An Introduction to Decentralized NFT Catalogs
Over the past year, venture capitalists have invested over $4.6 billion in non-fungible token (NFT) related infrastructure and projects. This infrastructure now needs users. They will come when people understand that they can apply these NFTs not only for speculative purposes, but also to design and structure their day-to-day activities. For these, they don’t need NFT – they have to sort out their lives. And decentralized catalogs are here to help them do that.
We can think of an NFT as a book that someone owns, and that ownership is recorded on the blockchain. But what we really lack is the library.
Not just a flower, but a garden
Several NFTs constituting a collection form a system. This system is structured by the standards it uses. If you’ve ever visited CryptoKitties, you’ve probably noticed the museum categorization of Kitties and their attributes in their “catalog”.
However, each item in the collection means nothing without the collection itself. You cannot remove a CryptoKitty from the original smart contract. You can copy the image or create a split version of it, but you will not be able to transfer its value if the derivative version of your CryptoKitty is not linked to the original collection. This means that the value of each NFT is not determined by a standalone element of the collection but by the collection itself.
Simply put, if we take a step back from each item in almost every NFT collection, we will discover that the real value is not in a single NFT itself, but in a perfect system of multiple NFTs linked by a smart contract. By doing this, we stop looking at a single flower and realize that we are in a well-designed garden.
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By applying all normalization approaches and properly structuring all data, we create systematic lists of publicly stored items on the blockchain – decentralized catalogs.
How Decentralized Cataloging Can Add New Value
Everyone has heard of the Guinness World Records, the Michelin Guide or the IUCN Red List. In a nutshell, these are all extremely valuable catalogs. Behind each of them hides a management authority that invests its brand and its expertise to bring value to each new iteration of the catalog. Even if the rules for adding new items to the centralized lists are not transparent or even called into question, this approach is sustainable.
However, the biggest problem these catalogs present is an extremely high barrier to entry for valuable new listings to enter the market. With NFT infrastructure and a Web3 mindset, however, we can democratize the process of creating catalogs of value. The difference between a normal listing and a decentralized catalog is the potential value it can accumulate.
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When you own a CryptoPunk, you are a co-owner of the CryptoPunks collection. Yes, this CryptoPunk may represent your inner self, but by itself it is just a JPEG. As we have already discovered, the value resides in the collection itself, and the value is created not only by the expertise that has gone into designing the character builder, but also by the owners of the collection.
By building an economy fueled by co-ownership, we can create seamless and scalable catalog systems. While another restaurant listing hardly adds anything new to the company, there are plenty of situations where decentralized cataloging makes sense.
Let’s imagine the most basic use case of decentralized cataloging. You have a collection of books and you want to share these books with someone. You know, however, that there is a good chance that those to whom you lend your books will never return them to you. That’s life.
So you start a very simple process of registering every book you share in the decentralized catalog; only each record is actually an NFT.
The person who takes the book decides to use it to put their own books in the catalog and share them with someone else, and this person also shares it with their friend. In a few years, your book sharing club will become an Internet phenomenon, with more and more people adding books to the catalog.
It’s only a matter of time before the big publishers join in as well. Some publishers may start adding newly published books for distribution through the catalog system you created. As we know about NFT compatibility, it is clear that all NFT marketplaces and frameworks we have today will become convenient tools and interfaces that will work right out of the box. No need for additional SEO websites, centralized libraries or payment solutions.
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And it all started with you adding the first book as an NFT to the shared collection of books.
The same approach is used in Cointelegraph’s historical NFT collection. It is a catalog of news from the largest crypto medium, and Cointelegraph readers choose which news to add to it.
The real future of the NFT standard is ordinary, and that’s good. We use a lot of ordinary things every day that were too expensive when they entered the market. However, as production and technology evolved, prices fell and made them accessible to everyone.
The same will happen with NFTs. The only thing we need to do now is stop looking at tulips and start designing a garden.
Ivan Sokolov is the founder of Mintmade, a project focused on creating new asset classes that will power next-generation Web3 businesses.
This article is for general informational purposes and is not intended to be and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.