Comprehensive Guide to NFT Categories 

Prison Professors Masterclass Digital Economy: Lesson 12: Binance BNB

The dynamic nature of NFTs reveals their transformative potential in reshaping the digital world. However, it’s essential to recognize the potential risks and approach this technology with vigilance. #PrisonProfessors #NFTs #DigitalOwnership #Blockchain #CryptoEducation #Innovation

Lesson 28: Comprehensive Guide to NFT Categories

Lesson Intro:

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28. Comprehensive Guide to NFT Categories


  • NFTs, or Non-Fungible Tokens, are unique digital assets that represent ownership, authenticity, and provenance of a specific item or piece of content on a blockchain
  • NFTs can be categorized based on their use case, interactivity, token standards, licensing and rights. 
  • Other ways to categorize NFTs include their rarity, underlying blockchain network, interoperability, and their creators. 
  • The NFT space is rapidly evolving and new use cases are emerging regularly. As adoption of NFTs expands, there could be more types of innovative NFTs. 

What is an NFT?

An NFT, or non-fungible token, is a distinct digital asset that represents ownership or proof of authenticity of a one-of-a-kind item or virtual good. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are interchangeable and have the same value, each NFT is unique. 

NFTs are created using blockchain technology, primarily on Ethereum. They can be bought, sold, or traded on various marketplaces.

NFTs have gained significant popularity in various domains, giving creators and collectors a new way to exchange and own digital content. These digital assets encompass a wide range of categories, including art, virtual real estate, gaming items, and collectibles. 

Common Ways to Classify  NFTs

NFTs can be classified based on various criteria. Some common ways to classify NFTs include:

  1. By use cases
    • The most common way to classify NFTs is by their use cases, including digital art, music, collectibles, gaming, and virtual real estate.
  2. By token standard
    • NFTs can be categorized based on the token standard they are created on, such as ERC-721 or ERC-1155.
  3. By platform or blockchain
    • NFTs can be classified based on the underlying blockchain network or the marketplace the NFTs are created or listed on. 
  4. By interactivity
    • NFTs can be broadly classified based on their interactivity, ranging from static representations to highly dynamic and interactive digital collectibles. Other ways to categorize NFTs include their rarity, interoperability, and creators. Let’s look at some of the most common methods to classify NFTs in greater detail.

NFT Categories Based on Use Cases

NFTs can be classified into numerous categories based on use cases:

  1. Profile pictures (PFPs)
    • The trend of using NFTs as profile pictures first gained popularity with the inception of CryptoPunks , crafted by Larva Labs, in 2017. Another widely recognized collectible of this kind is the Bored Ape Yacht Club (BAYC), which has expanded the utility of their NFTs far beyond PFPs to include physical goods and offline club memberships. 
  2. Digital art
    • This is one of the most popular categories of NFTs. It includes digital paintings, illustrations, animations, and other forms of digital visual art. Artists can tokenize their digital art, thereby proving their ownership. Digital art NFTs enable artists to monetize their work in new ways. 
  3. Music
    • Musicians can tokenize their music, albums, or even exclusive behind-the-scenes content as NFTs. This enables musicians to sell their work directly to fans, provide exclusive content, and earn royalties on secondary sales.
  4.  In-game items
    • In-game items are one of the most prevalent forms of gaming NFTs, encompassing virtual assets like weapons, armor, or other equipment that can be used within a specific game. For instance, Decentraland Wearables offers clothing or accessory items that can be worn in Decentraland, an Ethereum-powered virtual world. These NFTs enable players to customize their characters and enhance their in-game experience. 
  5. Virtual real estate
    • This category includes virtual lands, properties, and spaces in virtual worlds and metaverses. Users can buy, sell, and trade virtual real estate as NFTs.
  6. Utility
    • Utility NFTs are associated with a variety of services and goods, both digital and physical. For example, a utility NFT could grant the holder access to physical goods, special trading tools, ticketing services, exclusive online content, and memberships. The possibilities of utility NFTs are vast and can be customized according to the creativity of the issuer.
    • In the rapidly expanding world of NFTs, many NFTs possess some degree of utility that could lead to innovative usages. For instance, the gaming industry can benefit from utility NFTs by leveraging novel ways to monetize and distribute in-game content, granting ownership and exclusivity to players. 
  7. Identity
    • Identity NFTs focus on representing and verifying unique digital identities. They eliminate the reliance on centralized authorities for identity verification, enhance user privacy, and grant individuals more control over their personal data.
    • Other NFT categories based on use cases include video and film, domain names, fashion, photography, literature, and sports. This is not an exhaustive list, as the NFT space is rapidly evolving and new use cases are emerging regularly. 

NFT Categories Based on Interactivity

NFTs can be classified based on their interactivity, ranging from static representations to highly dynamic and interactive digital collectibles. 

  1. Static NFTs
    • Static NFTs represent digital assets with immutable characteristics such as images, art pieces, and collectibles. These assets retain their original form throughout their lifecycle. Prominent examples include CryptoPunks.
  2.  Dynamic NFTs
    • Dynamic NFTs are digital assets that exhibit variable properties or undergo transformation over time, often influenced by external factors or data sources. Examples include Chainlink’s VRF NFTs, which integrate verifiable randomness to enable procedural attributes, and World of Ether’s crypto-collectible creatures, which boast evolving traits based on user interactions and a dynamic breeding system.
  3. Interactive NFTs
    • Interactive NFTs are digital assets designed to enable direct interaction with the asset or its properties, often within games or virtual environments. Examples include Axie Infinity’s collectible creatures, which can battle and breed within the game ecosystem, and Decentraland’s virtual land parcels, which owners can develop and customize to create immersive digital experiences.

NFT Categories Based on Token Standards

NFTs can be classified by token standards.

  1. ERC-721
    • ERC-721 is a widely-adopted Ethereum token standard specifically designed for creating NFTs. This standard enables the representation of individually distinct, digitally scarce assets, allowing for the secure ownership, transfer, and management of various forms of digital and real-world items on the Ethereum blockchain.
    • Examples of ERC-721 NFTs include Cryptokitties, a virtual collecting and breeding game where each CryptoKitty represents a digital cat with distinct traits and visual appearance. 
  2. ERC-1155
    • ERC-1155 is an Ethereum token standard designed for creating both NFTs and fungible tokens. With its ability to support multiple token types within a single smart contract, ERC-1155 enables efficient management of a wide variety of digital assets. It streamlines transactions and reduces the complexity associated with deploying and managing multiple token standards.
    • Examples of ERC-1155 tokens include The Sandbox (SAND), a virtual world where users can create, own and monetize digital assets and gaming experiences. 
  3. Other blockchains
    • Numerous blockchains beside Ethereum have emerged with their own NFT standards to provide alternatives for innovative use cases or to address scalability and cost issues.
    • Some popular blockchains worth noting include Flow blockchain, BNB Smart Chain and Polkadot

NFT Categories  Based on Rights and Licensing

NFTs can be grouped into a few types based on rights and licensing

  1. Open licensing 
    • Open license NFTs grant their holders broad rights and permissions, allowing them to showcase, copy, modify, or redistribute the underlying digital assets in various contexts. Key features include the ability to create derivative works, share with others, and reuse the content across various platforms without significant restrictions or legal consequences. 
    • Open licensing promotes a collaborative approach and fosters creativity within the NFT ecosystem. Examples include CryptoPunks and Bored Ape Yacht Club.
  2.  Closed licensing
    • Closed licenses  enforce strict limitations on the usage, distribution, and modification of the NFTs They primarily retain the rights of the NFTs with the original creator or copyright holder, preventing unauthorized reproduction, commercial exploitation or alteration of the content without explicit permission. 
    • Closed licensing is designed to protect intellectual property and maintain exclusive control over the NFT’s rights, distribution and modification. An example of a well-known closed licensing NFT project is NBA Top Shot by Dapper Labs. Owners of this collection may only trade them within the platform’s ecosystem and cannot use it for commercial purposes. 
  3. Partial licensing
    • Partial license NFTs offer a balanced approach, granting specific rights and usage permissions to the NFT holders while retaining some exclusive rights with the original creator or copyright holder. Key features include allowing limited use and distribution, granting permission for select commercial exploitation, or permitting certain types of modifications while prohibiting others. 
    • This category of licensing aims to accommodate various needs and preferences of both creators and collectors, fostering collaboration without compromising original rights.

Closing Thoughts 

NFTs have introduced groundbreaking applications across various industries, redefining digital ownership and value generation in the digital era. NFTs can be classified based on many factors, such as use case, interactivity, token standards, and licensing rights. The various types of NFTs provide innovative ways of preserving creative expressions and redefine digital ownership. The dynamic nature of NFTs reveals their transformative potential and showcases the power they possess in reshaping the digital world.

However, it’s essential to recognize the potential risks and the early-stage nature of this technology. As we continue exploring the fascinating realm of NFTs, adopting a vigilant and cautious approach will be crucial to unlocking their unique potential and mitigating possible drawbacks.

Further Reading 

Critical Thinking Questions

  1. How might the adoption of NFTs impact traditional methods of proving ownership and authenticity for digital and physical assets? Provide examples to support your analysis.
  2. Consider the various ways NFTs can be categorized. How do you think the classification of NFTs based on use cases, interactivity, or licensing can influence their value and marketability?
  3. NFTs have been created on several blockchain platforms, such as Ethereum and Flow. Compare and contrast these platforms in terms of their advantages and disadvantages for creating and trading NFTs.
  4. Discuss the potential risks associated with investing in NFTs. What measures can be taken to mitigate these risks, and how can individuals make informed decisions in the rapidly evolving NFT market?
  5. NFTs have introduced new ways for artists and creators to monetize their work. How might this change the landscape of creative industries, and what could be the long-term implications for both creators and consumers?

Advocacy Initiative:

We encourage participants to begin memorializing the ways they are using time in prison to prepare for success upon release. I encourage participants to create a personal profile by:

  1. Writing a simple biography
  2. Writing a daily journal to show all that you’re learning
  3. Writing book reports that memorialize the books you read
  4. Writing a release plan to show the ways you’re preparing for success upon release

These strategies helped me immensely once I got out. By using my time wisely inside, I was able to raise capital, build businesses, and succeed in ways that few people would think are possible for someone who served multiple decades in prison. Anyone can do the same—if they prepare first.

If you’d like to follow in the same footsteps, I encourage you to begin building your personal profile. Get started by sending an email message to our team at:

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[email protected]
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Our interns will accept your email invite. You may then send the interns a message such as:

Dear Interns,  

My name is xxx, and I am in prison. I would like to begin showing the strategies I am using to prepare for success upon release. Please send me a Release Plan Workbook, and any other books that will help me prepare for the job market. After receiving those workbooks, I will begin building my profile to show others how I am using my time inside to prepare for success outside.  

[Your Name]


  • Algorithm (noun): A step-by-step procedure or formula for solving a problem or performing a task.
  • Bitcoin (noun): A decentralized digital currency that uses cryptography for secure transactions on a blockchain.
  • Block (noun): A unit of data containing transaction information, which is added to a blockchain.
  • Blockchain (noun): A decentralized digital ledger that securely records transaction data across many specialized computers on the network.
  • Collision (noun): The occurrence when two different inputs produce the same hash output.
  • Cryptographic Hash Function (noun): A hash function that uses cryptographic techniques to ensure data integrity and security.
  • Data Integrity (noun): The accuracy and consistency of data over its lifecycle.
  • Deterministic (adjective): Producing the same output from the same input every time.
  • Hash (noun): The fixed-size output generated from input data using a hash function.
  • Hash Function (noun): A mathematical formula that converts input data into a fixed-size output (hash).
  • Hash Rate (noun): The measure of computational power used in cryptocurrency mining.
  • Immutability (noun): The characteristic of being unchangeable once recorded.
  • Merkle Tree (noun): A data structure used in blockchain to efficiently verify the integrity of data.
  • Mining (noun): The process of performing complex calculations to validate transactions and add them to a blockchain.
  • One-way Function (noun): A function that is easy to compute in one direction but difficult to reverse.
  • Output Size (noun): The fixed size of the hash produced by a specific hash function.
  • Preimage (noun): The original input data that is hashed to produce a specific hash.
  • Resistance (noun): The difficulty of performing a certain action, such as reversing a hash function.
  • SHA-256 (noun): A cryptographic hash function that produces a 256-bit hash, used in Bitcoin.
  • Zero (noun): The leading character in a hash that meets the difficulty criteria in Bitcoin mining.

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