NFT Adoption on the Rise
What this means for digital assets, NFT renting, and disruption of existing industries
Sales Break $7 billion Mark in the First Month of the Year
While crypto markets plummeted during the start of January, 2022 — interest in NFTs has remained hotter than ever, arguably leading to a “de-coupling” between cryptocurrencies and their NFT counter-parts. Interestingly, as top currencies such as Bitcoin and Ethereum fell by more than 30%, searches for NFTs and trading volumes for NFTs on marketplaces such as OpenSea and LooksRare kept their 2021 momentum.
Trading and interest in the space continued so strongly that one of the most popular NFT projects to date, the Bored Ape Yacht Club, recently broke a floor price of 100ETH. Such a milestone has effectively signaled to the world that NFTs are here to stay, and that interest and growth in this space looks only to grow and widen from here.
Finishing January, the NFT market has already seen volumes break through $7 billion in sales — more than 17% of 2021 sales in just 31 days.
NFT Capabilities are Evolving
While NFTs were largely popularized as profile photos (PFPs), their functionality as more than just an interesting or fun looking image was limited. After all, CryptoPunk holders claim to fame is less about what they can do with them and more about the idea that they are amongst the “OG” NFTs — released to the public long before most of the world even knew what NFTs even were.
However, NFT issuers know that to properly grow the space, projects will need to start thinking more broadly, and leveraging the full capabilities which the underlying technology allows for its holders to take advantage of. Pay close attention, and we are already seeing the beginnings of this with existing projects.
For more established NFTs (those which have already established a strong floor price and community), the concept of “gating” is already well in place. Projects are collaborating with other projects — both established and up-and-coming, and allowing NFT holders of a specific group a certain type of access that non-NFT holders cannot obtain. Such things may be: free NFT drops from other groups, whitelist opportunities, access-restricted competitions, and more.
Other projects, such as Time Magazine’s NFTs, give their holders access to exclusive events, unlimited access to time.com, and more. Projects like DeadHeads are giving its holders character ownership rights, allowing NFT holders to monitor the specific DeadHead which they own.
This is only the tip of the iceberg — several other projects, both now and in the future, are building other features and access into their NFTs, sure to drive more interest and adoption in the NFT market.
NFT Renting — The Next Stage of NFTs is in Digital Asset Lending & Borrowing
As the perks pile on for incoming and existing NFT holders, a new market will soon emerge for this new asset class. NFT renting capabilities will soon be an important feature for almost all kinds of NFTs. Capable of disrupting across several industries, the ability to rent NFTs will serve projects well — especially those which may want to gate physical or digital content.
While NFTs have the capacity to transform all industries, three stand out in particular as being early adopters — especially as it relates to NFT renting.
Ticketing Industry
With Covid-19 crossing the two year mark this year, it may be difficult for many to remember the last time which they attended a live concert or performance. However, when the pandemic is finally behind us, an enormous opportunity exists for NFTs in the ticketing industry. Imagine a world where NBA basketball season ticket holders are holding their season tickets in the form of NFTs. Devout fans could be rewarded with specific drops — from the NBA team which they are supporting, the players themselves, or third parties who may be working on collaborations with the team itself. Perhaps fans holding a certain class of ticket get priority parking — and depending on whether or not the fan checks into the game in advance, the NFT could inform the ticket holder what their parking spot is for the day.
On the NFT renting side, season ticket holders may be able to put up their tickets for rent for specific games which they cannot attend. These tickets, good for only a specific amount of time, would convey all of the rights and privileges of the ticket holder to the renter — allowing the borrower to enjoy their experience as if they were a season ticket holder themselves. The ease in which this can be done, as well as the security in knowing that such tickets are verifiable on the blockchain, and borrowers can worry less about being scammed — is a key feature and benefit in the world of NFT renting.
Gaming Industry
It should come as no surprise that games stand to benefit greatly with NFTs and NFT renting. Already one of the larger use cases of blockchain technologies, many Web3 games allow players to keep what they earn — giving them the possibilities to sell what they have worked hard for on the marketplace. From levelling up to new weapons, to obtaining new skins, gamers far and wide will have increasing opportunities to take these newly minted NFTs and sell them on the blockchain.
Under the perspective of NFT renting, gamers who wish to hold on to their acquired digital assets can leverage NFT renting protocols to earn passive incomes while they sleep. Solutions like those from IQ Protocol allow users to safely store their game assets in the protocol, while interested borrowers can rent wrapped, expirable versions of the asset. These wrapped digital assets, a derivative of the original, ensure that the original NFT remains safely stored away — and not directly in the hands of the renter.
Music Industry
Without a doubt, the music world is ripe for disruption. Held under the grasp of big tech companies like Apple, Spotify, and more — musicians and music creators have spent the last two decades under-compensated and arguably exploited for the efforts which they have made to bring their music to market. With music streaming companies paying artists less than a USD penny per stream, any music artist who hasn’t climbed to the Billboard Top 100 likely has a difficult time truly monetizing their craft in a way which they can live off of their creations.
With NFTs, musicians take back the control and the content which so rightfully belongs to them. NFTs can enable new and existing fans to support them — via purchasing these tokens for exclusive access, rights, royalties and more. What’s more, NFT holders may be rewarded from their artists through exclusive releases, behind-the-scenes action, and more.
From an NFT renting perspective, imagine that artists reward their holders with access to exclusive concert or music video content. NFT holders may enable NFT renting for specific assets — allowing fans who don’t have such access to view this video footage or music video which otherwise isn’t accessible. In doing so, holders not only can enjoy the exclusive access that their NFT enables, but also earn passive income on it by renting out the content which they now own through the token!
Where NFTs Go From Here
While cryptocurrency markets may be trading sideways for the time being, NFTs have shown in the first month of the year that they are a very different asset class than those of Bitcoin and Ethereum. This new digital asset class has gained traction with the mainstream in just twelve short months, and looks to continue to build this momentum through 2022 and beyond.
As NFTs become more sophisticated, offer more features, and find ways to both stand out and add value to the lives of its holders — their capabilities and potential to disrupt the industry and our daily lives looks increasingly likely.
In the future, we may all be holding NFTs, across a broad portfolio of services and products which are both necessary and for pleasure. With the benefits that each of these NFTs can individually provide, the ability to consume all of them will be a challenge — one where the concept of NFT renting will look to help NFT holders to take advantage of. Passive income streams, the sharing of what each NFT offers, and more, looks to be something that we can all look forward to in the future.
