The future of NFTs — why they will be more than just art
NFTs are widely discussed but often misunderstood. NFTs are often thought of as overpriced cartoon images. Many decry NFTs as jpeg scams, something akin to the emperor’s new clothes — pointless, worthless, yet expensive. Given this conundrum, it’s a challenge to square the circle. This article aims to demystify what NFTs are and take a deeper dive into why it’s possible everyone will be using an NFT in one form or another in the future, and what the different use cases are.
Beyond punks and boredom
To understand NFTs, it’s important to look at what’s going on under the hood. If we start with NFT images, such as Cryptopunks, Bored Ape Yacht Club (BAYC), or Myria’s Sigils, the thing to remember is that every image is one-of-a-kind. What people are paying for when they buy an NFT is a unique and irreplaceable piece of code connected to an image. It is this piece of unique code that makes the difference between a straightforward JPEG and an NFT.
The fact that there can only be one of something is what makes it unique. And the fact that ownership of that unique item can be proved, along with its authenticity via related information immutably stored on the blockchain, is where the value lies.
For this reason, a lot of celebrities use their rare and sought-after NFTs to flex, replacing an image of themselves with their NFT avatar. This is a trend that has been growing at pace over the last few years. These are referred to as PFPs (profile pics) or avatar NFTs.
Compare thee, NFT, to the Mona Lisa
A good way to wrap your head around what makes some NFTs valuable is to think of a famous painting — the Mona Lisa for example. While millions of prints of the image exist (and even some impeccable counterfeits) it remains true that there is only one original painted by the hand of Leonardo Da Vinci. The paint can be carbon-dated, and the unique brushstrokes authenticated to the point that the painting can be identified with an extremely high degree of accuracy as an original.
When an NFT is minted on the blockchain, the code is associated with the unique wallet of the person who minted it. The only way ownership can be transferred is by an agreement made through a smart contract in which more coded information is immutably stored on the blockchain proving transfer and new ownership. It’s like moving the Mona Lisa from one museum to another. However, there is a key difference — while the number of Mona Lisas printed won’t affect the value of the original, the number of identical NFTs minted, even if they have unique codes, will impact the value. Common NFTs will have less value than ultra-rare NFTs, in the same way, that, had Leonardo Da Vinci painted two identical Mona Lisas at the same time, the existence of one would diminish the value of the other, and vice versa.
This is why completely original and unique pieces of digital art stored on the blockchain are more valuable than identical sets. Take Beeple’s artwork for example, which sold for a staggering $69 million. This is a digital piece of art and a labor of love now indisputably owned by the person who has it in their wallet. If you’re wondering what the point of that is, it’s time for a little bit of future thinking.
Let the Metaverse magic float in
Imagine a virtual world, a Metaverse if you like, where these works of art can be enjoyed in high definition. The art is gated, the community is global. People who want to see one of the world’s first examples of fine art in a strictly digital context would have to pay for it, much as they would have to pay to visit the Guggenheim, Le Louvre, or the Tate Modern.
So, while a lot of people don’t get it at the moment, that doesn’t mean they won’t in the future. As technology advances and an increasing number of real-life activities become possible in immersive digital environments, and as people understand what they are seeing as being as precious, valuable, and unique as the Mona Lisa, the penny will increasingly start to drop.
Moreover, it’s not just static images that are sought after. Moving works of digital art are commonplace, and these will only be viewable in digital spaces.
Anything that’s digital can be an NFT
But it doesn’t stop there. NFTs are non-fungible tokens which means they have their own value. They can be swapped for other NFTs but aren’t interchangeable, unlike fiat currencies or crypto tokens of the same denomination. This means that anything digital can be an NFT. This goes for music, gaming artifacts, collectible cards, one-of-one pieces of art, such as the aforementioned Beeple, photography, event tickets, membership passes, domain names, and blocks of virtual real estate and advertising space. In short, NFTs have come a long way since the first known NFT, Quantum, was created and sold in a live demonstration in 2014. As virtual worlds and Web3 gaming mature and gain popularity and wider adoption, the use cases for NFT will continue to expand.
NFTs in Web3 gaming
Perhaps one of the biggest areas to see the adoption of NFTs is the Web3 gaming space. Why is this important? Currently, game studios of the Web2 iteration have limited revenue streams. Business models rely on large budgets and teams of experts to create games, and then a sales process — either through stores or online subscriptions — becomes the main financial driver.
In-game purchases such as skins and weapons also generate large revenues, but only for the companies. In this economic landscape, the gamer is largely forgotten. The assumption is that it’s enough to give players a great experience and provide a vehicle for people to get together and socialize. Beyond this, there are pretty much no financial rewards for players.
The magnet of monetization
In Web3, players own their weapons, swag, and skins and those things have marketplace value. This means that digital assets can be sold in much the same way that real-life assets are. Using in-game currencies that can be sold for fiat on cryptocurrency exchanges, players are able to amass items and accrue hordes with real-world value.
The rarer and more desirable the items, usually the greater the value. If a skin or weapon bestows upon a player enviable powers that help them level up in the game and perhaps win further NFTs, the incentive for players to do well goes beyond mere game enjoyment and becomes a way to earn money.
The thinking among those developers building Web3 games directly on the blockchain — or on Layer 2 solutions to achieve speed and scale — and minting NFT collections is that, if two games were exactly the same in terms of user experience but one was on Web3, players would choose to play the Web3 version because of the opportunity to monetize the gameplay.
All hail a new asset class
With NFTs now being recognized as an asset class in their own right, the transition from Web2 to Web3 seems likely, though will take time. Currently, almost all Web3 games are produced by indie gaming studios with smaller development budgets meaning that the uptake will be gradual at first, but when it reaches critical mass will most likely be explosive. This is the case with most new trends. A shift in perception is also needed. Most people, when they think about Web3 games, associate them with poor gaming experiences and dubious economics.
The rise and fall in the number of play-to-earn games is evidence of this. But more independent studios are now building Web3 games with Unity and Unreal Engine 5 and striving to compete with some of the best console game producers in the industry. With gaming experiences improving and the allure of monetization, through buying and selling NFTs, rewarding players for their personal investment of time and energy in new and meaningful ways, independent games developers hope to see a growing number of players bridging across from Web2 to Web3. Already, Web3 games such as Moonville, PsyberX, and Zone9 Survival, to name a few built on Myria, are gaining attention and traction. These early adopters of the Web3 gaming space provide examples of what the gameplay looks like ahead of launch, and in the case of Moonville — a competitive, play-and-earn, tycoon farming simulator — there’s already some bonafide alpha play to be had.
Furthermore, as NFTs evolve and their use cases become better understood and more prevalent in online gaming experiences, they will be used to manage identities and get around having to do KYC. They will also be implemented in creative ways by developers to store vital data in a secure way that makes unlocking in-game utilities easier.
Myria is a comprehensive Web 3 gaming blockchain ecosystem that combines a gaming platform with applications, SDK tools, and the scaling infrastructure needed to bring blockchain gaming to life. Built in partnership with StarkWare, Myria offers instant trade confirmation, ZERO gas fees when minting and trading NFTs, without compromising the security of users’ assets. Find out more about building and minting on Myria here.
