I kinda get it, the image used in a NFT (which is usually illustrated by an artist) is confusing. People think they are paying for the illustration. That's not true at all. What you pay for, is the asset. Think about it in this way, Whenever you buy BCH, are you paying for the BCH icon? Of course not! Then why do we have the icon in the first place? You would probably say just for better recognition of the asset, giving it a sense of identity. That's the same with the relationship of Non-fungible Tokens and the image used for them. Better art helps with marketing and branding of the NFT however, the value is not in the art, it's in the issuer, rarity and the market demand for that particular asset. If I randomly make good art and put it out as NFT, it doesn't really have much value, but the same art, if is included in a collection from a good app with developers and a user-base, an active market place and future plans for the asset holders, could have lots of market value. It's important that we understand how to extract value from these assets.

I like to think about NFTs as the future of personal property. For many years we are obtaining virtual/intangible assets that are not actually owned by us. Think about game items, social network handles, domain names, AR/VR game assets etc. The more we get into the future, the more we are exposed to these kind of assets and the ownership over them are a really important next move to build trust and adoption over these items.

Why NFTs in Bitcoin Cash?

I'm talking about it for a while, but NFTs are one of the strengths of BCH compared to other platforms. Let's think about common types of dApps these days. For example in DeFi many of the applications come with protocol governance which is near impossible with the structure of Bitcoin Cash smart contracts. So even though BCH on DeFi has some benefits like efficient smart contracts, and faster transactions, a faster ETH v2.0 is still going to end up being more decentralized considering that users can vote to change the protocol variables. I will be happy to proven wrong and someone do it on BCH as well, but as a developer there are lots of limitations that actually exist here.

In the other hand, NFTs are also taking off in other dApps and I personally think BCH has the better NFT compared to everyone else. NFTs in Bitcoin cash are truly owned by the user and guaranteed to be rare. In ETH, in order to sell your NFT you should grant permission to other apps to have access to your assets, but you don't need to do that here. Considering that NFTs in Bitcoin Cash are just BCH UTXOs, they have the same security model as BCH itself. You can use them in smart contracts, stake them, and sell them in a decentralized manner. The ownership and transferability of the assets are guaranteed by Proof Of Work out of the box without any need to trust the issuer and the originated smart contract.

In the other hand, NFT is a movable asset. That's the whole point of it that you can move the ownership to someone else through the magic of a marketplace. ETH is still lagging in that front and no one cares to pay $3-$7 for every transfer of the asset. I suppose they will eventually resolve it by the time ETH 2.0 is fully utilized, and that's a enough time for BCH to steal the market. Having the liquidity of BCH as a top 10 market cap platform, with a strong market place of NFTs can onboard many users from current user base of ETH and hopefully many younger generation of users which understand the value of digital assets but don't have the purchasing power that ETH users currently have.

What is needed?

The infrastructure for the developers and users to freely utilize NFTs and having an open and inviting culture from the community towards these applications is the key in my opinion. As a developer myself, I think these are the important things related to the infrastructure:

  • Wallet support
  • Open decentralized market places (similar to OpenSea)
  • Developer material, tutorials and guides (similar to slp.dev)
  • Better SLP tokens Swap/trading platforms (a permissionless DEX)

Regarding the culture, it's up to the community to decide and support these use cases.

If you think NFTs in Bitcoin Cash are important and like to contribute, I already created an open source dApp wallet during last year which I'm working to integrate NFTs and SLP tokens in it. The feature will be available both to users and developers and if you want to help, there's a small flipstarter which is completed up to 70% and has a few days left.

Thanks for reading and feel free to let me know about your feedback!

submitted by /u/p0ok3r
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from Bitcoin - The Internet of Money https://ift.tt/3hl9Qdi

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