NFTs, which is known as non-Fungible-token, is about to rewrite the history of the cryptocurrency industry both commercially and technologically. Each day you look at the news, you hear of another NFT token sale outburst. These tokens are designed as a representation of the cryptocurrency trading platform where digital assets are traded to the highest order. It has overtaken the art market like an explosion. Thereby creating a digital market opportunity for investing millions of dollars, for those who understand the system and know how to trade. But as green as the NFT market potentials may be, what seems to be the future of NFTs? We have seen digital products like the MP3 players and the Amazon Kindle slowly lose their market potential.
Keep reading as we explore the inside of NFTs and their entirety.
What is an NFT?
NFTs are uninterchangeable digital assets stored and marketed on the blockchain technology with cryptocurrency. These tokens represent real objects of artworks such as music, movies, and games but in digital formats. NFTs are seen as a new form of cryptocurrency because they use the same blockchain technology for their marketing. Buying a token gives you ownership of a digital asset and direct access to the original file of that digital asset. To guarantee the security of owners of these digital assets, these NFT files are constantly tracked on the blockchain. Even though NFTs have been in existence since 2014, they have gained outstanding popularity as they are more and more becoming the best, fast, and easiest way of trading digital products. In 2017, an estimated total of $174 million was spent on NFTs boosting its market potential more.
The History of NFT
The journey of NFTs started in 2014 by Kevin MacCoy and Anil Dash with their first experimented NFT called “Quantum”. This was the first time that a non-fungible and marketable blockchain marker was specifically attached to a one-of-a-kind work of art. The Quantum was a display of large size bitmap with visible individual pixels. It was even recently put up for sale at a whopping $700,000. In 2015, Etheria was initiated as the first full-fledge NFT at the DEVCON 1 in London. This NFT did not yield any substantial commercial interest for the company. But by 2021, it was renewed and it ended up recording an exponential $1.4 million sale.
How do They Work
The functionality of NFTs' is just the same as that of cryptocurrency on blockchain technology. The ownership of NFTs can be verified through the blockchain ledger which offers a license to access and use the digital asset. The only problem with NFTs, just as I mentioned above, they are uninterchangeable. Every token represents a one-of-a-kind digital or physical asset. Some licenses are for personal use, while others allow the right for commercial purposes.
Market Values
NFTs' values in the marketplace differ due to the different nature of their assets. It creates an opportunity where an acquired digital asset can be edited and resell for tens of thousands, if not millions of dollars. At the Christie's auction, an old 1980 digital image was repurposed and was sold for the sum of $870,000. The YouTube channel that broadcasted the event (Charlie Bit), recorded 885 million views. Another bombshell was Mike Winkelmann's artwork that sold for $69.3 million. The advent of cryptocurrency and blockchain technology together with NFTs has brought an unbelievable market hype that the world is yet to understand. But when so much publicity provides such a large sum of money, there are numerous incentives to persuade innocent individuals to risk too much money. In the nutshell, NFTs have opened up a slew of new opportunities for both asset owners and developers to become wealthier.
Legal Implications
NFTs in a real sense is under the Intellectual Property (IP) law that governs all patent and trademark products. Digitally and market-wise, the system may be very strong. But according to IP Attorney Catlan McCurdy, when it comes to written contracts on paper and the NFT, there could be conflicts. Because your only right to ownership is digital. Which are computer codes that can be executed any time you want to access your digital asset. In the case of a smart contract, a level of programming knowledge is required for the rules to be verified and understand the codes. This means the person creating NFTs is completely blind to what the rules are saying. Considering this factor, including the hype in the market, what do you think is the future of NFTs?
The Future of NFTs
Naturally, we know that glitches are obvious with every new product, so this factor cannot be something serious enough to impact the future of NFTs. But then there is major concern about NFTs that is said to impact the future of NFTs.
1. Friction in User Experience
Due to its need for basic IT knowledge, NFTs are limited for use to only people of a certain class. Because You must create a wallet, and then get cryptocurrency before you can start buying NFTs. This alone can hurt the global adoption of NFTs.
2. Less Potential Buyers
Looking at the market scale of NFTs, the data shows that suppliers are more than buyers. Says “Ganesh Swami” – CEO – Covalent. This gives NFTs fans the impression that the much-advertised volumes are all fake. This causes a loss of trust and negatively impacts the future of NFTs.
3. Energy consumption
The purchase of NFTs is characterized by energy consumption which is better understood by those involved. For example, you designed artwork and you want to sell that artwork. You will have to upload that design to a site related to your niche. Most websites with this transaction use Ethereum, and the transactions are verified through mining. This is a major roadblock to many interested buyers.
4. The hype cycles
It is a bad thing for a business to experience too much hype, especially at the beginning. According to the CEO – Crypto cashback, NFT's high rate of sales is rather damaging to the market. When a business shifts that high, and in a short space of time, people rush and create a business unique for it. And when there is a crash, it`s like the whole world is coming to an end. Just what happened to crypto in the fall of 2017?
5. Sports Industry
Despite the challenges, NFTs could be of great help to professional athletes and other sportspeople in the future. More specifically, they could use the underlying technology to create more authentic digital assets and connect directly with their fans. Without a doubt, NFTs are slowly changing how sports icons have negotiated their image rights in the past. With NFTs’ underlying technology, athletes can make authentic trading cards with more value without requiring endorsement from any company.
Besides, sportspeople are already capitalizing on their image via digital advertising. They are no longer creating links with only sports companies and brands but also connecting directly with their fans.
Currently, the only NFTs sports-based collectible on sale is the NBA Top Shot platform. Admiring its current gross sales of $230 million, it is likely that other major sports leagues will soon find ways to benefit from the same tokens.
6. The Gaming Industry
Within the gaming industry, there is potential for big profits. Hence, it is likely that even brands that do not use blockchain technology will soon adopt NFTs. They will probably adopt NFTs by creating contracts with third-party businesses that already use blockchain technology and have the needed expertise.
In the traditional gaming industry, players do not benefit much unless they spend money to access restricted game features and content. And after purchasing an armor upgrade in a game, they can only enjoy enhanced gameplay. Such players could largely benefit from a gaming system consisting of non-fungible tokens.
Their in-game purchases would convert into transferrable assets they could use to access more games or switch them into cash or different digital assets. As NFTs can uniquely retain value beyond a mere game they came from, blockchain-based games could radically diversify the gaming market and lead to the development of better games.
Conclusion
NFTs have boosted the economy even more than cryptocurrency and a lot of people have amassed and are still amassing in it. But with all that is surrounding NFT’s trading may need to be reconsidered. Some Industries have been fast adopters, and others continue to build upon use cases.
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