BY JENNY LIDDLE, CONTENT MARKETING MANAGER
Since NFTs first landed in 2014, the landscape of NFTs has evolved rapidly and exploded before our eyes. Originally born as a unique digital token, NFTs have left their mark on countless spheres of life from art and music to gaming and even finance (that’s right, you can even borrow money from lenders by using your NFTs as collateral or buy Real Estate with NFTs). In 2021, Collins Dictionary even crowned “NFT” word of the year.
But why are NFTs booming? Regardless of whether you know what an NFT is or not, NFTs are not disappearing anytime soon, and their influence is spreading… fast.
NFTs have been at the receiving end of bad press recently, slammed for being a fad, a scam, a waste of time and money. One claim is that within the next 3-5 years, 90% of NFTs will be almost worthless.
Yet a market that has escalated from $1million to $2billion in only 12 months isn’t going to disappear any time soon. Especially not when the tech giants are investing their resources into NFTs which are set to be the key to building and shaping metaverses.
This may sound overwhelming particularly if you still don’t understand what NFTs are and how they work, (only 1 in 4 people actually know what an NFT is). Even so, you still need to recognize how signficant NFTs are.
So take a deep breath and scroll down to discover just 5 of the many ways that NFTs are taking 2022 by storm…
Remember the days of vinyls? Back then, artists could release their work, distributing only a limited number of records. Then fans would zoom off to get their hands on limited edition vinyls, which were in demand and more valuable.
Today, streaming platforms like Spotify, Amazon, and Apple have made music so easy to access and listen to whenever we want, wherever we go. But these platforms make money at the expense of artists, taking a cut each time a song is streamed. The danger here is that those independent artists who are struggling to establish themselves are the ones who lose out financially.
Think about it. The problem with streaming is that there is nothing unique about distributing music on Spotify. The value created from scarcity and uniqueness is lost.
Let’s add NFTs into the mix, which are totally rewriting the music industry as we currently know it. Artists can take control over the distribution of their work since they have the capability to release their songs as NFTs, which only have a limited release. Reintroducing a sense of scarcity creates demand, which thereby increases the value of a NFT, so that the artist receives more profits.
The world of NFTs is essentially a community. It is a space where people can invest time, share ideas, collaborate and support each other’s projects. NFTs bring people together, and the community aspect of NFTs will be BIG in 2022.
Look at the Bored Ape Yacht Club for example, which is now one of the biggest brands in the world. With 10,000 members, here’s proof of how humans have found the opportunity to build a community through the shared experiences of investing in NFTs. This community goes beyond digital transactions and the online experience as members are now connecting in real life too, meeting up at events and socials.
With NFT communities like Bored Ape Club, control over Intellectual Property (IP) lies in the virtual hands of the community itself. So what are the advantages of community-owned IP?
Giving communities power over the IP creates opportunities for creatives to add their creativity and add value, steering the brand in new directions.
In other words, blockchain and NFTs provide a platform for primary and secondary resell rights while ensuring that the original artist is still paid for future use of their work. Yet at the same time, reducing control of the IP of a NFT allows more freedom for creativity, for artistic expression. Artists can contribute to the development of a NFT at each stage and ensure they are paid for their work.
We should never underestimate the power of branding. Consumers buy into a brand, to make a statement about who they are or who they aspire to be. They buy products from brands that share their personal values and also embody how they want to be perceived by others.
But what makes a particular brand more valuable or aspirational than others? There are two main factors: scarcity and authenticity. Firstly, creating the sense of scarcity so that an item feels rare creates demand. And then there’s authenticity, consumers want to know that they are buying the real deal.
For instance, luxury brands like Chanel, Gucci, Louis Vuitton et al can sell products at inflated prices because customers want to buy into the brand. These brands embody a lifestyle that consumers aspire to and want to be part of by buying a piece of it.
The power of brands has infiltrated the NFT space too as companies are realizing the potential of NFTs and capitalizing on the opportunities. Look at Adidas’s NFT project collaboration with PUNKS Comic and Bored Ape Yacht Club or Mercedes commissioning 5 artists to create an NFT inspired by its G-class vehicle line for instance.
The arrival of the Metaverse also brings unprecedented opportunities for brands to advertise. Already Epic Games in partnership with Nike, have created an exclusive Nike Air Jordan outfit for in-game avatars. Brands will be able to host live sales events creating immersive interactive shopping experiences in the Metaverse for consumers.
The value of an NFT lies in its uniqueness and its scarcity. But imagine if an NFT could offer more than this to the owner?
Enter Utility NFTs, which are so much more than just NFTs. With Utility NFTs, the value lies in more than uniqueness and originality, the buyer receives perks too which can even be tangible and exist in the real world. Examples of Utility NFTs include access to exclusive events, early access to products, dividends, tickets, or memberships.
No doubt, the opportunities here are bountiful. Taking NFTs offline is the next revolution for NFTs.
Let’s look at one example of Utility NFTs (Ticket NFTs) to understand how they work exactly. When you purchase a ticket for a music gig or sports event through a ticket resale platform, you are unable to verify the ticket’s authenticity. Then you could be left in the unfortunate situation of being unable to access the event and lose the money used to purchase the ticket.
This is where NFT tickets come in. When you buy an NFT ticket to an event, you can verify both the authenticity and the ownership because the ticket itself can be traced to a digital NFT on the blockchain. All you have to do is scan the QR code and the ticket’s authenticity and ownership is instantly verified.
With Utility NFTs on the table, NFTs have transcended art and infiltrated the tangible world too, offering more benefits for investors. And more ways for brands to engage with audiences with real life experiences.
Tokenization and Gaming
NFTs have dominated the art space, sold for extortionate prices at art auctions despite the fact that they represent a digital asset and there’s no corresponding tangible asset. And they are rapidly infiltrating the world of gaming too.
In 2022, the Metaverse and gaming will continue to align with each other as games developers recognize the opportunities for gamers, integrating NFTs as tokens into their games.
With the rise of play-to-earn games like Axie Infinity, gamers now have the opportunities to earn income while they play in the form of cryptocurrency or NFTs. The pay off here? After gaming for hours and hours, players can unlock and collect digital assets, which they own, independently of the game.
Due to the way that blockchain works, the record of who owns a digital asset is stored forever and cannot be wiped. This means that even if a game is removed and can no longer be played, proof of ownership is still stored on the blockchain ledger. The player is protected since they will always be able to prove ownership of digital assets earned during gameplay and have the ability to trade and sell these.
The NFT Revolution
The NFT revolution has only just begun. Whether you believe in the value of NFTs or think they’re merely a one hit wonder, NFTs aren’t going anywhere anytime soon. NFTs are here to stay.
As the hustle to build metaverses continues, here is a new digital frontier that is unprecedented. A virtual space where we can live, work, play and socially interact with others. NFTs are set to be the building blocks of the Metaverse and if brands want to be part of this new world, they’re going to have to participate in the world of NFTs, to avoid being left behind.
It’s not just the Metaverse that NFTs will shape, but fashion, music, art, real-life experiences, and communities too. The NFT revolution has only just started spinning into orbit but it is evolving and growing rapidly. After NFTs have disrupted 2022, where will they go next? We’ll just have to sit back and watch.