- What are NFTs?
- The Biggest NFT Projects:
- NFTs As An Investment:
- NFTs In Gaming.
- What are NFTs?
Since the inception phases of the Internet, people have been creating content and sharing it online. From videos, music, memes, and the whole web – it is full of digital objects. However, for most of the internets history, there has not been a way to truly own and re-sell digital content. NFTs have created a new way to manage and track the ownership of a unique digital asset. Similar to crypto assets – like BTC and ETH, NFTs are secured by an underlying blockchain, meaning ownership records are immutable and do not require a trusted third party. NFT transactions and ownership history is publicly viewable and verifiable.
NFTs can be used to represent almost anything. At their core NFTs are unique tokens that are tied to specific pieces of meta-data. NFTs are minted – created – using smart contracts. The metadata portion can represent a URL, image, video, set of attributed, or any other piece of arbitrary data. In order to ensure interoperability, NFTs are typically built on top of a smart contract standard. CRC-721, Ethereum’s first NFT standard introduced implementation to allow unique tokens to be managed, owned, and traded. Although ERC 721 is still the most commonly used, other standards like ERC-1155 has also gained popularity. NFTs being interoperable refers to the ability to be moved across different decentralised applications and sold on third party marketplaces, as long as they support common standard.
OpenSea is the largest NFT marketplace – by volume. In 2021, there has been over 3M sales on OpenSea. Some projects, like CryptoPunks, also have their own dedicated on chain marketplaces.
- The Biggest NFT Projects:
CryptoPunks – One of the earliest NFT projects, CryptoPunks are 10,000 unique pixelated characters created by Larva Labs. They are commonly used as social media profile picture. Border Ape yacht Club – set of 10,000 unique ape avatars also commonly used as profile pictures.
Decentraland – early NFT project, which is a virtual world built on ETH blochain. Each parcel of Decentraland land has its own NFT which lets its owners build structures and experiences within Decentraland.
- NFTs As An Investment:
From an investment standpoint; NFTs offer unprecedented transparency and rich data for analytics, as well as the financial tools for price discovery and liquidity. By living on-chain, it is trivial to verify their ownership and provenance. Also, Decentralised Finance tools are already starting to be applied to NFTs. More data is needed, but it may also be reasonable to assume some NFTs will exhibit uncorrelated returns making them an attractive alternative asset to diversify portfolios. While a physical artwork may only be placed in a lobby or conference to maximise visibility – NFTs are scalable vehicles to show artists appreciation. By being programmable and digital in nature – NFTs can be viewed more easily across social media, webpages, and other areas of the internet. Institutional interest in NFTs is still at an early stage, but might pick up as more tools, buyers, collectibles, and capital enter the markets.
- NFTs In Gaming.
One use case; the concept that NFTs allow for provable ownership and scarcity of in-game digital goods that can be interoperable between games. NFTs have only scraped the surface of the $175B global gaming market. Other use cases include; collectibles, royalties for music or other media, ticketing, and rewards or coupons. NFTs could be used to represent real world assets as digital deed.
Within the gaming scene, as written within our report on Gaming & The Blockchain, there are evident use cases for NFTs within this context.
This is done in 4 ways:
- Gamers can really own the assets in their games. Gamers spend $150B a year, the majority of revenue is purchasing goods inside of games. However, gamers do not really own these goods.
- Blockchain enable the provenance of every item & asset – you can know the history of the assets.
- Blockchain will enable really rich market places – when players own assets, you can sell and trade these items.
- Blockchain & smart contracts – create rich incentive systems which reward players inside of the game, in different ways.
