May 20, 2022

NFTs: Promise or Peril?

Possibly one of the most popular buzzwords around these days, NFTs have taken the world by storm in 2021. While there has been a lot of mystery and controversy surrounding the term itself, there is no doubt about the opportunity it presents in revolutionizing the landscape of digital art. Searches for the word “NFT” almost quadrupled from August 2021 till the start of the year of 2022 and sales north of $20 million are generated weekly from NFTs. It’s only human to want a piece of the pie but you probably don’t have a very solid idea of what NFTs are, let alone start trading them. Keep scrolling to find out what NFTs are and what the future holds for them.

NFTs stand for non-fungible token but that doesn’t really tell much. In a way, it describes ownership of digital goods. Unlike cryptocurrencies like Bitcoin where all the coins are similar, each NFT is unique and practically anything can be an NFT from a tweet to a meticulously designed graphic such as the Bored Ape Yacht Club NFTs. Someone can take a screenshot of your NFT, but you will still be the owner of it, thanks to a digital signature verifying your possession of it. This signature is linked to the token attached to it on the blockchain, the same technology being used in Bitcoin. The blockchain is a record of all transactions that is available on many computer systems. In essence, this means that it is virtually impossible to hack or change this data. Since there is no physical accountant as would be the case with a physical ledger of a bank, this allows for unrestricted creation, distribution, and purchase of digital assets.

With the advent of the new age of the Internet and Meta, NFTs are finding themselves in applications much deeper than just digital art. Right now as you are reading this, NFTs are being used for digital purchases in the virtual world(read: the Metaverse), memberships in online communities and brand storytelling. The possibilities are endless and NFTs are just the tip of the iceberg.

NFTs as a form for community building

One of the somewhat better known applications for NFTs are in online community building. The ownership. Membership to well known NFT profile picture collections like the Bored Ape Yacht Club and CryptoPunks became exclusive to the owners of the relevant NFTs. What any good business owner knows is that customers seek a sense of belonging in return for the purchases they make. Oni Ronin, another NFT picture collection utilizes this advantage to a great extent. They provide workshops, ceremonies, prize raffles and free NFT gifts exclusively to any person part of this group. NFTs are also being used to restrict access to many events and resources. Due to the immutability of the blockchain technology, NFTs can also function as foolproof invites, potentially solving issues like identity theft and forging of documents.

NFTs as exchangeable game assets

Whatever your opinion may be of video games, from a financial standpoint they are a multi billion dollar industry with great ROIs for investors. NFTs can provide a lot of value to gamers by enabling ownership of virtual in-game assets. One notable project is the DeFi Kingdoms on the blockchain with useable NFTs allowing gamers to earn huge rewards with easy trading. This game has many NFT “heroes” that can be exchanged as well rented out. These NFTs can produce even more value of their own by being sent out on side missions, earning in game rewards as well as cryptocurrency. These NFTs are based on their attributes which directly affect how much crypto can be earned. The future of gaming only gets better with many gamers/streamers making even more money from similar games and creating a whole new virtual experience never even imagined before.

NFTs as a means of democratizing art

Philosophically, the whole motive of cryptocurrencies and NFTs, or fundamentally, blockchain as a whole is to minimize the role of a central authority or a government, thereby bringing power to the masses. NFTs as an art form has forever broken the concept that art is only for the rich and elite. Anyone with an internet connection can view and purchase artwork from any corner of the world. With a solid infrastructure that makes “cracking” the system virtually impossible, all sorts of content creators and digital artists are learning to leverage this technology to their advantage. From the artist’s viewpoint, there is no middleman now and they have much more control over their art as well. NFTs allow for direct support from fans and creators know exactly what to do to keep their followers happy.

So what about NFTs? Are they reliable or not? Will they be around in a few years? In my opinion, probably but many others would beg to differ, especially on the totally unregulated nature of transactions in this domain. However, we have seen many huge companies release their own NFTs such as Nike, Lamborghini and Paris-Saint Germain Football Club. One thing is for certain that NFTs will be the backbone of a virtual economy in the next generation digital world. So what if NFTs are not going to be around in a few years? As we speak, people are getting rich off them and you can too with a bit of inspiration and hard work.