What are NFTs anyway ?
Have you been seeing the rise of CryptoPunks, Bored Apes & other NFT collections and wondering — how on earth did these get so big so soon?
NFTs have been taking over the digital art and collectibles world by storm. Digital artists are finding a whole new crypto audience which is supercharging their sales, celebrities are identifying a new way to connect with fans and are joining in. However — digital art is only one of the ways in which NFTs can be used. In reality, they can represent ownership of a unique asset — similar to a deed for a digital or physical good.
In short, NFTs are tokens used to represent ownership of unique items. Things like collectibles, art and even real estate can now be tokenized. Only a single owner of an NFT can exist at any point in time — and the record is secured by the blockchain. Nobody can edit an ownership record , or “copy paste” a new NFT into existence.
Here’s a look at a few areas that NFTs are reshaping already, or could disrupt in the near future
1. Reshaping the Art Landscape
👨🎨 A record was set when “Everydays — The First 5000 Days,” by the artist Beeple sold for $69 million in a sale at Christie’s. That made it the most expensive NFT ever at the time, and placed Beeple among some of the most expensive living artists.
Digital art is one of the dominant forms of modern art. But, the problem with digital content or art is that it can be copied easily, and there can be an unlimited number of copies available on the Internet. What can help here, is if the original art can be authenticated somehow. A Netflix documentary called “ Made You Look” really explains the significance of authentication for art.
This is where NFTs come in — they provide a solution to authenticate the original piece of digital art, indisputably. The artist just needs to create an NFT for his creation — that prints an immutable record on the blockchain, which certifies the authenticity of the art piece. And after that — the NFT can be monetized by selling to interested buyers on an NFT marketplace.
2. Reshaping IP Rights in the Music Industry
🎧 Popular singer Akon seems to be ditching record labels and dropping his next album as an NFT to monetize it from day one!
In the music industry, artists usually receive a very small fraction for their creations. Though they do earn a small percentage as royalties on sales, they hand over the copyrights of their songs to record labels- severely limiting their royalties. There are also huge amounts of “unclaimed royalties” wherein a publisher or songwriter cannot be traced.
NFTs provide artists much greater control over their creations — and also the ability to track where the royalties are going. On top of that — artists can also monetize digital “merch” through NFTs.
Now there are NFT companies which solely target music copyright and sales tracking. For example, Bluebox uses blockchain to manage information regarding music copyrights. Its mission is for artists to “reclaim missed monetization opportunities…and sales of future royalties.”
3. Reshaping Ecommerce
👟 A Sale of Virtual Sneakers by the company RTFKT Raised $3.1 Million USD in Seven Minutes
The real issue with physical goods revolves around margin pressure.- any pressure on the cost or revenue side that could adversely affect the company’s profits. For example, retail companies producing goods in China could suffer from trade tariffs, factory closures, or Suez Canal obstructions — all of which have happened over the last two years.
As an example in traditional ecommerce, Nike makes nothing until their shoes (say a new line of Jordans) are actually sold. They effectively “float” cash for consumers before any sales are made. However when it comes to NFTs — the process is reversed. RTFKT is an NFT pioneer that Nike acquired late in 2021. In their process the customers bought NFTs first & received their shoes a month later. This produced several side effects that are only possible in the NFT model -
- Cash was generated upfront, via the NFT sales
- Accurate knowledge of the demand — RTFKT knew exactly how many wanted their product and could adjust manufacturing volumes accordingly
- The NFT holders showed off their NFTs, effectively becoming influencers
- Follow on revenue was generated every time an NFT sale was made — often before any actual shoes were delivered
This is just an example of how NFTs can produce several benefits in traditional (physical goods) ecommerce as well.
4. Reshaping gaming economies
🎮 Axie Infinity, a play-to-earn Vietnamese video game, became the most valuable NFT collection across the globe in August 2021. During August alone, the trading volume surged over $5 billion making it a record-breaking month.
Some of the biggest growth driven by NFTs has come in the gaming space — an ever increasing number of gamers sink their teeth into NFT gaming. Players enjoy financial rewards & crypto gamification, and interoperable assets — benefits not easily available in traditional gaming.
NFTs have disrupted the gaming/metaverse industries with their unique benefits
- The blockchain properties & the wide range of utility allow NFTs to be used as in-game characters, accessories, commodities, special abilities etc.
- For many, NFTs unlock the ability to earn additional in-game income (play2earn)
- In game assets can be interoperable via NFTs
- Play2Earn guilds have emerged from the popularity of decentralized games — these help new players get started. Members of the guild can rent the otherwise costly in game items, thereby lowering the barrier to entry. The lender on the other hands finds an alternative source of income by earning a portion of the player’s earnings
To wrap up — let’s take a look at some NFT stats !
Some key NFT stats from 2021–22
These are just some of the industries that NFTs are beginning to transform ! Genesis Shards is plugged into NFTs since early 2021. With a team of kickass NFT artists, we create NFT collections for all our launched projects, helping them tap into a cult-like early stage community.