NFTs are the hottest new technology in the headlines. From a $69 million collage to unique, one-player-held video game items, NFTs are shaking up the digital world.

But how do NFTs actually work? And what other applications are hiding just beneath the surface? Let's walk through a few industries and find out just how much value NFTs can provide. First, we need to go over a few basic concepts.

How does a blockchain work?

A blockchain is a decentralized public ledger, where transactions are broadcast and validated by nodes in the network. Once recorded in this public database, information can't be changed or removed.

The data stored on these blockchains is generally kept secure through cryptography: where blocks of transaction data are 'hashed', and distributed across many nodes (computers) in a network.

This means that when a block of data is added to the blockchain, it becomes very difficult for an attacker to change or remove information from it without changing all subsequent blocks and being detected by other nodes on the network.

To understand how Non-Fungible Tokens (NFTs) work within a Blockchain environment, we need to understand the concept of a smart contract, which is a digital self executing contract that can facilitate the exchange of anything in a transparent and permanent way.

A participant would write a program that defines what should happen in given conditions. The participants then broadcast this information onto the blockchain, doing away with any intermediary parties necessary for future transactions. As all transactions are automatically executed once the network conditions are met, there is no need to expect any human intervention or oversight.

This autonomous system makes smart contracts useful in areas such as: insurance premiums and claims, supply chain management and asset exchange through tokenization.

How do NFTs work?

Non-Fungible Tokens (NFTs) are tokens on the blockchain that represent ownership of digital or physical assets. They were proposed by Ethereum researcher @kauri in a post to the Ethereum subreddit on December 7, 2017.

This led to the establishment of the ERC-721 standard for NFTs by developer Fabian Vogelsteller, who had implemented NFTs using the ERC-20 standard for fungible tokens.

The first token to fulfill this standard was CryptoKitties, an Ethereum game that allows users to buy, sell, breed and exchange virtual cats.

What can NFTs be used for in the video game industry?

NFTs can be used in the video game industry by gamers and developers alike. Gamer's using NFTs to monetize (sell, trade and buy) digital in-game items and characters is a popular use for this technology. Using blockchain allows gamers to manage their entire in-game asset collection all in one place. This allows for easier trading, selling and buying of in-game items.

The potential uses for NFT's are almost limitless. Currently, you can trade almost all types of digital goods using this technology. This includes things like skins (for characters or weapons), in-game currency, and other digital assets.

What can NFTs be used for in healthcare?

NFTs can be used as patient records, federal health insurance cards, and digital prescriptions. In healthcare, NFTs can also be used to track pharmaceutical manufacturing information from the supplier to the pharmacy.

The blockchain allows patients to have more control over their own data which could boost individuals' trust with medical research and government agencies because there would be less chance of data being lost, stolen, or manipulated.

How can NFTs be used in real estate?

NFT's can be used to track property titles, pay rent, and facilitate the purchase of properties. This would make buying/selling deeds much easier for brokers, buyers, and sellers. For example, real estate agents could have a digital ledger that records all information about transactions between both buyer and seller e.g. amount paid or owed, signatures, and date.

Transferring property would be much easier with smart contracts because you could transfer ownership of an entire building in one transaction e.g. adjusting who is responsible for paying property taxes without having to double check everyone's balances and make sure they can afford the new amount (without double spending).

How can NFTs be used in agriculture?

Factom has partnered with the Department of Homeland Security to develop ways to use blockchain technology for managing information during, among other things, food production.

One way that NFTs are currently being implemented is by proving ownership of livestock because it provides more secure data records, which is vital in the event of lost documentation.

What are some other industries that might benefit from NFTs?

NFTs can be used for supply chain management by tracking the transactions and ownership history of an item throughout its life in a supply chain. This can apply in many different sectors including agriculture, manufacturing, healthcare, education, and several others.

NFTs could be used when someone receives their college diploma to prove that they have graduated from a specific university. NFTs can also provide information about the authenticity of an artwork which is important in the art industry for distinguishing counterfeit pieces from authentic ones.

What's next in the world of NFTs?

NFTs are a brand-new area of technology, and as such there is no one answer to the question of what's next for NFTs. The possibilities are endless, from allowing artists to protect their creations with unforgeable scarcity, all the way to allowing gamers to own unique elements in their favorite multiplayer games.

In securing NFTs on the blockchain, one can also ensure that artists are paid what they deserve for their work and gamers do not lose any progress.

NFTs are here to stay, no matter what application you may use them for. Coming up with creative uses of NFTs is half the fun!