Opening Doors and Minds Through NFTs
Blockbusters disappearing from street corners with the rise of Netflix, taxi drivers struggling to stay afloat with competition from Uber, and bookstores slipping from a growing market to a niche audience. These product evolutions are textbook examples of “creative destruction,” a theory tied to economist Joseph Schumpeter. An unending churn from the old to the new.
Considering this theory, one’s mind naturally wanders to blockchain technology (BCT) and potentially disruptive integrations. BCT can automate multi-tier contractual agreements in supply chains, bring new levels of data interoperability to the medical sector, liberate academics from restrictive funding modalities, and with the rise of NFTs, raise philosophical questions as to why we treasure things beyond their tangible worth.
It is an undeniable fact that digital assets powered by BCT are bringing about a paradigm shift in trade. As a result of this, NFTs have enjoyed relatively frictionless growth. You may have seen online that average NFT values have decreased since February. I wouldn’t let this get you down; in fact, it’s more likely to be a suitable buying opportunity. Let me explain.
Periods characterized by massive hype and speculation will typically ride a steep introductory curve, subsequently going down just as quickly as it went up. US consultancy Gartner refers to this phenomenon as the “hype cycle.”
The dot-com bubble and booming cannabis sector in Canada are prime examples of this in practice. These were industries that offered colossal upside potential for traders, just not as much as people were willing to pay at the time. After the dust settled from these wild rides, traders would have likely found themselves on a “slope of enlightenment” — long-term reliable upward growth. So, where are we in this so-called “hype cycle” with NFTs? I will leave that for you to decide.
What is certain is that NFTs enable businesses and creators to utilize new compensation and marketing models that didn’t exist prior. Creators are selling comic books, tweets, digital artwork, basketball moments, and even Gucci NFT Sneakers. NFTs challenge our perceptions of value while conveying very little that resembles traditional ownership.
Industries disrupted by NFTs
NFTs can come in just about any form or media file. They are typically created by uploading an MP3, JPEG, PNG, or just about every other format you can think of and then “tokenized.” Within the art world, this functionality holds much weight.
Ownership could apply to an NFT that represents the original art piece. This work could come in a single edition or have multiple versions contingent upon the artist’s preference. As NFTs reside solely in the digital space, they can expedite the selling and trading process and remove unnecessary intermediaries that typically facilitate art trades. NFTs have been received with emphatic approval from a number of industries, and its trailblazing doesn’t end here.
- The NFT market cap grew by nearly 800 percent in 2021
- NFT trading amounts to half a billion in monthly trading volume
- Industry experts predict a $1.3 billion NFT market cap by the end of 2021
Caught in the wake of this disruptive evolution is the music industry. Initial proponents suggested that NFTs create a new funding vehicle for struggling artists burdened by digital piracy, small streaming royalties, and non-existent touring revenue due to the extraordinary global circumstances. This is just scratching the surface.
Kings of Leon wasn’t afraid to be on the vanguard with this new technology, recently announcing their latest album, “When You See Yourself,” will come packaged in an NFT. The album release will be available for two short weeks — showing clear intent to capitalize on the innate human desire for ownership and exclusivity.
NFT also provides a gateway for exclusive, never released memorabilia such as “The Last Session,” an NFT collection of 104 pictures taken by photographer Jesse Frohman which document some of the final moments of iconic Nirvana frontman Kurt Cobain.
Art and music are two of the most widely discussed areas that could benefit from NFT integration. To elaborate on the tens, if not hundreds, of possible applications would morph this two-page article into a lengthy screed. Despite this, it is essential to recognize the synergy NFTs have with video games and virtual worlds.
Massively multiplayer online games (MMOs), such as World of Warcraft or Guild Wars, have players on an unending quest for the most potent weapon or resilient suit of armor. After acquiring these in-game items, users can either retain the object for use in-game or sell it for in-game currency in a relatively confined marketplace.
This constricted ownership model creates a disconnect between users and their in-game items they worked so hard for. This fosters an environment of “borrowing” rather than “owning” — in-game items that can be stripped away from you by game developers. NFTs integration would elevate what it means to own objects in a digital world. Users could remove them from the game world for which they were found and created and sell or trade them on external marketplaces.
This has unlimited potential.
The potential of NFTs expands far into other areas of gaming and virtual worlds, such as NFT-powered contract designs in esports, automated royalty deliveries for branded merchandise, and virtual land ownership. The Sandbox, the 3rd in our series of Mayhem ProBit Exclusives, is looking to do just that — elevate what is possible with in-game land ownership.
With its native token SAND, the Sandbox ecosystem is a community-driven platform where creators can monetize voxel assets (small geometric primitives used to construct larger game worlds) and gaming experiences on a blockchain. Users can leverage VoxEdit, an intuitive marketplace and game development tool, to create and monetize anything they can imagine — all thanks to the power of NFTs.
The sandbox has secured over 50 partnerships, including Atari, Crypto Kitties, and Shaun the Sheep, to build engaging “play-to-earn” gaming platforms owned and made by players.
The true potential and longevity of NFTs are yet to be uncovered. Whether esports will latch on to its unique qualities, the fashion industry will see its untapped potential, and the high-end art market will learn to appreciate its divergence from conventional ownership; it’s too early to call.
However, the NFT market brings to light that value can be created through collective belief and action — top-down fiat is not the only answer. $2B in NFT trading volume in Q1 speaks for itself.