Non-Fungible Tokens (NFTs) have been making headlines for quite some time now. The phenomenon is getting a lot of attention from people across the world. NFTs generally cost a fortune but thanks to Fractional NFT (F-NFT), people can acquire expensive assets for a few bucks.
What Are Fractional NFTs?
In simple words, Fractional NFT is a non-fungible token that has been divided into smaller fragments. Hence, different people can claim partial ownership of the same NFT. To understand this concept of NFT investing, take an example of a cake that is sliced to serve several people. Considering that NFTs are unique and can’t be duplicated, fractional NFTs go beyond these restrictions by enabling people to divide their ownership.
Difference Between F-NFT(Fractional NFT) and Traditional NFT
A fractional NFT or segmented NFT represents a certain percentage of ownership or portion of an NFT. A traditional NFT is a whole while F-NFT is a part of it. Moreover, the segmentation process can be reversed to convert fractional NFT into a complete NFT. A single NFT with a buyback option allows the investor to purchase all the shards and acquire the original NFT.
To convert fractional NFT ownership into a single NFT ownership, the holder must initiate a buyback option by transferring a certain amount of ERC-20 tokens to the smart contract. This triggers a buyback auction which will happen in a fixed period. Therefore, allowing some time for NFT holders to make a decision. In case a purchase takes place during that period, fractions of the NFT are returned automatically to the smart contract and the buyer will have complete ownership.
Advantages of Fractional NFT
Democratization
The NFT market restricts small and medium investors as the assets are mostly high valued. So, only a few of them can afford to buy these NFTs. However, fractional NFT benefits newcomers and small investors by reducing the cost of the assets and opening up more opportunities for them.
Greater Liquidity
For a high-priced NFT, you have to wait for a wealthy investor who can afford it. F-NFTs are more accessible and easy to sell as you can split the ownership of an ERC-721 token into multiple ERC-20 tokens and sell each of them individually.
Price Discovery
With no or limited transaction history, it is difficult to find the right price for a whole NFT. However, splitting it into smaller tokens make it affordable and more people can trade the asset. Hence, making it easier for investors to assess its true value.
Increased Visibility for Creators
A fractional NFT has a more liquid market that lets digital creators go online and reach a wider audience.
Industries F-NFTs Can Potentially Disrupt
Art
Digital artists along with NFT owners will have the option to divide their assets into smaller segments and sell each F-NFT portion individually to investors. Thus, emerging artists can also easily sell their digital artworks in the market easily.
Gaming
Games that involve trading cards can also seek the benefits of the NFT market. People can sell their cards for impressive amounts. Also, they can auction their in-game items, such as guns, rare skins, and armor through F-NFT and sell rare gaming products to multiple buyers by fractionalizing them.
Collectibles
One of the popular fractional NFT use cases is collectibles that have great potential with crypto being sold for over $1 million. Recently, a collection of 50 CryptoPunks was offered for sale after being fractionalized. This allowed small investors to acquire the asset and get a share in the collection.
Domain Names
With the evolution of the crypto market, the domain names like .crypto and .rth are in demand. So, rare and popular domain names can be fragmented and sold to different buyers.
Real Estate
Luxury properties that were too expensive to afford earlier are now accessible to more people. These high-valued properties can be fractionalized into F-NFT so multiple investors can acquire them. Also, there will be no need for mortgages as tenants could hold different parts of the property together.
Music
The music industry is making the best of fractional NFTs as music artists can fractionalize their albums and sell them to fans without involving third parties. This also resolves the problem of the direct artist-to-fan relationship.
The concept of fractional NFT is still in its initial phase but we can expect it to grow rapidly and become the next trend in the crypto market. F-NFTs open more opportunities for small and medium investors to acquire digital assets at affordable prices. They can easily invest in valuable assets that have the potential to offer many-fold returns in the future. Also, it will encourage people to start their NFT journey without delay as they need not have millions of dollars to buy popular NFT pieces.
 have been making headlines for quite some time now. The phenomenon is getting a lot of attention from people across the world. NFTs generally cost a fortune but thanks to Fractional NFT(F-NFT), people can acquire expensive assets for a few bucks.){kind=link}