NFTs, recently named the 2021 word of the year by Collins Dictionary, will likely stick around and continue to play an increasingly prominent role in our world. Lately, the art world has been shaken by the NFT craze. Minting, exhibiting, and auctioning have taken up artist’s time while investors have been busy buying, selling, trading, and investing. There may not be an endless line of potential buyers vying for these sometimes outlandish and bizarre digital assets, but that doesn’t mean the importance of NFTs is less pronounced. A growing number of use cases, paired with the fact they are the first breakaway digital asset that lacks a correlation to the price of other cryptocurrencies, helps NFTs carve out a critical role in the blockchain ecosystem. The human desire for ownership and authenticity are well-matched to key traits of NFTs, which has helped propel them into our daily lives. NFTs can be seen as business opportunities, or simply as an innovative way for people to make money while enjoying themselves. Many big-name artists, celebrities, and athletes have jumped on the NFT hype bus, and there are strong signals that this current frenzy is more than just fad. Join us as we take a closer look at the reasons we believe NFTs are here to stay!
For starters, an impressive, and growing number of use cases have helped justify the value of NFTs. A few unique financial benefits are brought to the table by NFTs in the decentralized finance space. Staking models for NFTs, such as the one offered by JustLiquidity, gives users the opportunity to stake tokens in a pool over time and get rewarded by receiving an NFT. This NFT can, in turn, be used to access the next pool. Another use case for NFTs that is still in the pipeline, but could explode soon, is linking real-world assets with NFTs. In this instance, tokenized assets of deeds can be created which would digitize the way we prove ownership. Illiquid items, such as houses and lands, could also be moved onto the blockchain. A niche that has already taken off is the play-to-earn use case. This simple model allows gamers to earn in-game tokens and assets that can be used to win more assets or cashed in when playing games on the blockchain. MetaPlay may be the shining example of this, touting a blockchain platform that hosts e-sport tournaments catering to amateur players who can win prizes funded by the transactions made on the project’s blockchain. Metaverse is another niche that has been gaining traction, particularly amongst creators. YouClout has found success in this arena, as well, offering the first-ever social network utilizing a TikTok-style NFT marketplace on the Metaverse. Creators are often strapped for time to be…well…creative. They must utilize multiple platforms to get their message out which can be taxing on time. By bridging the gap between creators, influencers, and their communities, YouClout has solved this problem, offering the first single, cross-device, decentralized platform.
One of the of the biggest points of scrutiny for NFTs to date has been their sustainability. As it stands currently, it’s tough to deny NFTs are poor for the environment since they rely on cryptocurrencies that cause a substantial amount of carbon emissions during the mining process. However, a positive shift may be on the horizon with the proof-of-work Ethereum blockchain getting phased out in favor of the proof-of-stake blockchain, Ethereum 2.0. The more scalable, secure, and sustainable characteristics of Ethereum 2.0, along with it being 99% less energy-intensive, paint a brighter picture for the future of NFTs. Seeing that OpenSea, the New York-based leading marketplace for NFT trading, operates on the Ethereum blockchain, the transition to a more environmentally friendly option will not go unappreciated.
With the COVID-19 pandemic casting a long shadow over 2021, NFT sales saw a 1,000% surge. Museums were temporarily closed down and millions of people confined to their homes for months on end, creating a pent-up demand to experience art, with few options as an outlet. Given their multiple applications in a variety of areas including music, videos, visual arts, raising brand awareness, collectibles, gaming, fundraising, and carbon trading, many patrons pivoted to NFTs to help fill this void and meet the rising demand. Even though most museums have opened once again, the NFT craze that occurred in their absence may have a lasting impact on how these museums operate. Left and right you can see examples of museums digitizing their holdings at high speed. NFTs are being used for a variety of reasons by museums, including fundraising. Three out of the largest 20 museums in the world have turned to NFTs for fundraising recently, as they continue to recover from the lingering effects of the pandemic. While there are plenty of museums still hesitant to make the immediate shift to further implementing NFTs into their space, they all say it’s something that is at least on their radar. Most wouldn’t be surprised to see it develop into a staple in their respective establishments in the future. Perhaps the most exciting news regarding the topic comes out of New York City, where Todd Morley, Guggenheim Partners co-founder, announced plans to create the world’s largest museum dedicated to NFTs within a massive skyscraper downtown.
There is plenty of evidence suggesting that the world is continuing to warm up to the idea of NFTs. Visa, the financial multi-national service company best known for their payment card and electronic funds transfer services, recently entered the NFT space back in August 2021 when they purchased ‘CryptoPunks’ for $150,000. Head of crypto at Visa, Cuy Sheffield explained, “We think NFTs will play an important role in the future of retail, social media, entertainment, and commerce.” Sheffield also noted that Visa has eyes on the future and the CryptoPunk purchase was just the beginning of their work in the NFT space. Tesla CEO, Elon Musk, also got in on the action this past year when he announced plans to sell a song about NFTs as an NFT. Despite a reported bid over $1 million, Musk changed his mind and ended up hanging on to it. Entrepreneur and social media icon Gary Vaynerchuk also made his thoughts on NFTs clear when he stated, “I believe the NFTs are the keys, the actual physical key, the unlock to every action of society at some point.”
NFTs continue to play a larger role in modern society and appear to be much more than just a fad. Have you bought into the frenzy?
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