A Close Look Into NFTs

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NFT
A Close Look Into NFTs

Non-Fungible Tokens (NFTs) are on the rise and are gaining new use cases each day, making them more than digital art. They have evolved dramatically from the likes of CryptoKitties and now are more than just the Bored Apes that most people know about. They are gaining a stronghold in institutions in sectors like the Art industry, Sports industry, Entertainment industry, and many more.

These assets also serve as good investment schemes for individual investors, with some public figures confirming hodling them. These individuals are primarily well-known wealthies who like to flaunt their property publicly. However, even small traders can access the NFTs as some types of NFTs (Fractional NFTs) even allow for joint hodling.

Other innovations in the crypto space are interlocking with NFTs. For instance, some properties of the metaverse involve NFTs. As the most recent metaverse games are commonly offered in conjunction with NFTs, it creates a very lucrative chance for over 1B people who are video gamers. 

Another common trend that is seeking to interlock with NFTs is content creation. Even though this is among the first use cases of NFTs, it has evolved to encompass more extensive media than images. If you have been seeking to learn more about NFTs and how they are spearheading the adoption of digital economies, worry no more, as you will find some of the latest developments below.

What Is an NFT?

Blockchain technology offers a chance to create two types of tokens: fungible and non-fungible tokens. Fungible tokens are characterized by identical tradable values, making them easily tradable as one unit which is similar. The best example of fungible tokens is cryptocurrencies, where each token is equivalent to the other of the same network. Fiat currency is also based in this way.

However, Non-fungible tokens are a cut above the fungible ones as every single unit is different from the other hence cannot have equal value. They all hold different values depending on how they are made. These assets are built using metadata, avatars, unique IDs, and custody chains to ensure that no two tokens will ever be identical.

These assets are built this way as their most important use case is storing information and not value, unlike their fungible counterparts. Good examples of NFTs are CryptoKitties, Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC).

How NFTs Work and How They Get Their Value

NFTs prove the ownership of a digitalized item like texts, sound files, or images similar to cryptocurrencies. However, these assets are only worth what an investor is willing to pay for. The price can be higher for well-known artists when the collector is wealthy enough.

Cryptocurrencies use blockchain technology which requires cryptography techniques to chain blocks of transactions to an ever-growing list of records. NFTs also function similarly where cryptography secures information in the blockchain to build a non-fungible asset.

After buying the NFT, investors are given the right to move it to their wallets. After that, the transfer of the original asset becomes recorded to prove that they own the original piece, just like holding the traditional paintings. It also avoids the forging of masterpieces, as it is common in traditional paintings.

The asset has a private crypto key and the content creator’s public crypto key. The private key serves as a certification of the ownership of the original asset, while the content creator’s public key serves as a certificate to authenticate the original NFT. The two keys are primarily what determines the value of the NFT. Therefore, an investor should never lose their keys.

How Do Tokens Relate to NFT?

In Crypto, tokens are the cryptocurrency assets hosted on other networks as they do not have their chains. These assets are uncountably many, and NFTs happen to be among the category. 

The Ethereum network mainly hosts NFTs as it has a perfect ERC-20 program that allows for the hosting of smart contracts. Currently, there are thousands of tokens in the crypto space on different networks. 

The Relation Between Metaverse Gaming and NFTs

The metaverse is one of the most recent innovations in the crypto-verse. It is there to reshape the reality in which people will be socializing in the next iteration of the internet- the Web3. It allows for people’s virtual communication and interaction inside a virtual world.

The metaverse encompasses different aspects like gaming and other activities needed in day to day lives of people. Companies have introduced P2E systems in Metaverse gaming where one wins rewards from the game in virtual assets. An example of such a game is Axie infinity which uses AXS as its native token.

As NFTs are digital and unique collectibles, they are now widely featured in the metaverse. Developers are introducing them in metaverse gaining as representations of Characters, consumables, rewards, and such items, including redeemable vouchers. However, it is best to be on the lookout for the games that claim to be tied to NFTs, as some may even be scam traps. 

The caution is necessary since some games require a free connection with a crypto wallet to transfer gaming NFTs. Even though this functionality seems intelligible, if it is a scam trap, an investor may end up losing their holdings.

How Do Play-To-Earn NFT Games Work?

NFT games are very different compared to hodling the assets in a digital coin wallet. A given NFT game may use NFTs in its rules, mechanisms, and player interactions, while other P2E games offer the chance to earn from gaming. 

Normally, a player receives the NFTs according to the time they spend while playing the game in question. Other P2E games use tokens originally set in the game development to unlock in stages and are more lucrative than ones with random NFT drops. 

In-Game NFTs

Ingame NFTs are also available in some games to help a player generate income. During the game’s software development, NFTs are embedded to release as collectible items. This method is one of the initial ways of generating income through NFT games.

The items collected vary in price according to their rarity, aesthetic value, or utility in the base game. CryptoKitties is one game that uses this technique to gift its users with NFTs.However, most recent games mix both P2E and in-game NFTs.

How Do NFT Games Generate Revenue?

The amount of money made from playing metaverse games with digital collectibles differs according to the game’s structure. It is also possible to make money from other users who value the NFTs collected in the game through P2P or exchange-based sales.

The value of the assets from NFT games is mainly influenced by the collectability of the asset or its in-game utility. However, the two factors also result in speculation.

Is It Possible to Lose Money to NFT Games?

It is possible to lose money in any asset connected to the crypto space, including the NFT games. However, the exact amount of money that can be lost in a single game depends on its functionality, from mechanics to the value of the tokens.

Also, losing money in metaverse NFT games does not necessarily have to come from scamming. Since these assets are speculative and their value depends on the price tag that people put on them, market forces control possible losses. 

NFTs Meet the Art Industry- An Everlasting Union?

Non Fungible Tokens (NFTs) are very versatile in their use cases and functionality. They can fit in almost every industry that requires content creation and creativity. Due to this feature, their perfect fit is the Art and Entertainment industry.

The two industries are working correctly as NFTs seem to be digitizing the Art world, which most artists wish for. These assets allow the digitization of the media made by the Art industry, which comes with new advantages and opportunities like digital rights of ownership. 

Blockchain technology powers the NFTs to ensure that perfect cryptography is used to secure the information recorded by the assets. Due to such security features, artists get the chance to enjoy the fruits of their work as no one can fabricate it.

Do NFTs Offer More Protection Than Copyrights, Trademarks, and Patents? 

Copyrights, trademarks, and patents protect traditional art. Copyright is a collection of rights that protect the original works of art that involve authorship, such as writings, music, architecture, and artwork.

 A trademark is also similar to copyrights, but it is different in that it distinguishes the goods and services offered by various enterprises. The trademarks fall under the protection of intellectual property rights.

Patents are also a protection measure for authorship work where it protects an invention barring others from copying it. It comes as an official document that confers a right to exclude others from copying your invention. Patents come in three types: utility, design, and plant patents.

While all these measures are well crafted to secure the traditional works of art, they fall short of their expectations. Piracy has never been wholly curbed, which results in loss of potential returns for the artists. Inventions are also copied and faked despite having patents and trademarks on them. These occurrences show how weak the security system has been for the art industry.

In comparison, NFTs use a technology that offers security measures to the information recorded that are close to the combination of the three traditional security methods. However, the highly intuited systems powering these assets allow them to work without the fear of failing. 

NFTs can never be copied under any circumstance as the original signature of the asset will always be in the network used thus will be retrieved for comparison. This feature makes NFTs offer better security to the art industry than copyrights, patents, and trademarks.

Can Movies, Videos, Music, Art, and More Be Turned Into an NFT? 

NFTs use cryptography to encode media that will be secured through a blockchain network. Today, these assets have evolved from just harboring images to tokenizing Movies, Videos, Art, and other creative pieces. OpenSea, the world’s largest NFT marketplace, is an example of the places where you can mint and sell your audio NFTs (Tokenized Music).

According to a Forbes report, it is already confirmed that songs, albums, soundbites, lyrics, and music can be tokenized. In 2021, Kings of Leon became the first band ever to release their album in the form of NFTs.

Similarly, movies, videos, and other forms of media can also be converted into NFTs. Last year, some Indie Filmmakers were exploring the possibility of converting their work to NFTs. The project featured Anthony Hopkins (MCU’s Odin), Kevin Smith, and Jennifer Esposito.

The advantage of turning these media types into NFTs is maintaining the copyrights. The work would also be distributed better, allowing the artist to maximize their profits. The NFTs could also be resold, earning the buyers some money during redistribution.

Can Creators Benefit, Engage, and Build Loyal Audiences in This World of NFTs? 

Content creation is one of the critical components of Web3, as so is the NFT sector. Therefore, the early interaction between the two industries is perfect timing. With the metaverse in its early stages, we might see creators building audiences using NFTs there.

Currently, some platforms have already been developed to help in bringing together artists to work on their art projects as NFTs and connect to fans. Label is one such project. It is building an NFT infrastructure that would benefit the entertainment industry by leveraging the benefits of NFTs and blockchain technology. It will also encompass P2P payment systems to enhance the funding of the artists.

The platform targets to help content creators to benefit, engage and build their audiences, thus hauling in more profits from their work.

What Is the Future of Content Creation in This Brave New World of Cryptonomics?

With a market capitalization of over $2T, Cryptonomics is essential and should not be overlooked. Binance recently invested a $200M stake in Forbes, which inside sources leaked before the exchange commented.

Even though the exchange did not say why it is so interested in Forbes, an inside source confirmed that its CEO eyes content creation in the crypto sphere. The CEO believes that content creation will be crucial in the sector as information transfer is one of the world’s most essential needs.

Therefore Binance bought in Forbes and still plans to increase its stake to become a top investor there. NFTs are also expected to break records as they remain bullish even during market tumbles. If the break-out happens due to mass adoption, content creation will also benefit and gain commanding growth as it is strongly related to NFTs.

What Are Institutional Investors Doing With NFTs?

Institutional investors have been seeking to join the bandwagon following the ‘perfect’ performance poised by NFTs through 2021. Different studios and companies like GameStop, Konami, Ubisoft, Nike, and Mercedes are already exploring these assets.

Nike began by seeking a patent to develop tokenized shoes. It succeeded and has already made some tokenized assets for trading. In February 2022, it also announced a special edition of the ‘Flying Formation’ Air Max 1 shoe with NFTs. It also has a metaverse that features NFT shoes for use in the virtual world.

In January 2022, Mercedes announced that it had turned the G-Class edition of its cars to NFTs in conjunction with five artists. The German car manufacturers named it NF-G Challenge. It dropped the assets on Nifty Gateway with a price range of $222 to $1554.

Konami also released NFTs on its games during the CastlleVania anniversary. It received backlash like Ubisoft but did not give up as it made over $400k from the sales of the assets. Ubisoft, a gaming competitor to Konami, also had an NFT project. It was developing UbisoftQuartz, an NFT project left behind after backlash from society for being involved in a ‘scam’ innovation.

GameStop is another big name that is investing in the NFT sector. It is planning to launch its NFT marketplace. It is also planning on setting aside a $100M fund for game developers who choose to use their NFT Marketplace.

How Can Consumers, Investors, and More Benefit From NFTs?

It is possible to leap big from NFTs for consumers, investors, and other parties. Like most cryptocurrencies, content creators usually launch NFTs at considerably low amounts of money. For example, Disney has recently released some Pixar NFTs at a listing price of $60 per asset. Hours after the sale, one piece was selling at $350.

Disney’s examples show that cashing in in well-prepared and popular projects may generate more significant profits and in lesser time than late purchases. It is also possible to make the NFTs and trade them Individually.

Hodling is also key to investing in any crypto-related project. Therefore, an investor or an NFT holder should not sell until the market is highly bullish. This technique generates a lot of money for the hodler as such assets tend to gain value with time. However, it is best to conduct in-depth research on NFT projects before investing to avoid any possible losses.

Latest Trends in the NFT Sector

NFTs are actively evolving through time and at a generally fast rate. In 2017, they were just unique art for rare cats at CryptoKitties. Now, they have gained new use cases, and trends keep changing frequently. Below are some of the latest use cases and trends in the NFT industry that everyone should look out for in 2022 and beyond.

P2E Gaming

As many people are gamers, it is best to watch metaverse and NFT gaming. Since the metaverse and NFTs are the latest innovations in the crypto space, their involvement in another significant industry like gaming should not be overlooked. Even major companies like Microsoft are investing in metaverse gaming which reflects its potential.

Fundraising in Charities

Crypto fundraising is not new to the world. Crypto enthusiasts are known to rally together to gather resources to fund Charities and other related organizations. As NFTs are becoming popular, they are also gaining a use case in fundraising. Recently, Ukraine received NFTs as donations to help arm their military against Russia.

NFT Ticketing

During events and concerts, the number of people is too much to handle at times, resulting in some sneaking into the events. Fake tickets are also rampant when a big event is scheduled to happen. As a result, a new trend has been rising where event hosts introduce tokenized tickets to avoid such occurrences. This trend may continue beyond 2022, which makes it worth watching.

AI NFTs

Artificial intelligence is becoming increasingly valuable for the world currently as technology advances. Now, it is getting applied in blockchain technology to help in minting NFTs. It is also helping in the art; for instance, Obvious Art sold artwork in 2018 for over $400K made by an AI program

An AI named Alicia also made a tokenized Artwork that sold for over $400(0.1 ETH) on AI Made Art. This trend is worth watching as both AI and NFTs are still in the initial phases of development.

Final Word

The NFT industry is a growing sector of the crypto world. Even with its immense popularity, it only accounts for a small sector of the whole market which is why it is very lucrative currently. Additionally, it is gaining massive support from institutional investors, making it evolve at a much faster rate. As a result, there is almost a new iteration of NFTs each day.

The new iterations of these assets increase their application in real life. Therefore, it may be safe to derive that the adoption rate may rise as new iterations and use cases of NFTs crop up. This calls for everyone to look at the assets from a better angle and research them entirely to decide whether they should hop in.

However, there are several points to consider before deciding whether to join the crypto space through NFTs. The most important one is that the market is highly volatile, so investments should only be what one is comfortable with losing. The market also remains unregulated; thus, there is no insurance for the loss of assets from one’s wallet or in any other way.

Even though the market is still unregulated, some assets are given a floor price that will be used to settle paybacks in case the parent company closes business. Therefore, it is good to capitalize on such assets as they are free from total loss.

These uncertainties show that the best thing to invest in is knowledge before going for the assets. To gather educational information on cryptocurrencies and related assets, use top-notch sites like Crypto.news and follow their social media accounts to track the latest developments easily.

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Samuel Mbaki Wanjiku

Samuel is an adventurous person who likes to explore topics in-depth and learn new things each day. His passion lies in gaining knowledge to help transform the world through his writing skills. He also believes in blockchain technology and its potential to usher in a cashless society. Currently, he is pursuing a Computer Science Bachelor’s degree driven by his fascination with emerging technologies. He has writing experience of about three years in different fields and two in blockchain technology.