The most difficult thing in anything blockchain, crypto, NFT, metaverse these days is to be able to separate signal from noise, let’s try to bring some clarity into what is happening with NFTs.
It’s clear that blockchain can have many uses, smart contracts being one of them, with tokens being both fungible (example: cryptocurrencies) and non-fungible, and the market has started expanding with creative cases in the last year or so.
As I was researching the web to find how people — smarter than me -have categorized the existing cases already launched in the market, I found a wealth of listicles with different takes, so I decided to aggregate the best understanding I have as of now.
TL;DR; All types: Digital Artworks, Music NFTs, Video clips & GIFs, Memes
Avatars & PFPs, Video games items, Trading cards & collectibles, Metaverse land, Virtual fashion, NFT/Crypto domains, Text-based NFTs, Ticket & membership NFTs, Real world assets.
See at the bottom of the post for few examples of original articles and sources.
- Digital Artworks
These are mainly digital artworks that come with a public certificate of authenticity and ownership issued by the digital ledger on which they are stored.
Digital marketplaces provide a platform for bidding, as well as renowned artists, to showcase their artworks for sale while collectors get exclusive access and ownership of them. This led to the rise of some of the most popular digital artists like PAK and Beeple. PAK broke the record of ‘The First 5000 Days’ by artist Beeple which earned a staggering US$69.3 million in March 2021 in an auction by Christie’s. PAK sold 2,66,445 NFTs for a total of US$91.8 million. The sale was held through Nifty Gallery and saw a new technology whereby when a collector bought a considerable number of NFTs, the tokens merged together in their crypto wallet to give rise to new NFTs that cannot be found elsewhere. Other noted digital artists include MATTDESL, XCOPY, HACKATAO and FEWOCIOUS who have huge Instagram and Twitter followings and NFT collections that score thousands of dollars in sales.
- Music NFTs
This is one of the newest phenomena in NFT mania. Artists pre-release their albums on NFT marketplaces before releasing them on traditional streaming platforms and buyers can buy a part of the album, like say a share in it, and then when the album is released via traditional channels, the buyers get to have a share in the profits of the album. This business model is not yet an established way of trading in Musical NFTs but a considerable number of transactions follow this pattern. Recently 12-time Grammy-winning singer John Legend announced the launch of his music and social NFT platform called OurSong. Branded as a ‘social commerce platform,’ it will enable creators to easily make NFTs called ‘Vibes’. What sets it apart from the other platforms? Collectors don’t need cryptocurrencies to buy NFTs here and can deal directly in USD. The app allows collectors to bid on ‘Vibes’ using USD which is then converted to Ether and exchanged for an ERC20 token by OurSong. This makes the process quite smooth and easy for those not quite familiar with crypto trading. Many other artists have sold their albums as music NFTs to garner maximum audience in the digital space. For instance, Kings of Leon’s album When You See Yourself was sold as multiple NFTs in March 2021. Meanwhile, Grimes and Nas have released NFT versions of their tracks. Canadian singer Bryan Adams’ “Heat of the Night” also exists as an NFT on OpenSea. Additionally, dedicated marketplaces like Airnft help musicians and budding artists to create and tokenise their music. This form of NFT art can be traded using cryptocurrencies and stored in crypto wallets. American musician Justin Blau, aka 3LAU, took to this trend quite early. In February 2021, he sold a collection of 33 NFTs titled Ultraviolet reportedly earning US$11.7 million. Others include Deadmau.
- Video clips & GIFs (Moments)
Since the beginning of 2021, we’ve seen a vast number of top-tier sporting corporations, teams, and athletes embrace NFT technology to create unique in-game moments and immortalize gameplay on-chain.
One of the most salient examples of this is Dapper Lab’s NBA Top Shot, an NFT marketplace developed in partnership with the National Basketball Association and focused on providing fans with some of the most iconic moments in basketball.
Each and every video clip listed on NBA Top Shot is represented on Dapper’s own proprietary blockchain Flow as an NFT and can then be bought, sold, and traded directly on Top Shot’s marketplace.
The NBA aside, we’re now seeing other sporting behemoths such as the MLB and the UFC, among others, enter the NFT verse.
This is because NFTs have thus far proven able to drive paradigm-shifting economies in pretty much any field they’re involved in, opening up a new spectrum of financial opportunity for all parties involved. However, out of the many existing use cases for NFTs, the sports and entertainment industries appear to be among the most logical and economically promising implementations of NFT technology.
The original Doge meme sold for $4 million in June 2021. Memes like Disaster Girl, Bad Luck Brian, Success Kid, NyanCat, etc have also been valued significantly and have been sold for a fortune making the meme creators wealthy and the meme market lucrative. The meme of disaster girl sold for over $470,000.
- Avatars & PFPs
Profile picture (PFP) non-fungible tokens (NFTs) have come to dominate the NFT ecosystem. As these generative avatar projects became astoundingly popular in 2021, their significance has only continued to increase as the NFT ecosystem has grown.
At its core, a PFP NFT is a digital token or artwork that is designed to be displayed as a person’s social media profile picture. Many of the world’s most popular NFT collections, such as Bored Apes and Doodles, are PFPs.
PFPs live at the intersection of collectibles and generative art. They’re collectibles in the sense that they usually come in large quantities (10,000 or so) and have varying degrees of rarity, somewhat similar to trading cards. Yet, PFPs are also generative. They are created using a simple plug-and-play method in which users load a variety of traits — like body type, head shape, background color, etc. — into an application that will in turn randomly compile vast quantities of NFTs.
This method has allowed countless artists and developers to launch both original and derivative collections in the image of the original PFP project, CryptoPunks. With so many PFP collections saturating the NFT market, we’ve compiled a list of the most prominent projects — ranked by overall sales volume — to help you understand which ones continue to stand the test of time.
- Video games items
In-game NFTs have been one of the hottest commodities in crypto in recent times, and this is primarily because there appears to be a solid economic use case for NFT technology within blockchain-based and non-crypto native games.
The value of the global gaming industry currently exceeds 300 billion dollars, with the number of active gamers worldwide currently sitting at 2.7 billion. But, what’s fascinating about in-game NFTs is that they embody some of the earliest expressions of NFT technology in the blockchain space. In fact, the first instance of gaming NFTs dates back to 2017 with the CryptoKitties, a series of in-game collectibles stored on the chain as NFTs.
Since then, with the advent of GameFi and the play to earn ecosystems pioneered by Axie Infinity, gaming NFTs have drastically evolved their economic use cases and are currently fueling a truly leading-edge financial framework centred around in-game and in-world non-fungible assets.
Players have been buying virtual goods for decades; however, the utility of these items has been limited by the game’s own centralized architectures and so-called walled gardens. This, in turn, has led to the creation of gamer first economies built on the financial propositions fostered by NFTs and on the ability for gamers to exchange their virtual in-game assets for real-world economic value such as crypto or feared.
Thus, given the clear economic utility of virtual items stored on-chain as NFTs, the use case for NFTs in the gaming sphere has ultimately come to be thought of like a match made in heaven.
- Trading cards & collectibles
The art of collecting has evolved drastically over the past two decades, and in fact, it wasn’t long ago that collectable shops and trade shows were the principal marketplaces.
Most collectable and memorabilia transactions have migrated to the digital realm, and they found themselves a loyal ally in NFTs.
The use case for NFTs in the collectables market is crystal clear. This is primarily because collectables, be it a rare panini football trading card, a ticket to see Hendrix at Woodstock in 69, a fine wine, or a funny looking kitten, derive value from their nature of being unique and not replicable, which makes them the perfect match for NFTs.
As it stands today, according to Market Decipher, the global collectables market is valued at more than 400 billion dollars, and it’s expected to grow at a 7% compound annual growth rate between 2021 and 2028, with projections of it hitting a staggering 628 billion dollars by 2031.
Thus, similarly to how NFTs and fine art have come to go hand in hand, it was only a matter of time before the collectibles market merged with the provable scarcity, immutability, and blockchain-backed value offered by non-fungible tokens.
This is because NFTs have broadened the horizons of traditional collectibility practices and have paved the way for the development of an innovative market centred around rare digital assets making NFTs the perfect fit for collectable items.
With the numbers that NFT collectables have been pulling in over the last year, that 628 billion evaluation by 2031 doesn’t actually seem like too much of a stretch.
- Metaverse land
Today one can buy plots of land, houses and even yachts in the metaverse. In 2021, a noted transaction took place in the metaverse when a plot of real estate land was sold in the 3-D virtual world Decentraland for a record US$2.4 million (approximately Rs 17 crore) worth of cryptocurrency. Bridging the gap between the real and virtual, TechCrunch founder Michael Arrington sold his Kyiv apartment for over USD 93,000 via the real estate platform Propy in 2017, using Ethereum and smart contracts to close the deal. At the time, the collection included the ownership deed, the apartment picture and a unique NFT artwork by Kyiv-based artist Chizz. A smart contract is a programming in the Blockchain that stores all transaction information related to the NFT and once the deal is done, it can be accessed by the owner. The smart contract is transparent and cannot be altered. For many, buying and selling real estate property can be a tedious process involving ceaseless paperwork. If such assets can be turned into NFTs and involve blockchain to transfer the ownership certification, the entire process would become rather simple and decentralised. In this regard, a lot of regulations and governance would have to be involved. Whether it can be at all turned into a reality, only time can say.
- Virtual fashion
With digital collectibles as NFTs establishing a profitable marketplace in the last year or so, fashion brands like Gucci, Louis Vuitton, Nike, Prada, and Adidas seem to be catching the non-fungible fever.
For instance, Gucci and Louis Vuitton recently dropped their NFT collections raking in millions from their sales, with Louis Vuitton actively working on its own NFT game Louis.
Moreover, there does indeed seem to be a rather logical process to implementing NFTs into the high fashion domain. This is because fashion is an ever-changing dynamic industry producing seasonal items, drops, and collections which NFTs could help to immortalize and generate a market for in the digital sphere.
While I do think that fashion brands embracing NFTs is something akin to aesthetic capitalism, we cannot ignore the role they’re playing when it comes to raising awareness around NFTs and the Metaverse concept overall.
A great example of this would be Adidas partnering with one of the most prominent NFT projects at the moment, the Bored Yacht Club, to generate a unique metal burst experiment for fans and celebrate its entry into the blockchain world.
- NFT/Crypto domains
Similar to web domains, I have mine from unstoppabledomains.com — carlodemarchis.x
These are crypto domains minted on a blockchain, for example on Binance Smart Chain or Ethereum. They have over 500 domain extensions, the most sought-after of which is ‘.eth’. Crypto domains do not depend on any centralised authority and hence are a coveted asset. Moreover, they can also be used to link crypto-wallets which is not a feature in non-NFT domain names. The biggest shortcoming of Cryptodomains is the fact that a majority of browsers do not support them as of now.
- Text-based NFTs
Jack Dorsey first tweet? Not a great story in the end. But also poetry and more coming.
- Ticket & membership NFTs
The onset of NFTs has introduced various innovations in the way day-to-day transactions take place and ticketing has not been left behind. Tickets for events can be minted now on blockchain platforms and then can be auctioned off by the organisers. NFT tickets can also be sold at a fixed price. This would significantly reduce forgeries and add a sense of memorabilia because these tickets can also be stored and resold as collectibles.
- Real world assets
NFTs for physical assets have the same characteristics and features as NFTs for digital assets. This presents a number of advantages for trading physical assets, including:
- Demonstrating provenance. Novel assets such as a rare antique or original painting by a famous artist derive their value from their authenticity and provenance. NFTs can act as a digital record of authenticity and provenance on the blockchain; each sale, trade and owner is built into the NFT’s ledger, and the NFT’s metadata might contain a digital certificate of authenticity. By resolving uncertainty around as asset’s provenance, an NFT might actually enhance the asset’s value.
- Security and immutability. As NFTs utilise DLT, the transaction record is stored on an immutable distributed ledger that offers a tamper-proof record of asset ownership and transfers. NFT holders will still need to ensure that their private cryptographic keys are sufficiently secure. However, the use of DLT and cryptography provide additional security protection compared to, for example, a single centralised asset registry.
- Decentralisation and disintermediation. Traditional means of buying and selling collectibles are often highly centralised. For example auction houses can charge a premium for auctions of luxury goods because of their role validating the items’ provenance and bringing potential buyers and sellers together in a centralised auction. By contrast, NFTs can provides a decentralised means for demonstrating provenance, while also supporting trade across decentralised networks.
- Smart contract integration. NFTs can be embedded within smart contracts to provide added utility and automate trade. For example, a smart contract could provide that transfer of a physical asset NFT self-executes once the buyer has provided the necessary KYC documentation, helping to reduce transaction risk and the need for intermediaries.
- Monetisation of secondary trading.Smart contracts can also be programmed to enable royalty payments upon secondary sale. For example, an NFT representing ownership of a rare sculpture could be programmed to allow the original sculptor to receive a percentage each time the sculpture is sold.
- Creative possibilities.As well as representing ownership, NFTs can enable other ways for holders to interact with items, such as embedding additional digital assets in the token itself or functioning as tickets to exclusive content or events. For creators, NFTs can therefore act as a vehicle for distributing further content.
- Accessibility and inclusive growth.NFTs can open up new avenues of ownership and participation with assets that might otherwise be out of reach to a single collector. That might be by enabling a book collector to own a page of a rare first edition, or enabling liquid trading of assets across continents and social divides.
Links to related articles and sources
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