The Endless Possibilities For NFTs
The blockchain technology, on which NFTs are based, has an enormous potential. Every interaction or transaction produces smart contracts on the blockchain, which is a decentralized system. These contracts are extremely secure and can be used to prove ownership or activity which is ideal for a currency like Bitcoin. What’s occurring in the NFT space is that small groups are developing in a variety of fields, from gaming to baseball card collection. These communities are forming structures known as DOAs (Decentralized Autonomous Organizations), and thanks to the blockchain, these decentralized organizations may create their own currencies and monetize the item that brought them together.
A new way to determine ownership of digital property using a blockchain ledger, NFTs are increasingly popular in the art and collectibles scenes. One of the most notable NFT collections of 2021 was called the Bored Ape Yacht Club. NFTs are currently attached to eccentric digital art but the possibilities for them are endless. NFTs can be used to purchase digital land and for next-generation music ownership, licensing, and publishing. It is also speculated that the chances that NFTs could be used to access special sales or limited-edition products is high.
This is where NFTs come in. If we use another example of how it could work, imagine a new album, the artist could convert each song into an NFT, and fans could use their tokens to buy into their favorite song. Theoretically those who invest in the song that reaches No. 1 will be able to resell that token for a higher amount. So, the community supports itself, becomes self-sufficient and as it grows then the whole community benefits.
In this article, we will dive into the ways that NFTs have and will integrate with multiple areas of technology and the endless potential that comes along with this. It’s not just about auctioning of digital art but has further implications for the blockchain and FinTech as a whole.
NFTs and the Environment
Apart from impending government laws, the environmental challenges that blockchain faces will be a key hurdle that will determine the path in which this new technology develops. New platforms are being created in an attempt to alleviate excessive energy use. While Ethereum consumes large amounts of energy, it is preparing to release Ethereum 2.0, which is said to fix many of these issues. Others are working on better alternatives as well. There must be more research done on the platforms we use and how they operate. Proof of Work (POW) and a subsequent update called Proof of Stake are two extensively used blockchain methods (POS). It is said that POS consumes significantly less energy than POW, demonstrating that Blockchain is still a nascent technology with many kinks to smooth out.
With the rise of NFTs, there have been many arguments against the increase in popularity with the environmental footprint and the association with criminal activity has preventing many users from entering the space. The adoption of NFTs for buying consumer products may only be the tip of the iceberg. With all the talk surrounding the metaverse, an immersive 3D digital environment that’s been proposed by Meta (formerly Facebook) CEO Mark Zuckerberg and other movers and shakers in the tech industry, NFTs could serve as building blocks for a next-generation digital world.
NFTs and Gaming
The $85 billion video game industry may be one of the most fertile areas of potential for NFTs. Some of the larger studios are already experimenting with them. Gamers are already accustomed to caring about digital goods, so the potential for NFTs is enormous: a few million NFT users compared to almost 3 billion gamers. Especially when it comes to gaming, large corporations see NFTs as an avenue to make a continuous revenue stream out of digital content.
Aside from attaching NFTs to any game that sells cosmetic skins, it’s equally easy to see how NFT principles might be applied to card-collecting games like the Ultimate Team modes featured across EA Sports titles. Essentially every card in the mode could be its own NFT, and then you could sell ownership of any card in your deck to other players, with Electronic Arts taking a cut of auctioned sales.
NFTs and Stablecoins
Bitcoin and most cryptocurrencies are known to be volatile and make insanely quick gains or loses which deters many people from purchasing them. Stablecoins is the solution to this problem. This subcategory of cryptocurrency is tied to an underlying asset and mitigates much of that volatility. Stablecoins could play a vital role in turning cryptocurrency into something we can easily use to conduct the ordinary transactions of everyday life. They have the potential as a medium of payment and as a dollar digital currency. The use cases for cross-border payments, aid relief, instant settlement payments are starting to flourish in 2021 and we will see more of that this year in 2022. Transferring assets more efficiently is one of the central values of a stablecoin. This value is powerful for companies that need to move digital assets and cash quickly and efficiently.
NFTs offer scope for a new type of stablecoin, one collateralized by a pool of NFTs with known value that isn’t likely to change. These NFT-backed collateralized Stablecoins could be collateralized at a lower percentage than the current generation of crypto-backed Stablecoins, without involving fiat currencies at all — and while maintaining the decentralization, security, and transparency of the blockchain.
NFT tickets serve as access credentials for your events and can provide exclusive perks. These assets can be sold, generating new revenue streams for the community and yourself. In a ticketing system, event organizers can mint the required number of NFT tickets on their choice of a blockchain platform. They can code the NFTs to set a sale price or run the sale as an auction where people can start the bidding process for the ticket. Customers then purchase NFT tickets and keep them in their wallets that can be accessed from their mobile devices. Once they visit the event, they produce NFTs.
GET Protocol and Centaurify are among several companies ushering NFTs into the world of ticketing. The creation of tickets as NFTs gives more control over the resale market, more secure storage of tickets, and the opportunity for tickets to be viewed as digital collectibles.
The future of NFTs in ticketing offer opportunities for lifetime value, exclusive access, and extra incentives for buyers.
A few innovative applications of NFT ticketing include:
- Kings of Leon selling NFTs that entitle buyers to lifetime front row seats at their tours
- WarnerMedia’s DC Comics giving out comic book NFTs along with tickets to their DC FanDome event
As the popularity of NFT increases, so does the price. There’s a new trend that’s making high-value NFTs more liquid and accessible to investors also known as fragmentation. Fragmentation is essentially breaking up an NFT into smaller pieces (ERC-20) so people can purchase small parts of an expensive NFT. This is comparable to buying shares where you can own a small part of the company.
Insufficient liquidity has become an urgent problem to be solved in the process of the NFT market moving forward.
At present, the prices of popular NFT collections are high, and it is not easy to find suitable buyers quickly, and ordinary investors who want to own these NFTs are difficult to enter due to the high prices. In the end, sellers can’t get rid of, potential buyers can’t get started, and the buying and selling needs of both parties cannot be met.
Through smart contracts, NFT ownership will be divided, retail investors can jointly own a piece of NFT work, its entry barriers to the market are lowered, and this will inject more liquidity into the NFT secondary market.
Alongside blockchain, artificial intelligence (AI) is the next major disruption in tech. The combination of NFTs and AI is the next revolution. We will be seeing AI generated NFTs where the software will study many pieces of renowned artists then completing hundreds of thousands of iterations of complex computing to understand the patterns and techniques of the artists. This will then result in a one-of-a-kind painting.
The second way that AI and NFTs will interact is through iNFTs which are NFTs that are given an AI personality which you can converse with, and they can learn new things and change their personality, and they live on the blockchain. These iNFTs may one day be dropped into other metaverses like Sandbox and Decentraland, where users could interact with them as though they are other players in the game. In the future, your iNFT could live in your virtual home in Facebook’s metaverse. When you’re not online, your friends could come by your virtual home to talk to your personal AI, who’s imbued with your personality. They’ll explain to them where you are and tell them a little bit about what you’ve been up to lately. The next time you log on, they’ll be waiting and tell you your friend visited and asked about your family.
The future of NFTs becomes increasingly popular as we the industry continue to think first and foremost about fans and consumers. There needs to be shift the attention of the media and consumers away from the six and seven-figure primary sales numbers to a focus on creating real value by way of infusing true utility into NFTs. Consumers must focus on creating smart, strategic collections of NFTs (as opposed to one-off drops) that gain enhanced value over time as the utility of the NFTs purchased becomes increasingly evident to fans. As the popularity of NFTs rise, they will start integrating with other technologies and systems. It is such an exciting space where the limits al most seem endless.
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