2022 has started with the growing success of NFT. This success reflects our gradual progress towards Web3. It is undoubtedly changing our consumption habits and the way we interact with each other. NFTs are slowly but surely going beneath a multitude of industries and some more than others. The world of finance, trade in general and art can boast of having already started with NFTs.
NFT – Definition
An NFT (Non-Fungible Token) refers to a token, a digital asset that is not interchangeable. This non-fungible token is typically a unique digital asset, certified through the blockchain. The Blockchain is a decentralized and secure system that will prevent falsification of digital property by verifying each information related to the token (signature, author, date, last transaction, etc.). Each NFT has its own value, which is why it cannot be traded (For more info, see “What are NFTs“).
A Brief History of NFTs
NFTs are less recent than one might imagine. The very first NFT called “quantum” appeared around 2014 and was the first on the Ethereum blockchain. The ERC 721 standard is the current NFT’s format. This standard was introduced with Dapper Labs’ cryptokitties in 2017. Since then, the rise of NFTs has been more than concrete, especially with 2021 being its high point. NFT sales for the 3rd half of 2021 were estimated to be over $10 billion. In 2022, questioning the value of NFTs does no longer matter. It has become a lasting trend that is not about to fade out anytime soon. Here are 10 NFT trends to watch out in 2022.
“Play-to-Earn” refers to the possibility for players to earn assets by playing that they can invest on different platforms. Each player, owning their assets in the game, can then resell them as they wish on other NFT markets.
Axie Infinity game is a precursor in the “Play to earn” model. Based on the Ethereum blockchain, it simultaneously combines NFT and cryptocurrencies, which promotes a large number of transactions. To get started on Axie Infinty, you need three axies that will allow you to access the game and create your own universe or kingdom. Since this game is about organizing the creature lives in a given empire, building a kingdom requires buying lands. Lands and axies being limited, each player has the possibility of increasing the value of their possessions in order to resell them later at a higher price. Both axies and lands are rare and unique, which gives them value. This game uses its own cryptocurrencies: Axie Infinity Shard (AXS) and Smooth Love Potion (SLP). Axie Infinity now has over 2 million daily active users and an estimated $1 billion in trading volume.
Metaverses like The SandBox also use this process. Decentralized Finance (DeFi), as well as Decentralized Applications (DApp), are also noticing the great increase in traffic created by the game Axie Infinity.
NFT avatars as profile picture on social media
If an NFT avatar can be considered as an identity marker, it is easy to understand the enthusiasm that the Bored Ape Yatch Club (BAYC) has generated on social networks. This is actually one of the most trendy NFT collections. This wave comes in particular from cryptopunks in 2017. Cryptopunks are still today the most famous collection of 10,000 cryptos. The most expensive NFT of this collection is estimated at more than $11 million and the amount of cryptopunks traded at $4 billion. Currently, the tier price of a cryptopunk is $400,000. Celebrities like Jay-Z or Snoop Dogg have them. It goes without saying that this project from the Larva Labs studio was a great success.
An NFT avatar is more than a digital identity marker. It paves the way for communities. Twitter or Discord is in this case the way to highlight your NFT possessions as a profile picture. In this way, it is possible to join communities that are also keen on NFT in general. The notion of belonging to a group is accentuated when we speak of an NFT avatar.
The Sharing of benefits
NFTs introduced the “Sharing of benefits” trend in intellectual property. It is possible to own some of NFT’s brand intellectual property and profit from them. With the BAYC collection for example, the owner of NFT BAYC has the possibility to recreate their own crypto art and resell it under the BAYC name. This practice enriches the creative side of the NFT collection and allows artists to benefit from the resale rights on the works. It is the act of creating value for the NFT brand as well as for the community. It is typically through this process of co-creation that the BAYC has become so famous.
The metaverse paves the way for the possibility of buying luxury designer clothes, which are less expensive than in real life. If wearing Louis Vuitton or Gucci is not easy for small wallets, it is more accessible in metaverses like Roblox or Decentraland.
The fashion industry has not waited longer to digitize and many brands are already offering digital collections. This trend tends to grow in 2022, to the point where it will be more viable to produce outfits in the metaverses before making them in real life. The first digital NFT wearable launched by Dapper Labs in collaboration with the fashion house of Manufacturer has paved the way for a multitude of digital fashion experiences. Nike and the NFT Cryptokicks is a good example of virtual fashion.
Integrating the metaverse requires having a digital avatar, which you can customize as you see fit. With a metaverse like Sensorium in this case, it will be possible to diversify the appearance of your avatar as much as possible.
The NFT as a certificate of ownership of which it is possible to trace all the information thanks to the Blockchain, can represent intangible as well as tangible assets. Irl, you can utterly imagine any good being turned into a non-fungible digital token.
In the cinema
The film industry is already subject to the disruptive wind of NFTs. The famous movie director Quentin Tarantino recently auctioned seven original scenes from his cult movie Pulp Fiction as NFTs. These NFTs also include a handwritten text of the first scripts of the film as well as the comments of the director himself. And of course, only the owner has the privilege to see the entire content of this NFT.
The music sector will also be shaken up by NFTs. NFTs will allow artists to fully enjoy the fruit of their labor. Thanks to NFTs, an artist will be able to directly receive dividends on the work produced. NFTs provide a financial model that will guarantee the artist’s creative independence. It will thus be possible to sell singles in NFT’s form, as the musician Daniel Allan did.
Decentralized platforms like StereoheadZ NFT or Stationhead will be present on metaverses and will guarantee their users the rights to their own musical works.
Splitting an NFT
Buying an NFT can be like emptying your bank account. What if it was possible to just buy a fraction of an NFT, so as not to go broke? If this model already applies with cryptocurrencies, it also seems admissible in the context of NFTs. The trend of buying NFT shards is gaining momentum. It is a matter of dividing an NFT into small fragments of ERC-20 token, in order to make it more accessible.
It is however important to raise a point of differentiation. An NFT is a unique good, but once divided, each of its fragments becomes fungible. Having a shard of NFT follows the logic of owning a share in a company. Just as a share in a company can be traded, so can an NFT shard.
Picasso’s painting “Little Girl with Beret” saw its fragments being bought by 4,000 people, who now each hold a fraction of the famous painter’s property.
Not enough of Metaverses
The change of identity from Facebook group to Meta was clearly a trigger to rush in the metaverse. The metaverse can be described as a digital space that will become an extension of life, both real and virtual. This means that everyone will find in the metaverse a world combining social interactions, place of entertainment and even work. Virtual Reality headsets are also becoming more popular. In such a configuration and having knowledge of Internet’s setbacks, it will be essential for each user to be able to justify ownership of both their identity and their digital possessions. The solution is therefore to adopt NFTs.
If the specific characteristic of NFT is its rarity, it is quite conceivable to think of a digital ecosystem based on these values. Metaverses like Decentraland have taken over from this revolution. It is possible to buy plots of land in there. Each virtual piece of land has its specificities, just like in real life. And these assets give their owner the ability to exploit them as they wish. It is possible to place houses, galleries or even brand advertising spots. Brands like Carrefour have embarked on the adventure and bought plots of land on Decentraland.
Republic Realm, for example, invested almost a million dollars to acquire a land on Decentraland. It is even more interesting because this bought plot was very popular. This brand has built a virtual shopping center in which it rents virtual shops. It is an economic model that we all know too well, and which is already taking hold in metaverses.
Art is THE industry that has harnessed the power of NFTs the most. And it won’t stop. This is the sector in which NFT sales records are estimated at billions of dollars. The crypto-arts market according to the Financial Times is estimated at over $41 billion. It is understandable. The NFT being unique allowed works of art to be singular again, more so with virtual artistic creations that had lost their value due to illegal reproductions. This is a trend that is also creating new uses. QR-codes in particular can be used in the future as a marker of authenticity for an artistic work or on paintings by great artists.
The creative fields are expanding and everyone can express their creativity as they wish. The birth of new artistic forms testifies the evolution of society’s perception of art. The Injective Protocol company for instance bought an artwork by Banksy for $95,000, burned it while filming the scene and resold the video from this package in the form of an NFT. Art is found in everything and is renewed, adapts a multitude of forms with NFTs.
NFT Galleries in the metaverse
Since artworks are tokenizing, it is easy to imagine the creation of NFT art galleries in the metaverses. Visiting a museum in the metaverse becomes possible. For this purpose, the art auction house Sotheby’s has created a metaverse in which it presents the NFT works of art for sale and sets up its auctions there.
Terra Virtua platform, on the other hand, also gives NFT collectors the possibility of presenting their dematerialized goods in virtual reality in the format of a virtual museum.
The combination of AI and NFTs
With Artificial Intelligence, creating artistic NFTs without human deed becomes possible.
GAN, an AI-designed artwork from Christie’s, sold for $400,000 in 2018. As NFTs have popularized the value of digital goods, it’s understandable that such projects will prevail the coming years.
“Arlequin”, for example, is an artistic painting created by AI Alicia. This artificial intelligence analyzed through complex calculations the process of creation and artistic techniques. This painting was then sold in NFT form for the sum of 400 dollars on the AI Made Art platform.
The “i” here does not refer to iPhone NFT but rather NFT Intelligent. It is a trend of creating an NFT with an AI. The holders of these NFTs can therefore have a talk with their NFT, learn, etc. These NFTs remain on the Alethea AI Blockchain. This blockchain is the one that started the iNFT trend, like Alice, which was sold for $500,000 at Sotheby’s.
iNFTs are expected to evolve significantly in the coming years. The Alethea blockchain has set up a program called “train to earn” which will consist of making its NFT even smarter to win money through “Battle of the minds” tournaments. In the near future, these iNFTs will be able to interact, as players themselves, with users of metaverses like the SandBox and Decentraland.
NFTs to support charities
Selling NFTs is not merely a way to get wealthy. Selling NFTs can also be used to support humanitarian causes. The Blockchain’s decentralized system makes it possible to transparently validate the funds transactions to charitable institutions. Unlike with a bank, crypto transfer fees are lower and less complex. Non-profit structures also have the possibility of setting up auctions that are less expensive than those planned in real life. Non-profit sectors can thus as well benefit from the power of NFTs.
The artist Beeple by selling his artwork Ocean Front has donated the 6 million dollars of earnings to a non-profit structure called Open Earth Foundation which fights against global warming and climate change.
Macy’s held a fundraiser selling NFTs and raised around $10,000. Proceeds from this collection were donated to the Make-A-Wish foundation, which supports children suffering from serious illnesses. The foundation in the event of resale of these NFTs will receive royalties of 10%. Thus, non-profit organizations have a vested interest in following this NFT trend.
NFTs and finance
If NFTs are clearly speculative assets estimated at billions of dollars, it is because they are goods in constant movement. From one wallet to another, NFTs gain in value as they are resold. The very principle in investing is that funds are not static, but in constant motion. And this is the case with NFTs.
Securing a loan with an NFT
NFT being a non-fungible digital asset with value, can be a way to secure a loan. Many platforms, especially in decentralized finance (DeFi), make it possible to guarantee a loan with a non-fungible digital asset whose value can cover the amount of the loan. The contractors, thanks to smart contracts, will ensure that the transaction is validated and that the NFT is inaccessible to the borrower until the full repayment of the loan is made.
With platforms like Drops, it is also possible to mortgage your NFT, in the event of non-repayment of a loan or for any investment.
The NFT, although sometimes speculative, is changing uses in a multitude of areas. The future is about to be built on the model of NFTs, as the use of blockchain itself migrates to something more accessible, more democratized. The tokenization of physical assets being in full swing, we must also think of a future where the metaverse will be an extension of the world as we know it today. Brands, in order not to miss a lasting trend, have every interest in taking a closer look at it.