Non Fungible Tokens, or NFTs, seem like the most popular digital asset in 2021. An NFT is a tokenized asset that has been used extensively in the art world this year. They can be traded on the blockchain, with some selling for tens of millions of dollars. The future of NFTs could be much wider than fine art.
This novel token format may also transform markets including retail products, vehicles, and recorded media. Like Bitcoin and altcoins, NFTs are stored on a blockchain. However, each NFT is unique. Imagine ten pennies. These are like Bitcoins. Interchangeable, or “fungible”. But if you cut one into a star, it would become one-of-a-kind, or “non-fungible”. Each NFT is a distinct token that operates on a public blockchain.
Fine Art and NFTs: Ground Zero in 2021
NFTs were created as a new form of digital asset that allows people to buy anything in the digital environment – and depending on the laws, assets in the physical world as well. These assets may include digital art, photography, music, GIFs, tweets, and lots more. In theory, NFTs can turn any digital file into something unique and irreplaceable through a type of security protocol, and record the information on the blockchain. Since NFTs represent non-fungible assets, it is possible to trace the authors of an NFT and verify its authenticity. For NFT paintings that are selling for more than $69 million, that makes a big difference.
The adoption of NFTs in the art world is expanding rapidly. In fact billionaire Mark Cuban sold this quote as an NFT in mid-2021: “Nobody ever changed the world by doing what everyone else was doing.” The quote from Cuban was priced at 0.96 ETH, which is around $3,800 USD at the time of writing.
One of the most interesting things about NFTs is how 'royalties' operate. Unlike traditional royalties, which are paid by a publisher to an artist, NFTs can pay the original creator a percentage of every sale – for the rest of time. For recording artists, this may become a powerful tool in creating passive income. Think about a used record store that pays the artists (not the label) every time a record sells.
Boosting Blockchain Gaming
NFTs are a massive boon for blockchain-based gaming. The existence of economic systems in the game industry is not new – but NFTs allow gamers to own in-game items. It works like this – in the old days, the game devs controlled everything. Top to bottom, the company owns the gaming platform and has all the control.
Sure, a gamer could accumulate 'valuable' items in a game, but they had no cash value. NFTs are starting to change this model in a big way. NFTs make it easier to tokenize gaming assets. Because these assets are freely tradeable on exchanges, in-game NFTs are now as good as cash (as long as there is a buyer).
Players can buy video game in-game items with cryptocurrencies as NFTs and also stack in-game tokens. This gaming model is already at work in Axie Infinity – and it has created loads of new games now and under development.
The ICO Boom All Over Again
Remember the Bitcoin boom of 2017? BTC at $20,000 used to seem like a high price. Big money was made in many of the ICOs during that massive ramp in BTC and ETH prices, but many of them were scams. With the success of NFTs and Axie, the same problems that the ICO boom suffered through are now present in the NFT-based gaming space.
The sector is hot – and the scammers may be evil - but they aren’t stupid. Unlike the ICO boom of 2017, there are a few companies out there who are working on keeping the NFT-based gaming market on the rails. Gamerse is a social platform where gamers engage with content, create groups, community pages, and keep up to date on what is growing in the blockchain-based gaming sector.
With everything compiled into one central hub, it will be much more difficult for scammers to slip through the cracks unnoticed. The platform allows people to find newly minted NFTs from all NFT marketplaces aggregated into one place, NFT promotions, and also to trade their own NFTs. By trading their in-game items on an open market, they no longer depend on a gaming studio to hold custody of their hard-earned loot.
Game developers can earn money when an item is resold in the marketplace if they build a royalty payment into the NFT, which may become a form of passive income for the devs on top of the fundraising model. Gamerse will open a game studio as well to help even more NFT projects find funding and launch. NFTs could actually create a mutually beneficial business model for both players and developers by giving players ownership and devs the ability to sell directly to anyone who is interested in their tokens without middlemen and in a safe environment.
NFTs Will Only Grow From Here
NFTs are creating a global economy that connects people and allows new thinkers to grow into a highly supportive global marketplace. With the kind of money that has flowed into NFTs in 2021, the development side of the blockchain economy is taking notice.
The next stage of this rapidly evolving digital ecosystem is likely to be a Metaverse. People want to have digital ownership over their assets, and NFTs make that possible. People no longer have to settle for whatever large tech companies will offer them, they can take their autonomy into their own hands and become a participant in the system, not a product/consumer.
It is telling that Facebook is working on changing its name, and creating the Metaverse. Smart money knows that metaverses are the next frontier and that the days of many centralized online platforms are numbered. Survival is no longer guaranteed, and any platform that doesn't adapt to decentralized tools will likely fall behind.
Disclaimer: The author holds tokens in the above-mentioned companies. The opinions in this article belong to the author alone and should not be considered investment advice.
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