Last week, I had the privilege of having lunch with Chanel and Chin, both practitioners in the NFT space. Chanel had recently quit her job to run her own Tasty Toasties NFT collection, and Chin had just joined the NFT marketplace “X” to drive growth and global expansion.
The conversation at lunch was delightful— we spoke about how Ghozali became a millionaire from selling his selfies, how Singaporean influencer Irene Zhao started her own DAO, and how there’s even a hybrid project of the two which raised 20.2 ETH.
I was deeply humbled. Halfway through the conversation, I suddenly recalled that Kenneth, the founder of another NFT marketplace FormosArt, had gifted me a CryptoKitty NFT back in August 2019, which makes me an NFT Original Gangster (“OG”).
Never selling my CryptoKitty though.
What are NFTs?
NFTs only started gaining wider attention after digital artist Beeple auctioned off his artwork at Christie’s in March 2021. The piece sold for a massive US$69 million to a crypto whale in Singapore.
With the total sale of Bored Apes Yacht Club NFT collection (BAYC) recently surpassing US$1 billion, “non-fungible tokens” (NFTs) were hailed as one of the most hyped topics of 2021, with the trend likely to continue into 2022.
Also Read: Demystifying NFTs and DeFi
Very recently, we also read news about the nine Singaporean companies that are exploring NFTs for their brands and businesses. Because of the vast media attention given to this phenomenon, some have labelled NFTs as “a speculative bubble” and some others have called for increased regulation.
There are many types of NFTs, ranging from collectables, profile pictures (PFP) artwork, event tickets, gaming, virtual items, memes, and even Web 3.0 domain names.
In short, a secure network records the sale of the above items on a digital ledger (“the blockchain”), giving buyers proof of ownership and authenticity.
Yet, with all these incredulous statistics, NFTs are not just temporary hype. Here’s why.
Reason #1: With NFTs, you are buying social clout, not the copyright
Some people think that NFTs infringe on creators’ copyrights and tend to disregard them. Frankly speaking, this sort of argument is misleading and is not consistent.
This is because it assumes that the fundamental element that gives market value to the NFT is the copyright of the artwork.
Instead, let me posit to you that the central element that gives the NFT value is social clout and not copyright. In other words, ownership of an NFT makes it verifiable that you are taking part in an innovative digital movement. It has nothing to do with stealing the rights of a creator.
Now, the determination of the market value of NFTs, therefore, lies in the immutability and the verifiability of ownership.
Because there are now particular NFTs that are highly coveted, you become an important person in the community with verifiable social standing. People both inside and outside of the community will look up to you.
Think about it logically for PFP NFTs— the difference between simply right-clicking the BAYC .jpeg file, setting it as a profile picture, and actually owning it is simply being able to show it as a measurable fact, thus confirming that you are verifiably part of a movement.
Also Read: The art of blockchain: What is the NFT craze all about?
Therefore, the NFT is not just a part of a .jpeg file. Human beings are meaning-fuelled creatures, which signifies that we intrinsically want to be part of something larger than ourselves.
Are there parallels to this concept and the human desire to be part of something larger than ourselves? Of course!
Humans have always sought an existential approach to exploration, often pursuing meaning through religion, civil movements, celebrity worship, and contributing to different types of communities. NFTs just raised the bar.
Before NFTs came about, you simply couldn’t visibly and verifiably prove that you have X amount of social capital and power in a certain community. NFTs make this possible.
Reason #2: NFT is a radical disruption to traditional business models for creators
Rendering games and creating artwork used to be skill sets that weren’t very financially rewarding for most. NFT changed this, by revolutionising the business models of these two industries.
I’d like to share an article here by Brian Fyre, titled “After Copyright: Pwning NFTs in a Clout Economy.”
In this article, Brian Fyre posits:
“But the NFT market suggests upfront investment could be a viable business model in areas other than the art market. If investors believe work is or will be important, and is underpriced relative to its expected future value, they’ll be delighted to invest in it, so long as there’s a resale market. And there it is.
When people invest in the NFT market, they are literally investing in the expected future value of the works they own. Or to look at it in another way, they’re investing in the careers of the authors who created those works.
They’re essentially buying a fractional interest in that author’s career, represented by an NFT of one of that author’s works.
This is great for authors because it means they get paid upfront, whether or not the works they create turn out to be successful. Copyright only ever rewards successful authors.
NFTs at least promise to reward any author people think might be successful. Moreover, they reduce the need for intermediaries.
Realising the value of work in the copyright market typically requires a distributor, who claims a substantial share of the revenue. The NFT market enables authors to connect directly with their investors.”
After reading this paper, I was dumbfounded. Can you imagine investing in the future careers of young and driven young people through NFTs and upfront payment?
This is an incredibly empowering notion because it encourages people to experiment in any way they want or desire, without the fear of failure, since the project money would be handled upfront.
Also Read: NFTs provide new ways to handle IP management, empower content creators: Inmagine CEO Warren Leow
This is the beauty of decentralised projects because once your vision and mission are clearly articulated, fundraising tools can be easily and effectively utilized.
I’d like to share an insight from my Multiverse Labs colleague Jake, a young Korean chap in his mid-20s. He points out that the market value of any piece of artwork including music, movies, dramatisations, etc. not only comes from the activity of creation but from trading as well.
This links back to the idea of social clout and why art gallery owners earn more than single artists. Since we can now vividly imagine the possibilities of this new business model working by looking at the solid data of successful NFT projects, what makes you think NFTs are simply going away?
Reason #3: People dismiss intense discussions and things they don’t understand as “Hype”
As with all new technological innovations, there are bound to be intense and incredibly polarising discussions. There will inevitably be early adopters in any industry who will try to make a quick buck through unconventional processes.
Because of this, some observers label NFTs as scams/hype, and others associate NFT trading with money laundering. Sounds familiar? Because it is. People said the same thing about Bitcoin since its inception in 2009.
Admittedly, a group of obscure VCs have recently been caught throwing liberal amounts of money at projects with the words “GameFi” and “NFT,” creating a false impression that the whole space is “all hype.”
It truly isn’t that difficult for founders of blockchain projects to get funding in the current business climate. And to that, let me just say that the public should do their own due diligence and research before investing any pocket change.
The key takeaway here is this; just because something isn’t widely understood, it doesn’t mean that it won’t last. In the fast-moving blockchain world, we really don’t know what we don’t know! So perhaps it might be wise to rethink that assumption.
If NFTs are here to stay, where do we go from here?
Practitioners like Chanel and Chin in the NFT space are impressive because of their strong personal convictions and grit.
Currently, I work as the Head of Ecosystem at Multiverse Labs, an open metaverse with a mission to empower promising individuals and groups to become leaders in new digital spaces.
I count my blessings daily because I get to interact frequently with passionate people like them, who are literally building the new era, one NFT at a time.
Also Read: Are digital art NFTs horrible for Mother Earth? BoT gearing up for digital currency test
Yet, because I work as Head of Ecosystem, people naturally assume that I’m also an “expert” in the NFT space. The truth is that I am new to learning like everyone else because the space is always rapidly evolving.
What I do have, however, is the conviction that NFTs are the key building blocks to the open metaverse. And since the “metaverse” is not hype (Meta is investing at least US$10 billion/year), by logical extension, NFTs are not hyped either.
I encourage you to start participating with me in this space by minting NFTs in any projects that tickle your fancy. You’ll learn faster by having a growth mindset and taking action.
For example, as a pure experiment, we have created and minted some IKItties as NFTs on the Polygon blockchain network, and they look like this:
I’ll most likely be minting my first NFT on the ethereum blockchain from Zoofrenz soon, which looks like this:
I also warmly invite you to join us at Multiverse Labs in building the open metaverse together. Feel free to get connected and show us your NFT collections anytime! 🙂
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The post More than hype: 3 reasons why NFTs are here to stay appeared first on e27.
