What will happen to Blockchain Collectibles (NFTs) in the early 2020s?
Since the new year, many blockchain experts have been making lucid predictions about the future of cryptocurrency in 2020s. Usually this involves talk of scaling solutions and growing financial use cases. As NFTs are one of the fastest growing technologies in Blockchain, we thought it would be appropriate to write an article about their future in 2020.
In summary for those who are not fully absorbed in the world of NFTs, at the time of writing this blog there are main 3 uses of NFTs:
- NFTs that are virtual items (think gaming items)
- NFTs that have utility (think tickets)
- NFTs that represent or track ownership of physical property (think art)
In short, I think NFTs will become the most popular and widely adopted use of smart contracts. To those whose main knowledge of NFTs revolves around CryptoKitties, it doesn’t seem compatible with the grand vision for fundamental social change and decentralized governance that was espoused for years by early adopters (myself included) in the Ethereum community. Yet in our work with NFTs at Showcase we have come to realize that the future of NFTs reaches far beyond popular conception and has many subtle implications for NGOs, marketing firms, regulators, artists and content creators, and everyone else.
- Utility NFTs will grow.
Although “collectibles” has become one of the most commonly used words to describe NFTs, they will in fact be used for much more. In a time of increased regulation, NFTs can be used without as much legal red tape as fungible tokens that are often classified as financial securities. In the case of tickets, redemption codes, gifts, coupons, one time use codes and more it may be advisable to use an NFT format. The user friendly graphic representations of NFTs will lead to more enjoyable UI that could boost conversions and attract users. I predict you will see a large handful of innovative startups tackling these use cases in 2020.
2. Gamification (not gaming!) of everything
Gamification is a trend we will see across the board. Addictive UI design focused on user retention and incentivizing engagement will be enabled by NFTs. The same craze we see in limited edition and exclusive product brands such as high end fashion, sneakers, and baseball cards will translate to NFTs. This will happen in multiple ways, from licensing of name brands to celebrity sports players. Many name brands are actively looking for ways to milk their brand identity and create value out of thin air, and will not be able to resist the temptation of an NFT despite the relative infancy of the industry and the association with blockchain/crypto.
3. Mobile adoption will increase, especially in gaming
Being able to publicly display Digital Collectibles without risking their damage or theft is what makes them interesting — and completely unique compared to traditional collectibles. Right now most NFT platforms are desktop based, limiting this ability. We will see more platforms like Showcase and Quidd opting for a mobile-first User Experience.
Additionally, we will see a sharp spike in mobile-based gaming platforms, and these platforms will gain the most adoption. The reason for this is that mobile games tend to be 2d or have more crude graphics and less computationally intensive gameplay as compared to desktop/console games (think sim city, tetris, etc). Many NFT powered games are limited in their development resources and technical ability (This is changing though — see scaling section) and tend to be lower resolution graphics or 2 dimensional. By focusing on mobile first, they can worry less about being compared to high budget productions with advanced 3d graphic design teams.
4. Scalability solutions will be battle tested
Layer 2 solutions like Matic Network and Loom will continue to grow as the side-chain technology matures and large NFT companies, the majority of whom are already testing and developing layer2 scaling integrations, will feel comfortable to flip the switch from Ethereum or at least consider a hybrid approach. This will reduce congestion on Ethereum.
5. Content creators will make more money
The art community will find new ways to create value with NFTs. It will surely expand from the currently most common format of static images to includes many other forms of digital media. There will be projects attempting to solve pressing issues in music licensing, trying to balance the needs of up and coming artists with the reality of piracy and streaming platforms. Pressland plans to integrate NFTs in their 2020 agenda to support independent media and freelance journalists. Art platforms like Artory are working to tie NFTs to physical art assets.
NFTs will create a digital media identity crisis. It will force us to roll up our sleeves and get into the nuts and bolts of content creation and dive deep into the value of brand identity. What kind of digital media is valuable, why, and how much? What is the true power of a personal brand and following? These are questions that have not been presented to the free market outside of centrally controlled and planned distribution, sales and licensing platforms.
6. NFT development will be increasingly publicized (for better and worse)
Throughout 2019 NFTs have been flying under the radar of many in the crypto/blockchain community, even active researchers. Unfortunately, it is unrealistic to believe that the future of NFTs will be such low key smooth sailing. There will be issues of regulatory, tax and legal controversy in jurisdictions around the world. There will be the potential for money laundering, as exists in the physical art world. And in a world of fast paced technology innovation, new security vulnerabilities will be exploited (not necessarily with the core NFT specifications). Inevitable price adjustments on some highly priced and highly speculative NFT assets could also create tension in the crypto community, as we have seen over the years with crypto.
On the positive side, there will be more conferences internationally, especially in Europe and Asia. NFT meetup groups such as NFT.NYC and NFT London are growing fast, and gaining rapid traction year over year and even month to month. NFTs are just now becoming mainstream in the blockchain world with the highly publicized $15m raise by Gods Unchained and the launch of a Binance NFT in December.
7. Volunteering and contributing will be rewarded
Crafty NGOs will use NFTs to incentivize volunteering and community contributions. You can be rewarded with an NFT for showing up to volunteer at a homeless shelter. You could put this NFT on your biography, resume, or social media profile. A more sophisticated implementation would be tracked based on time or performance of specific achievement. You can receive an NFT for every 100 pieces of plastic you pick up from the beach. Publicly available data about these combined collections of NFTs could be used to create a social credit system.
8. The Hustlers are coming
A new market of young entrepreneurs are making a living hustling and flipping. Whether it is the multi-billion dollar sneaker resale markets StockX, and GOAT or whether it is trading collectible sports cards, entrepreneurs like Gary Vaynerchuk are inspiring a new generation of go getters. NFT markets will attract amateur speculators who will use their in depth knowledge of the ecosystem (gaming, sports, etc) and modern internet culture to make informed trades. Some hustlers will attempt to earn a living playing games, using reward apps, and more to earn NFTs that can be flipped for profit.
9. Marketing won’t suck quite as much
Earlier this year Vodaphone airdropped NFTs across London using AR, creating a gamified marketing campaign. Large blue chip brands will continue to use creatively gamified giveaways as marketing campaigns, incentivizing user engagement and brand loyalty with NFT rewards. Digital marketing platforms can partner with them to integrate NFT rewards for watching ads. Imagine every time you watch a video ad you get and NFT for opting not to click “skip”.
10. NFT technology and standards will improve
Without using too much technical jargon, the underlying smart contracts that power NFTs are evolving. Openzeppelin is working on a standard reference implementation of a new NFT protocol created by Enjin that will improve efficiency and reduce many of the data congestion issues that have historically occurred with NFT usage on Ethereum. Decentralized file storage solutions will continue to grow with platforms like IPFS and 0chain.
Time will tell which of these predictions turn out to be accurate. It is clear that we are very early in the historical timeline of NFTs and we cannot comprehend all of the potential future use cases. We believe that NFTs are one of the most promising areas for smart contracts in particular to gain adoption.