NFTs: Applications and Challenges

Abstract

Before the widespread application of blockchain-based technologies, the mechanisms in place for verifying ownership of digital assets and thus, means of securing them remained susceptible to tampering that translated into significant losses. Decades of research and advancements in blockchain led to the development of Non-Fungible Tokens (NFTs), which are tokens that represent digital assets and have proof of ownership embedded. The novel characteristic of each token being unique and distinctive from another has strengthened the security of assets and reinforced unique ownership. This cutting-edge technology continues to grow and capture the attention of the masses as more applications of NFTs are identified with time. This research aims to present a comprehensive overview of NFT and its underlying core technologies, namely blockchain and Ethereum. Further, numerous platforms for buying and selling NFTs are presented along with the applications of NFTs across various sectors including education, fashion, sports, and digital art. Moreover, the paper highlights the key challenges in adaptation of NFT technology from the perspective of security, privacy, environmental impact, ownership, governance, and property rights.