Beeple’s $69 million auction at Christie’s took NFTs mainstream. These digital assets are now in the center of the public eye with countless pieces, explainers, and even an SNL sketch dedicated to them. Investors like Mark Cuban and Gary Vee have become collectors as other famous NFT projects like Cryptopunks and NBA Top Shot sell these digital assets at all-time-highs.
Hype aside, NFTs are simply a way to register ownership online. Instead of going to a brick-and-mortar institution like the Copyright Office, you are able to prove that you own a digital object — be it a .jpg, .mov, .mp3, .txt, or whatever — by keeping a record on a tamper-proof online registry known as a blockchain. That registry is always keeping track of who owns what at any point in time.
What’s interesting is that this lets people buy or sell this claim of ownership in a peer-to-peer fashion. Imagine you came up with a meme and it went viral. You could have registered that as an NFT right when you made it and have an actual claim to it. You could then sell that and transfer its ownership online without any kind of paperwork. The same applies for any type of content.
Why would someone pay exorbitant amounts of money to say they own an image file? All we can say is that there's a market for it based on scarcity, similar to the market for traditional forms of art. This makes NFTs an important new asset class in the digital economy.
Numbers In Music
However, the numbers are also showing up for use cases that seem more tangible. Musicians, producers, songwriters, bands, and DJs are all seeing how NFTs can change the way they “interact in a business setting.” These online registries give their fans a way to participate directly in the value that they create as artists by purchasing unique releases, tickets, or even their own community tokens.
In the context of purchases, acclaimed DJ and producer 3LAU recently became the first artist to launch an NFT album. His 2018 release Ultraviolet sold for over $11 million as a collection of ERC721 tokens on Origin, a blockchain protocol that supports these events. Holders of 3LAU’s NFTs were also able to redeem them for vinyls and unreleased music.
3LAU said he was “beyond excited to present the first tokenized album on a direct-to-collector platform built by Origin Protocol,” and that the event marked “a major turning point in the NFT space; creators will have maximum flexibility in issuing digital assets to fans.”
Other major artists have followed suit. Grammy-winning artist Lupe Fiasco’s launched his own NFT collection titled Food & Liquor to similar expectations. The event took place on Origin’s Launchpad platform on April 12th.
The Future Of Gaming
NFTs also open new avenues for online gaming experiences. There’s a whole set of possibilities for secondary markets where players own their in-game items outside of the game itself. Some items have famously sold for over $170,000 as was the case when blockchain games first made their appearance with CryptoKitties in 2018.
More important, perhaps, is that NFTs allow development teams to create new forms of in-game interactions. Nowadays, the most interesting games in the space are pushing the boundaries of what’s possible beyond collectibles and are designing games that integrate them with other blockchain-based features.
A notable first is Cometh, a strategy game that combines NFTs with another field of blockchain technology known as decentralized finance, or DeFi. On Cometh, players collect NFT spaceships that mine nearby asteroids for tokens and produce “yields” for their holders. This is possible because Cometh integrates innovative DeFi concepts such as liquidity mining into its gameplay. In simple terms, the game lets players participate in its own online economy that includes forms of passive income and other economic incentives.
DigitalBits has become the blockchain of choice for organizations such as Zytara, an innovative fintech company with strong ties to the gaming community. Litemint, a leading NFT and Collectibles marketplace, has also begun to integrate the DigitalBits blockchain network into its NFT platform, catapulting DigitalBits into this rapidly growing market. Originally forked from the Stellar protocol in 2017, DigitalBits supports lightning fast payments and extremely low fees, in stark contrast to Ethereum, which currently suffers from excessive congestion. DigitalBits' high scalability coupled with leading platforms such as Litemint are ideally positioned to usher in a wave of new NFT users that may have been deterred by the limitations of Ethereum.
Another example of where blockchain gaming is going is Illuvium. The open-world RPG game that lets users capture creatures, Pokémon-style, except these creatures are held by players in blockchain wallets where they can be bought, sold, or exchanged outside the game. These ‘Illuvials’ have value because they can also be used for PVP combat, making for a dynamic and competitive gaming experience. The project has caught a lot of attention due to its crisp graphics and fully fledged features, with some calling it the first AAA blockchain game.
Industrial Design For Everyone
The world of 3D modelers, mechanical engineers, and industrial designers is also a niche that is set to benefit greatly from having its creations tokenized and registered on a blockchain. For one, it represents a way to test the market for designs before they enter a costly manufacturing process. Some believe this could lead to a “democratization of design,” especially in the context of furniture.
Although most of these enthusiasts have resorted to popular NFT marketplaces to sell their designs, specialized options have begun to sprung up. Smart MFG Tech is a blockchain company that has started to apply the NFT features of its partner’s platform, supply chain blockchain SyncFab, to launch an online NFT marketplace specific to this sector.
Initially available to enterprise clients, the NFT.SMARTMFG.IO marketplace is being expanded to include a wider audience of non-enterprise customers. It will let 3D modelers, industrial designers, mechanical engineers, architects, vintage automotive and novelty spacecraft collectors tokenize and sell their works as NFTs.
The use cases for NFTs are certainly not limited to these fields. Other applications such as provenance tracking in supply chains or decentralized name services on the Ethereum Foundation’s ENS are also proving to be useful and sometimes profitable. However, in terms of NFTs’ potential to affect established industries, music, gaming, and industrial design are on par with art as fields that are ripe for change. The new asset class represents a space that, while overhyped at the moment, could redefine these industries.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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