NFT as a Service (NFTaaS); NFT Will Dominate the World
NFT is already at the beginning of its concept and now taking over everything in business to consumer (B2C) space. It is only a matter of time to see NFT in B2B space. The question is are you ready for yet another transformation?
NFTs Are Here To Stay, Dominate And Slay.
Everything blockchain comes in waves and cycles, and the nonfungible token craze is absolutely no exception. The hype wave of the first half of 2021 as many celebrities raced to cash in on the mania ultimately fizzled out. Still, the NFT obituaries that started circulating the crypto press were premature, just like the frequent talk of Bitcoin’s imminent demise.
The ecosystem has witnessed both hype and market adjustments, from the burning of the Banksy painting and Beeple pocketing $69 million in the now-famous Christie’s auction to celebs, influencers, athletes, musicians and artists issuing their own collectibles. All of this has further cemented NFTs as a relevant sector in the blockchain universe.
New NFT marketplaces, dApps, and supporting blockchain solutions keep joining the ecosystem, and the market is being flooded with thousands of new digital collectibles every week. NFTs are back.
NFTs first entered the limelight way before you might think, with the launch of CryptoPunks, the world’s first “rare digital art” marketplace, in October 2017. Back then, they were just nonfungible tokens, with very little name recognition outside the hardcore blockchain crowd.
Fast-forward to 2020 when 30,000 to 80,000 NFTs change hands weekly.
But it was in 2021 that boom times truly commenced. A recent report by nonfungible.com states that more than $2 billion was spent on NFTs during the first three months of 2021 — marking a 2,100 percent increase from the fourth quarter of 2020.
DappRadar estimates that NFTs generated $1.2 billion in sales in July 2021 alone; more than half of the cumulative $2.5 billion sales volume in the first two quarters of the year.
And, daily trading volume on the OpenSea NFT marketplace surpassed $49 million on Aug. 1.
The catalysts behind the growth
One of the major reasons the NFT trend is so spectacular is because it transforms the value proposition for creators. Instead of enlisting a publisher, gallery, or record label to monetize creative works, artists can carve out a larger slice of the total pie. This paradigm shift also breaks down the traditional stratification between consumers and creators.
The rise of crypto-rich billionaires and deep-pocketed investors plays a significant role as well, given that owning a piece of digital art is gradually becoming more mainstream culture, even a status symbol to some extent. Take the ascent of bored ape avatars on Twitter accounts of The Bored Ape Yacht Club; nothing says status symbol like an article in The New Yorker.
As the demand for NFTs surged, marketplaces flooded the market, contributing significantly to adoption and accessibility for collectors — but less so for the artists.
Until recently, the Ethereum network was the only blockchain supporting minting NFTs (the process of creating an NFT), but the network started facing throughput and fee issues, and the cost of minting NFTs surged.
Development on newer chains such as Binance Smart Chain (BSC), Cosmos, EOS, Polkadot and others led to lower costs, but they still fell short of addressing the real elephant in the room: user-friendliness for the blockchain uninitiated.
The process of minting and trading NFTs offers a complicated onramp for artists. But as the cryptoverse always does, it took care of the problem. Solutions like Unifty have answered the call by enabling less tech-savvy artists (or anyone for that matter) to design, create, manage and trade NFTs without code. Bluzelle addressed other pressing needs within the NFT community via its decentralized database–creating a hosting platform for NFT files that demand security, availability and censorship resistance.
Celebrity influence propels NFT adoption momentum
The NFT market is driven by rarity to an extent. With the influx of celebrities and influencers jumping in, platforms like Ethernity started producing limited-edition NFTs by artists and “personalities.”
Ethernity’s conceptualization accelerated the celebrity-NFT culture, a trend that continues to grow by leaps and bounds. The platform recently introduced a new acronym into the mix–aNFTs–limited-edition authenticated NFTs, which are endorsed by prominent celebrities but created by real artists.
The beauty of NFTs shine by limitless ideation. For instance, a series of NFTs minted by the Lithuanian street-art collective KIWIE transformed street art into NFTs linked to the geo-coordinates of the actual art. Owners of the NFT also own the actual street art.
Another important factor behind the surge in demand is that NFTs are no longer limited to art. The horizons of NFTs have expanded to cover music, videos, sports and especially gaming.
The play-to-earn gaming revolution’s footprint
Back in 2017, decentralized gaming company Enjin was one of the first mainstream gaming companies to understand (and leverage) the intersection of gaming and blockchain. It merged blockchain technology to its infrastructure and issued a gaming cryptocurrency, ENJ, which is officially whitelisted for use in Japan.
Another major piece of the NFT adoption puzzle: P2E, or play-to-earn. Games like Axie Infinity and Splinterlands enable users to mint rare in-game assets into NFTs; players can buy, sell and trade these items–and these gaming related transactions pile up. Data on DappRadar shows that Splinterlands alone generated more than 4 million transactions a day on Aug. 7, 8, and 9 — while the entire Ethereum network generates an average of 1.2 million transactions daily.
Now gamers are able to generate revenue through their in-game assets in NFT form. As a result, the play-to-earn blockchain gaming model has established itself as an immense growth opportunity for NFTs.
For gamers from third-world countries, these blockchain-based games can serve as more than just games. According to Forbes, Axie Infinity witnessed a surge in user growth in the Philippines when it offered players an alternative source of income during the pandemic.
The gleaming outlook for NFTs is already materializing
The first wave of NFTs was a testing ground for Ethereum’s tech, primarily centered on the digital possibilities for art. Now, we are entering a second, roaring-20s phase for NFT adaptation as new use cases are unveiled, signaling additional room for expansion.
Fueled by the pandemic and the influx of easy-to-use and cost-efficient NFT minting platforms, protocols, marketplaces and the rising demand of the gaming industry, the NFT market is undeniably here to stay as it adapts to the creative preferences of a new digital generation.
“It’s actually a lot simpler than you think.” It’s a Tuesday afternoon, and somewhat to my surprise, I’m on the phone to Paris Hilton, who is graciously explaining the world of NFTs.
Hilton is many things — a reality star, an heiress, an unlikely lockdown fitness guru who uses designer handbags instead of weights. But until now, she has never been considered a significant player in the art world. When artists have acknowledged her, often they’ve done so to fetishise her image. In 2008, Damien Hirst bought a portrait of her by the artist Jonathan Yeo, in which her body is constructed from collaged images cut from porn magazines.
Yet in the past year she’s become a surreal figurehead in the NFT scene: a world flush with crypto dollars and high on a promise to transform the worlds of art and commerce. When we speak, Hilton has just returned from a bitcoin conference in Miami, where customers paid up to $25,000 for VIP tables at the opening party to watch her DJ in a pair of diamanté-encrusted headphones. “NFT stands for non-fungible token, a digital token that is redeemable for a digital piece of art,” she explains. “You can have it on your computer server or your phone. I have these screens in my house where I display them.”
Sure enough, at Hilton’s Beverly Hills mansion there are screens displaying NFTs she made in collaboration with the digital artist Blake Kathryn. These include a video of a chihuahua on top of a rotating ionic column (a tribute to her deceased pet Tinkerbell) and an animated self-portrait of Hilton as a sparkling CGI Barbie floating in the clouds, a piece she’s called Iconic Crypto Queen, and which she sold in April for more than $1m.
Hilton first started investing in cryptocurrency in 2016. “I became friends with the founders of Ethereum,” she says. (Ethereum produces ether, the currency in which the majority of NFTs are traded.) Since then she’s thrown herself into collecting crypto art, and owns more than 150 NFTs.
To advocates of the NFT, the technology offers a revolutionary new way of selling art, and of circumventing snooty cultural gatekeepers whose resistance to a crypto future seems as square as the 19th-century Parisian art world’s disdain for impressionism. In this context, the relevance of Hilton’s brand to the NFT movement makes sense. Pink, jewel-encrusted, and openly motivated by being as rich and famous as humanly possible, she’s a far cry from the type of person whose work is typically exhibited in blue-chip galleries or hung in booths at art fairs.
Yet Hilton’s endorsement may also be ammunition for those who view the NFT as just another depressing example of the speculative logic of finance monopolising taste. To detractors, from critic Waldemar Januszczak to artist David Hockney, the NFT marketplace is a home for morally bankrupt, environmentally vandalistic money-grabbers whose creations barely qualify as art.
While most of us are still trying to remember what “fungible” means, a battle is under way to define how NFTs are understood. Are they a vital cultural product that tells us something profound about digital consumerism? Or are they just the latest cynical way to make absurd amounts of money?
In March, the crypto firm Injective Protocol paid $95,000 for Morons, a physical artwork by Banksy depicting an auctioneer selling a framed picture bearing the words: “I can’t believe you morons actually buy this shit.” They then burned the picture before selling a digital token of the work for $380,000. The event was a marketing ploy, designed to stoke outrage, drum up publicity and turn a profit. Yet the symbolism was potent: digital art is here to replace its physical forebear, and its coming supremacy should be reflected by a higher price tag.
In essence, an NFT is a digital certificate of ownership, almost always bought and sold using cryptocurrency, to which any digital file — a jpeg image file, a video, a song — can be attached. That Hilton is able to display Iconic Crypto Queen in her home, despite having sold it, is part of the NFT’s appeal — and the challenge it poses to the established business model for trading and accessing art. With a simple Google search, anybody can find and download the file associated with an NFT for nothing, and store it on their phone or computer, but only the owner has the right to sell it. Each NFT is unique, and all transactions are logged on the blockchain, a type of database invented in 2008 for the purpose of recording the movement of cryptocurrency.
In March, Everydays: The First 5000 Days, a collage of previous artworks by a 40-year-old American named Mike Winkelmann, better known as Beeple, sold for $69.3m at Christie’s New York. After that, Kate Moss sold a gif of herself for more than $17,000. Jack Dorsey, CEO of Twitter, sold an image of the first ever tweet for $2.9m. A Brooklyn film director managed to sell an audio file of his own farts for $85. Dominic Cummings even threatened to use the technology against Boris Johnson, by releasing what he said was evidence of government malpractice in the form of an NFT.
In March, Everydays: The First 5000 Days, a collage of previous artworks by a 40-year-old American named Mike Winkelmann, better known as Beeple, sold for $69.3m at Christie’s New York. After that, Kate Moss sold a gif of herself for more than $17,000. Jack Dorsey, CEO of Twitter, sold an image of the first ever tweet for $2.9m. A Brooklyn film director managed to sell an audio file of his own farts for $85. Dominic Cummings even threatened to use the technology against Boris Johnson, by releasing what he said was evidence of government malpractice in the form of an NFT.
But NFTs could become something far more widely used, if not in such flashy ways. They have many practical business uses. At least, they might once people iron out some significant problems.
What makes an NFT special
An NFT is a digital object — some computer code and data — that conveys ownership of something. The property could be online, like virtual real estate in some digital world or a special outfit in a video game. It might be something real: actual real estate, a painting, or seat at a concert. Then again, an NFT might be some hybrid, like the right to decide who can lease a room in a cooperative living space (something a San Francisco entrepreneur tried, though with no takers as if late May 2012).
Conceptually, this is old. Contracts, deeds, bills of sale, stock shares, titles, logins for cloud-hosted software applications — even a pet’s dog tags and many other mechanical and digital methods have conveyed and proven ownership for as long as there’s been commerce.
That’s no difference than almost any other technology. Cars took over from the horse and buggy. Computers replaced pencils, paper, accounting journals, human activity, and much more in specific ways.
Like any technology, NFTs can provide more efficient ways of conducting business. For example, they work with the crypto technology called blockchain — a distributed digital records ledger that doesn’t necessarily need a central system to run. Transactions can potentially happen more quickly and easily.
Second, the blockchain also keeps a record of all the transactions connected to the NFT and the property it represents. In art sales, for example, that could represent the provenance of something going back to the creator.
Third, NFTs can include what are called smart contracts, or coded elements that can automatically take actions under certain conditions. The concept is of an automated and self-enforcing set of rules that can’t be ignored or skipped.
But then there’s the reality, according to people involved with and using the technology. The technology first appeared in 2014 and didn’t start hitting mainstream attention until the last few years. Limited time in use means limited time for problems to appear and experts to devise fixes.
“We’re opening a Pandora’s box,” says Morgan.
There are the security problems that, with the best of intentions, can still arise. Someone anonymous calling themselves Monsieur Personne, or Mr. Nobody, claimed to have found a way to force a known artist to authorize an NFT without being aware of the process.
I am launching my first NFT project in few weeks.
Keen to see what is your take on NFTs and how they change our future.
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