Why Cross-Chain NFTs Are Needed in DeFi

Bitcoins (2)

By Hannah Parker

Cross-chain non-fungible tokens (NFTs) are essential for developing a multichain ecosystem and advancing cryptocurrencies.

There is much to be said about centralised, opaque entities in light of current events. Throughout 2022, we have experienced calamity after each disaster, with the fall of FTX being the most recent. People are searching for a solution as their mistrust of cryptocurrencies grows.

NFTs are one industry that has been rapidly growing amid the upheaval. And not only are crypto behemoths like Binance exhibiting confidence, but real-world use is also accelerating. NFTs are being rapidly integrated by high-end companies like Gucci, sports legends like Ronaldo, and even social media sites like Reddit and Twitter. But there’s an issue: while we live in a multichain ecosystem, NFTs are walled by individual blockchains. There is, therefore, justification for cross-chain NFTs.

What is a Multichain Ecosystem?

There are a lot of Layer 1 (L1) blockchains in cryptocurrency.

While some are made to be all-purpose, others are designed to serve a particular need. Additionally, there has yet to be a definite winner who will take it all because they each have distinct choices between scalability, performance, and security. Because of these variations, Web3’s users, builders, and protocols are dispersed among chains, generating numerous fragmented networks.

This concept initially has the issue of isolation and fragmented liquidity. Cross-chain bridges, which let you lock assets on one chain and withdraw them on another, have already partially solved this problem.

The fragmentation of fungible tokens like Ethereum (ETH) or avalanche (AVAX) won’t be the sole barrier preventing consumers from accessing other ecosystems in a multichain future.

Crypto experts, Bitcoineer mentioned that this was due to their verifiable and trustless characteristics, non-fungible tokens offer a variety of novel use cases. Still, digital identification is the logical next step for Web3 communities.

Using Digital Identities in NFTs

Online, we all present a public-facing version of ourselves.

And there’s a good reason behind it. As the world has become more digital, we gradually move our offline personalities online. Consider how we present ourselves on various social media channels, like Twitter, Instagram, and even LinkedIn.

That is your digital identity, which reflects your online self. Because it is the only way we can communicate with others in a Covid and remote working world, protecting our digital identities is a concern.

Take the NFT frenzy from last year as an example. People were and still are willing to spend thousands of dollars for a PFP (profile photo) exclusive to them. In a virtual world, our faces serve as our avatars.

This is also why people enjoy spending a ton of time creating content for their social media accounts and purchasing skins for video games to present a digital self-portrait to others.

The same factor makes social media so well-liked. It enables you to create a distinctive internet presence for yourself.

However, given the condition of social media today, we need help with digital identity. Your digital footprint, including your relationships, interaction, and content, might be erased at any time.

NFTs can store and transfer every facet of your digital identity, which is where they come into play. You desire control over your identity, which is impossible with social media programs as they stand right now.

We are gradually changing the internet into a place where user ownership through DeFi and Web3 exists. However, there is a lack of trust in the existing securities in Web3, which is constantly worked on to ensure trust in the industry. 

The Need For Cross-Chain NFTs.

Your digital identity must be chain-neutral if it is an NFT. You’d instead carry it wherever you go, much like your real-life persona.

The concept of cross-chain NFTs would only work if you were limited to a single blockchain. Games, communities, and decentralised applications (called dapps) will all be dispersed over a larger ecosystem of several blockchains. Interoperability is necessary for a multichain ecosystem to be sufficiently inclusive.

As an illustration, consider the metaverse — a public virtual world that is accessible to anyone. NFTs will be a crucial link that connects Web3 and the metaverse, enabling individuals to move, exchange, and use things like avatars, items, and even real estate.

Without considering digital identity, some NFTs could be viewed as a store of value that you could want to move to another chain, highlighting the even greater necessity of cross-chain infrastructure.

Infrastructure for interoperability will serve as the building blocks of a vibrant metaverse. Without it, we’ll develop societies that are just as contained as the ones we already have.

Cross-chain non-fungible tokens (NFTs) are essential for developing a multichain ecosystem and advancing cryptocurrencies. There is much to be said about centralised, opaque entities in light of current events. Major events like a crypto collapse always shake the crypto industry and its investors. There’s an ongoing desire for crypto to be safer for all parties involved. NFTs are a growing market with many security measures in place for investors, attracting many. Without considering digital identity, some NFTs could be viewed as a store of value that you could want to move to another chain, highlighting the even greater necessity of cross-chain infrastructure. It will thus lay the groundwork for a vibrant metaverse. Without it, we’ll develop societies that are just as contained as the ones we already have.

Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article. 

Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.

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