After the release of the game CryptoKitties in November 2017, the concept of the non-fungible token (NFT) has been ingrained in the minds of developers and investors in the crypto community. However, 2019 has been the year that NFTs have gained mainstream attention. And it should come as no surprise that even huge, multinational companies are currently developing NFT projects.
Recently, Microsoft’s blockchain-based cloud platform, Azure, released its own nonfungible tokens program called “Azure Heroes” with the aim of rewardin its developer community.
The release of Azure Heroes
Through Azure Heroes, Microsoft aims to reward individuals for verifiable acts of impact such as coaching, creating demos, building sample code, blogging about Azure or completing certain challenges. With that purpose, it has created a tool to inspire the community to learn, coach and build on Azure while promoting healthy and inclusive behavior.
Issuance and transactions of “Badger” collectibles will be carried out on the Ethereum network, allowing winners to hold them as NFTs. The tokens were created in partnership with Enjin, a platform that specifically caters to the video game industry.
In order to earn one of these Badgers, Azure developers must first be nominated — either by themselves or by the community. Then, the community moderators will select the best nominees, based on their performance, to be awarded a Badger. Winners will then be provided with a QR code that can be used to redeem their Badgers via their Enjin wallet, where it can then be transferred to any other NFT, compatible Ethereum address. Azure Heroes is branded as a new and fun way to earn digital collectibles for meaningful impact in the technical community.
The development of NFTs
Fungibility refers to an item that is interchangeable with another, identical item. Keeping this distinction in mind, an NFT is a unique digital asset with a traceable history that differentiates it from other assets that appear similar. Non-fungible tokens are a type of irreproducible token that can be designed to represent practically anything, whether that be trading cards, identification documents or in this case, rewards badges.
One of the most interesting things about NFTs is its ability to fundamentally change digital ownership. Until now, people never truly had ownership of anything that they purchased virtually. Purchasing virtual items and treating them as real-world assets is one thing, but the reality is that they don’t belong to the players who made the purchase; they belong to the game’s publishers.
However, 2019 was the tipping point for the adoption of NFTs, and there are a few reasons for this, at least in the gaming community. Since then, NFTs have been found in a host of similar games, including MyCryptoHeroes and recently Tides of Magic, but Gods Unchained was the first game had done this.
Created by Australia-based blockchain gaming startup Immutable, Gods Unchained is a digital trading card game that operates on the Ethereum blockchain. There are other games such as Decentraland, Etherbots, Spells of Genesis and Rare Pepe. However, outside of the gaming industry, companies utilizing NFTs, such as SuperRare, Zcrafty, and Terra0, have also gained prominence. Marketplaces like OpenSea, RareBits, and OpenBazaar have also started to trade NFTs as crypto-collectibles.
Moreover, there are other factors for NFTs’ fame, one of them being an interest of multinational corporations in blockchain gaming. In September 2018, one of the biggest names in gaming, Ubisoft, sponsored the Blockchain Game Summit in Lyon, France. When asked about the current use of NFTs in popular products and services, Ethan Pierse, the director at the CryptoAssets Institute, shared that Indiegogo and GoFundMe users had shown that people were willing to spend plenty of money supporting causes and products that they believed in.
Pierse went on to add that brand loyalty and self-identification are likely to intensify further, as supporters are also able to show off digital collectibles. He concluded that if those tokenized collectibles also had value as an asset to encourage holding and trading, then we were looking at a digital version of the same craziness like Beanie Babies or Magic: The Gathering cards.
Various ways to use NFTs
There is a noticeable drive for the development of NFT use cases beyond entertainment. Specifically with the case multi-layer blockchains, the foundational layer — which is the home of assets such as Bitcoin — is increasingly shifting toward being a store of value, presenting a segment of the market in which high-value NFTs can develop.
First, NFTs can signify ownership of high-value or sensitive physical, illiquid assets. Second, an especially area that can profit from the use of NFTs. Additionally, there is a drive to use tokenization and fractional ownership to make these investments liquid. For instance, NFTs can represent individual units in a property owned by multiple families.
Even though many people look at NFTs as a way of building new financial assets and democratizing access to capital, regulation can be a hindrance. For example, the NFT platform Codex Protocol aspires to use NFTs as a medium to fractionalize ownership of a piece of art. While this is interesting in theory, there is a risk that doing so would turn these tokenized assets into securities, which would then need to be regulated as such.
Jonathan Brandt, the principal information technology consultant at the Willow Group, said he believed a major obstacle to the adoption of NFTs for more serious purposes like the provenance of antiquities or the tracking of a medical supply chain was lack of intuitive or obvious methods for redress and recovery. Microsoft, like it or not, had achieved tremendous mass-adoption of Internet Explorer, Windows, and the Office suite. It had the reach and the gravitas to nurture the acceptance of NFTs.
How NFTs can benefit value for an enterprise
Essentially, the evolution of NFTs is heavily dependent on the underlying blockchain infrastructure. Optimizing for scalability and transaction speeds is anticipated to have a huge impact on the rate of development for space. Besides, the absence of accessibility when it comes to NFTs is a real problem that has yet to be solved, and the participant of big players like Microsoft can go a long way to help.
Enterprises can use NFTs for inventory management, where certain tokens can be combined with other tokens to represent an assembled product with multiple component parts. Another way to apply NFTs potential is in the licensing software of Microsoft. Such licenses have been traditionally represented by keys, but NFTs stored in wallets can now be used to grant permissions. Real estate is another example of a unique asset that can potentially be represented as NFTs. And identity management both in social media and in enterprises can leverage nontransferable NFTs.
Microsoft and blockchain
Through Azure, Microsoft has made many pioneering efforts toward blockchain adoption. Over the course of 2018, it has launched a blockchain development kit and the Azure Blockchain Workbench. In May 2019, the company also released the Azure Blockchain Services, which is a fully managed service that allows for the formation, management, and governance of consortium blockchain networks.
Along with these products, the company has launched an extension to Visual Studio Code to help developers create and compile smart contracts based on Ethereum, and then deploy them on the public chain or on a consortium network in the Azure Blockchain Service. Regarding this, Pierse, the CryptoAssets Institute’s director, said that Azure was locked in a battle to differentiate itself with AWS, Oracle, and Heroku among others. If nothing else, this would create visibility and further engages Azure’s existing communities.
Soon after the announcement of Azure Heroes, Microsoft also unveiled new tokenization and blockchain data management services, highlighting the increased adoption of blockchain in enterprises.
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