NFTs are Here to Stay
Are NFTs here to Stay? Let’s Find Out
What are NFTs (Non-Fungible Tokens) ?
Right, that doesn’t make it any clearer. In the simplest terms, NFT can transform the collectibles and digital works of art into verifiable assets that can be traded easily on the blockchain. NFTs are tokenized or digital versions of assets that are grounded in the blockchain, the same technology behind crypto assets. Such as Ethereum and Bitcoin.
As NFT stands out for non-fungible tokens. Fungibility here means that each part that constructs the property is interchangeable.
Meaning 4 quarters, 10 dimes, and a dollar note are all worth 1 US Dollar, no matter in which manner you divide or cut them up. The currency here is fungible because it doesn’t matter at all which dime you have… it’s worth a dime. And there is nothing intrinsically more valuable in one dime than another.
How do NFTs work?
The NFTs are part of the Ethereum blockchain. When NFT is created or “minted” it generates a smart contract, that is recorded on the blockchain. This contract is managed via a unique ID or address which displays the current owner. So, when you purchase an NFT or say digital art that unique ID changes and is reflected on the blockchain.
Why are people suddenly investing in NFTs?
There are two main reasons for the expedited investment in NFTs:
- NFTs allows private ownership of digital products
- System of ownership helps in traceability enabling people to unlock their digital items
For instance, the digital piece of art posted on social media by owners used to become the property of the platform but with NFTs, the channel would not own the artwork.
How are big brands playing with NFTs?
In less than a year, the acronym NFT has gone from WTH to BFF for big brands. Indubitably, NFTs and blockchains are ubiquitous in today’s conversations about the tech future. The main reason big businesses and companies are moving towards NFT is their potential for monetization. Plus, their pursuit of establishing themselves as leaders in this emerging industry.
Recently, we have witnessed some major brands like Nike, Addidas, and Twitter leveraging the idea of digital ownership. Moreover, NFTs have also proved to be the conduits of new revenue streams and engagement tools for brands. And how you can underestimate the power of NFTs when Paris Hilton is giving them out
NFTs are fostering social responsibilities
Charity organizations are not sitting in the backseat either when the entire world is equally benefitting from the NFTs boom. The technology can help NGOs set up decentralized fundraising events with lesser overhead contrary to the common auctions settings.
The very prevalent NFT artist Beeple auctioned a few items from its collection called “Ocean Front” and donated the gained $6 million amount to the Open Earth Foundation — to battle climate change.
Play to earn in MILLIONS!
The crypto-powered play-to-earn games are a new tangible reality in the NFT co-space. NFTs are empowering players to own their in-game assets — that they can trade for a greater yield on NFT marketplaces. The play-to-earn games are mostly played in developing countries like the Philippines and Venezuela where active players easily earn a bigger income relatively.
Axie Infinity was one such crowd-pleasing in 2021. Last August, Axie Infinity’s NFT revenue beat the US$1 billion trading record, while every active player earned a handsome $1 million. Since the game’s player base crossed over 2 million regular players.
To become a player of Axie Infinity, you are required to buy three Axie NFTs. Since the NFTs for Axie are limited, the player bases are rewarded with price appreciation in the longer run.
When thinking about non-fungible tokens (NFTs), most people think about artwork. But here’s the thing about art – it leads the way in all great revolutions. It has done the same for NFTs. But make no mistake, we will look back at this time and laugh at ourselves for thinking NFTs were all about some “Bored Apes”.
Now put the two together and let’s discuss the three big use cases of NFTs:
Machine to machine communication
Imagine each appliance, like your refrigerator and washing machine, communicating on which one is powering up and down to ensure regulated energy consumption through NFTs. This is how NFTs can help us make smarter decisions to become carbon neutral. And have you ever considered autonomous driving and traffic management through a NFT marketplace? What that means is that, if my autonomous vehicle needs to get somewhere faster, my vehicle could easily communicate with the vehicle in front of me and could offer to pay the toll in exchange for that autonomous vehicle moving on the other lane. All of this could be done through the means of NFTs.
Did you know that it is estimated that as much as 50 per cent of the world art in some of the most well-known museums are frauds? Authentication has always been a concern in certain industries such as art, titles of real-estate, money, diplomas, luxury goods etc. Many of the current products, services and records are at risk of fraud due to the lack of verifiability and transparency of the technology used so far. An NFT in the real-estate would contain all of the information about the property, all modifications made to it, the market value changes would be tracked, and it could even provide proof of previous and current ownership. Same principle can be applied to the supply chain and the art industry.
NFTs can be attached to products giving the companies and art suppliers the benefit of tracking their products throughout all of the stages: manufacturing, shipping, delivery and any other in-between stages; and it gives the clients proof of authenticity and transparency with regards to the handling processes.
Preserving human identity
How do we capture and preserve human identity and ingenuity in an age of automation? Human identity and ingenuity are not your degree or birth certificate. We are talking about the unique way you think and act, often using human skills such as creativity, judgment and decision making, leadership etc. It is a dynamic phenomenon that cannot be encapsulated in a psychometric, static profile or resume. It is shaped by the conversations we have with people, the way we handle situations, the people we surround ourselves with and the projects and ideas we tackle and NFTs can capture all of this in a very simple way. This is what we have been working on with Lovely Humans by Gleac. It’s the world’s first utility NFT of an industry expert’s time dropping on October 15, 2022. The next drop of 100 NFTs will take place in the first quarter of 2023.
Unique personal documentation: With NFTs, government- or private-issued documents could be turned into unique personalized tokens. In theory, there’s little stopping people from one day owning digital documentation wallets containing driver’s licenses, immunization records and even birth certificates minted by sovereign states.
The same goes for private vendors, such as event promoters. In the future, people could see concert tickets minted as NFTs, which could eradicate illegal scalping or illicit secondary market activity.
- Virtual reality items: Virtual reality (VR) technologies are becoming increasingly popular, and the rise of decentralized VR worlds could necessitate the use of NFTs for buying and selling authentic digital creations. We’re already seeing decentralized VR environments running on blockchain technologies in Somnium Space and Decentraland.
- In-game purchases: Much like VR environments, NFTs lend themselves well to online video games. NFTs can allow players to purchase and retain ownership of unique digital items such as skins, armor or weapons. Unlike centralized in-game purchases and microtransactions, NFTs could be created and sold by the players themselves.
- Collectible investments: Rather than art alone, NFTs are well suited for a host of collectible items, such as first editions or pre-print books, trading cards or even stamps. As a decentralized technology, NFTs remove the burden of having to hire third-party authenticators to verify whether a collectible is truly genuine.
NFT Scams to Watch Out For
As with any nascent asset class, you’re going to have to be vigilant when it comes to NFTs. Since they aren’t well-understood by the investing public, there’s bound to be scammers and frauds out there willing to capitalize on ignorance or misunderstanding. Such NFT scams could include:
- Buying NFTs that the seller doesn’t actually own themselves.
- Buying NFTs that transfer “ownership” without accompanying legal documentation or an agreement in writing stating such.
- Buying NFTs from an online auction site that goes under or orchestrates an exit scam.
- Buying NFTs with high royalty fees that funnel proceeds back to the seller.
- Buying NFTs with non-exclusive ownership rights, which grants the seller the right to continue minting replica copies to other buyers.
Putting It All Together
There’s massive potential in issuing digital assets on blockchains. It just so happens that NFTs are one of the first such applications. The future of NFTs could go in either direction, but the use cases for NFTs go beyond merely art ownership. I think NFTs are here to stay and aren’t going to die out anytime soon.
However, there’s one thing that’s certain. In the future, the NFT market won’t look much like it does today. Creating non-fungible tokens on blockchains has real and unique benefits across a variety of industries such as live events, online gaming, virtual reality and real-world documentation, and this is where I see the asset class going.
Author Ayesha Urooj holds master’s degrees in both research writing and computer science. The author pays close attention to details and is committed to giving readers engaging information.
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