The Utility of NFTs
🔮 What you’ll learn:
- What is an NFT?
- How to buy NFTs?
- Why are we talking about utility?
- The impact of NFTs beyond digital art?
👀 What is an NFT?
An NFT = Non-Fungible Token
‘Non-fungible’ more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another and you’ll have exactly the same thing. A one-of-a kind trading card, however is non-fungible.
NFTs are verifiable digital assets that are traded on blockchain technology — most NFTs are part of the Ethereum blockchain. Therefore, they are compatible with anything built using Ethereum.
💲How to Buy NFTs?
Before you purchase from a marketplace, it’s worth figuring out what type of digital wallet is required to store the asset and what currency you’ll need to complete the sale.
You can buy crypto on platforms like Moonpay, Coinbase, eToro, Gemini, even PayPal. After your purchase you will move it from the exchange platform to your wallet of choice.
… But what is a crypto wallet? A digital wallet is where you can store NFT art and cryptocurrency.
Wallets:
Popular NFT Marketplaces:
Why are we talking about utility❓
Ahhh yes, $11.7 Million for a CryptoPunk…
In June, a rare CryptoPunk sold at Sotheby’s for over $11.7 million. “Covid Alien,” CryptoPunk 7523 is considered to be a rare NFT, or nonfungible token, collectible. It is one of nine “alien punks” in the entire series.
At these whopping price ranges, the utility of NFTs are being questioned. No one bought these NFTs for a specific use case.
The viability is perceived as ‘flex utility’. The purchase of these rare and collectible NFTs offers a form of social currency. Communities that value this form of ‘flex utility’ are the basis of value for digital art NFTs.
Lets think about a real world example… when someone buys a Rolex they don’t spend thousands of dollars because of the watch’s utility. A simple $6 watch could perform the same exact function. The ultimate sense of value comes from the status achieved with brand recognition.
🔍The Impact of NFTs Beyond Digital Art
NFTs offer immense utility outside of the digital art world and the technology is impacting sectors across gaming, sports, music, media, real estate, fashion… the list goes on.
🎮 Gaming
NFTs create a new in-game economy for developers to monetize their content.
Starchi is a decentralized finance (DeFi ) game on Polygon, inspired by the original Tamagotchi. It calls itself a “purposeful game” and aims to remind players of “human values.”
In this game, players can collect digital pets called Starchis. “These are adorable creatures that thrive in the sun. However, they are on the brink of extinction and are in search of a new source of energy to survive.” As with Tamagotchi, collectors have to then raise, feed, and entertain the pets from their infancy to adulthood. More importantly, the players have to ensure that the creatures don’t go extinct.
Starchi will run on a dual-token economy. The first token will be used to trade Starchis, while the second will give economic incentives in-game.
- $START — The token utilized by their incubator launchpad to allow entry to the game and exchange Starchi
- Starchi Liquid Luck ($ELIXIR) — Their magical mix that makes the Collector wealthier for a period of time (while in possession of the elixir)
🎶 Music
NFTs could have a huge effect on streaming platforms that simply don’t earn artists enough. We could see an era where artists are able to do business directly with music retailers and sell their NFTs like they used to with self-produced content.
Music Mogul Russell Simmons is getting into the NFT market with his “Masterminds of Hip Hop” collection. The project is centered on pioneers in the hip hop music industry and curated with rapper and NFT collector Snoop Dogg. Simmons was quoted saying, “A respect for the founding fathers of hip hop needs a reboot. This is my chance to use a new vehicle to revisit and repay these amazing artists wile they are still living”.
Grammy-nominated DJ Steve Aoki is another artist joining the NFT movement. He and digital artist Maciej Kuciara released a new NFT collection “Neon Future” exclusively on Nifty Gateway. Aoki released five new tracks with the collection, along with the expectation that NFTs will guide the future of music with collectible valuables and experiences stored in digital wallets.
🏀 Sports
- NBA Top Shot is a digital version of a traditional basketball card. All those drawbacks of the physical card are gone. Through blockchain technology, it’s easy to see a Top Shot’s history — who’s owned it, how many others there are, what it’s sold for in the past and estimate its value off that information
- Kevin Durant partners with NBA Top Shot to curate exclusive NFT moments
- Speedway motorsports has created RaceDayNFT.com, a first of its kind motorsport marketplace for race fans
- The Montreal Canadiens launched their first-ever non-fungible tokens (NFTs) in the form of digital art collectibles that celebrate the team’s run to the 2021 Stanley Cup Final.
🎬Media
What if you could own a moment that broke the internet?
Inspired by the creativity and innovation of the TikTok creator community, TikTok is exploring the world of NFTs as a new creator empowerment tool. NFTs are a new way for creators to be recognized and rewarded for their content and for fans to own culturally-significant moments on TikTok.
The creation that happens on TikTok helps drive culture and start trends that impact society. TikTok will bring something unique and groundbreaking to the NFT landscape by curating some of these cultural milestones and pairing them with prominent NFT artists.
🏠 Real Estate
Physical Real Estate and NFTs
Legendary venture capitalist Tim Draper explains, “I am excited about how NFTs in the virtual world are going to be applied to real estate in the physical world. I suspect that people will soon be able to buy a building, buy the air rights and buy the virtual rights of any physical space”.
The future of physical real estate NFTs also includes the opportunity to capitalize on decentralized finance. One could buy a house as an NFT, and instantly borrow against the NFT using DeFi or TradFi products with a 2–4% interest rate.
Although the real estate industry is notoriously known to be slow with technology adoption, there are many reasons why it already behaves as a digital asset.
Virtual NFT Real Estate Phenomenon — the ‘metaverse’
Metaverse… “meta” meaning beyond and “universe”. This refers to shared virtual worlds where land, buildings, avatars and even names can be bought and sold, often using cryptocurrency.
- Decentraland — a virtual destination for digital assets… buy and sell land estates, avatar wearables and names in the Decentraland marketplace. In Decentraland, a massive plot was bought for over 500 ETH or over $1 million. It’s wild that these virtual plots are worth more than most homes.
- Cryptovexels — a virtual world and metaverse, powered by Ethereum blockchain. Players can buy land, build stores and art galleries
- Metaversereit — the world’s first virtual real estate investment trust and your gateway to metaverse land ownership. Metaverse plans to introduce a REIT that owns and operates a portfolio of high-quality development properties in Decentraland, Somnium Space, Crypto Voxels, Sandbox, Upland and other commercially viable Metaverses.
How can we see an intersection between virtual and physical real estate through development?
It will be interesting to see the evolution in utility of NFTs and it’s clear that this is just the beginning. It’s an exciting time to see how this technology will impact various industries and change investing forever.
