The alleged death of Mark Twain in 1897 is not the only one that has been greatly exaggerated. NFTs, an acronym for non-replaceable tokens, are experiencing premature statements of their demise today. A source explains the NFT bubble burst, another points out that NFT prices are fallingand yet a third claim that the mockery of NFTs by billionaire Elon Musk was one of the reasons for a collapse. Of course, these reports come amid a wider stock market decline and the cryptocurrency markets also.
Much of this reporting on the downtrend in NFTs (pronounced “niftys” or “nefts” or simply “eN-eF-Tees”) has focused on the number and price of some NFT sales, completely missing out on the broader technology trend denoted by NFTs. NFTs represent an important new way of thinking about virtual and digital property, and the innovation they represent will not disappear just because of the current swings in market prices.
The value of NFTs is recognized in the non-virtual world. The UK Supreme Court recently ruled that NFTs are legally owned.
Those who underestimate the power of this new technology will end up like those who believed in the… World Wide Web was dead after the 2000 crash† In reality, the power of the web was only really beginning to be realized. Think of all the things that were years away: Facebook and Twitter and YouTube, Zoom and Fortnite, Netflix’s video streaming service, Musk’s Tesla selling used cars on their website is unseen†
Why are NFTs another important part of this digital revolution? A non-replaceable token represents verified ownership of an individual piece of digital property, such as a digital photo or piece of virtual real estate in a video game. As with the purchase of a property, the property must be registered somewhere in order to be accepted as valid. When you buy a house, it is done in the local registry of deeds. For a car, it’s with your state’s motor vehicle department.
Likewise, with NFTs, if you buy a digital asset that is unique, your property is registered on the internet through a piece of technical magic called a blockchain. Unlike a single physical or digital repository, a blockchain is a new decentralized way to keep track of all types of information, including ownership of NFTs and cryptocurrencies, without the need for a central server or authority. (Disclaimer: I regularly own and trade cryptocurrency such as Bitcoin and Ether, and I am an owner of NFTs, as well as an investor and advisor to multiple companies that create and sell them.)
NFTs started out as collectibles in games (think digital baseball cards), and became known in 2018 with CryptoKitties, allowing buyers to collect individual “cats” as part of a new type of video game. When a buyer buys these pieces of digital property — often a simple JPEG image but increasingly complex — they register their ownership on a public blockchain. Buying an NFT can also give the owner access to benefits such as pre-release or VIP access to movies, music or video games, and in some cases, the copyright of the artwork itself.
Today’s most famous NFTs are sold in collections that are variations on a theme, such as the monkeys in the Bored Ape Yacht Club series, which have become so popular that they were featured by the host Jimmy Fallon on NBC’s “The Tonight Show” and even have their own series of movies coming out soon. Other celebrities to join the NFT action include: Reese Witherspoon† Katy Perry even Paris Hilton†
Indeed, the mega sales of one-off NFTs fueled a gold rush mentality among many artists and celebrities. The best-priced NFT ever sold to a single owner belonged to the artist Beeple, which sold for $69.3 million. The highest-ever NFT sale, for $91.8 million, demonstrated the ease with which NFTs can offer fractional ownership: the purchase was made collectively by more than 28,000 people who now own some of this artwork.
However, it is a mistake to see NFTs as art only, as they have the potential to do much more in both the virtual and real world. One of the most popular uses for NFTs is collecting and equipping virtual characters in the metaversean increasingly popular science fiction-sounding idea of virtual worlds that we explore with our 3D avatars. Nike took RTFKT last year. about (pronounced “ar-te-fact”), a maker of virtual sneaker NFTs. Leading Brands Realize Gen Zers Can Post Just as Much importance on self-expression with their avatars like they do on their real wardrobes.
NFTs also prove useful in tracking investments in virtual land, the next frontier in real estate, which makes millions† An individual paid $450,000 in December to purchase an NFT representing ownership of a plot of land adjacent to the home of rap artist Snoop Dog’s Metaverse (located in a virtual world called The Sandbox† Even amid all the recent hype about the passing of NFTs, virtual land sales for an upcoming video game from the creator of Bored Apes pushed NFT revenue up to $1.7 billion during the first week of May.
The value of NFTs is also recognized in the non-virtual world. the UKs Supreme Court recently ruled that NFTs are legally owned† This is a big step because it means that if someone hacks into the system and steals your NFTs, they are just as guilty of theft as they are stealing “real” artwork from your home or illegally copying a Hollywood movie.
You can already borrow real money with your NFTs as collateral in an emerging field of decentralized finance (or DeFi for short). And there are real ones real estate funds now using NFTs to create fractions of real estate that investors can buy.
In short, not only will NFTs become more user-friendly, but smarter NFTs beyond simple visuals – which I like to call NFT 2.0 – are only now beginning to come online. Much like the internet after the web bubble burst in 2000, blockchain technology and NFTs are still in their infancy. Buying and using NFTs is still cumbersome for the average user, but that will change as popular consumer apps such as Instagram add support for NFTs, just announced this week.
As long as there are assets, real and digital, that people are willing to pay for, NFTs will be an important new technology for tracking property and profits in many industries. In a few years, even today’s doomsayers will agree with my invocation of Mark Twain in saying that reports of the demise of NFTs have been greatly exaggerated.