Technology’s ubiquitousness plays a paramount role in our lives, society, environment, economy, industries, sectors and businesses.
- From creating smart homes to residing in smart cities to driving hybrid or eclectic cars to one day travelling in self driving cars.
- From using AI analysis and predications to drive business decisions to its role in the supply chain, logistics or efficient management of an entire business.
- From efficient farming practices employing deep tech such as AI, IoT, Robotics, Drones, Satellite Imaging to production of 3-D printed organs or medication. Or even 3-D printed satellites for space excursions.
- From consuming plant-based meat and dairy products produced in labs to immersing ourselves into the mystical virtual land of gaming and entertainment.
- From super-fast payments to trading platforms that emphasis game of skill to selling and owning art online!
And this transaction does not take place on e-bay but the blockchain. But how does this work?
This is where NFTs or non-fungible tokens come into picture. It is anticipated that NFT’s have and will revolutionize the art, gaming, real estate markets, supply chains of businesses and beyond. It is the monetization of digital assets and IPR (i.e. JPG, drawings, music, tweets, memes, MP3, GIFs, autographed concert tickets, posters, poetry etc.) and commodification of digital assets so it can be traded in the NFT marketplace. To be precise it is a certificate of ownership that can be bought and sold using cryptocurrency in booming the NFT marketplace. In fact, its nature is different to cryptocurrency eg: bitcoin, as each NFT will always hold different value.
Generally, it is perplexing to identify the real validity of any piece of art work, as replicas of the art and replicas of its certificate of authenticity are available online in abundance. Hence NFTs endows artists and owners of a particular art (physical or digital) to claim authenticity of their work that is etched in the blockchain forever (attached to their art work!). Artists seek the pleasure of connecting with their fans or purchasers like never before, unlike the days when art dealers took majority of the profits leaving artists with an unfair piece of the pie.
NFTs eliminate financial exclusion and gender exclusions that are predominant in society, by impelling artists of any race (BIPOC), gender (male, female or LGBTQ) or religion to expose their art on the NFT marketplace and earn a living from their phenomenal art. Furthermore NFT collective platforms seeks to promote and empower neurodiverse (Autistic, ADHD and more) artists as well. Impeccable initiatives by the platforms! NFT is like a gift bestowed on individuals, propelling metamorphosis in societal norms by activating diversity and inclusion! These NFT collectives furnish a sense of belonging for artists who had been neglected in the past. Some NFT collectives include Boss Beauties, ARTXV, TheBlkChain! In addition, interactions with the collectors and investors boost confidence creating a sense of achievement and belonging. The fame and appreciation achieved in the NFT marketplace can help artists obtain employment as well. The proceeds from NFTs are also being invested in social causes adorning a philanthropic streak to the NFT marketplace.
Soon every painting or any object be it digital or physical will have NFTs attached to them. This will sound absurd but Nike is creating NFT verification for its shoes!!! Twitter is incorporating NFTs in its platform!! (Jack Dorsey (CEO of twitter) sold his first tweet for approx. $3 million!!!) Warner Bros. is contemplating on announcing NFTs for music. Gucci, Jimmy Choo, Burberry, Clinique, Coca cola, Disney, Mattel, Taco Bell, McD all have launched NFTs till date. Trevor Andrew created a Gucci Ghost that sold for $3600. Sounds ridiculous.
Art collectors can buy and resell NFTs and the creator/ original artist can earn a royalty every time it is resold in the NFT market place. An upside for the artist as they lacked this right when selling their art in art auctions. These are terms and perks that can be merged with the NFTs.
In the spectacle of gaming, in-game purchases (add-ons to their gaming avatars) will now, not be owned by the gaming company but the gamer who purchases it, thanks to NFTs! They can later sell it on the gaming platforms as well. These will remain eternal even if the gaming company or game unfortunately fails to survive in the future (as the validity is stored on block chain!).
Real Estate fraud will be mitigated as the contracts will be created as NFTs and remain protected in the blockchain. NFTs have found a place for themselves in the supply chain to meet the rising demand of customers regarding product traceability. NFTs can be used as a collateral for loans! In fact, who knows NFTs may be adopted by the pharma industry, that would be superior to the present-day copyrights or trademarks (of course the legal and tax systems around NFTs will need to be constructed along with T&C to ensure fairness). Pharma companies can trade their copyrights with competitors (in this case NFTs) or probably the notion of copyrights may not exist! Perhaps NFTs would act like a permanent copyright that doesn’t have a termination date! NFTs may play a role in M&A between companies from any industries, where one company may purchase the other companies NFT! WHO KNOWS RIGHT? NFT’s APPLICATIONS ARE BOUND TO RISE!
The grapevine implying the metaverse, makes it evident that NFTs will play a substantial role in the metaverse. Whatever we buy or invest in, be it, real estate, or fashion for our virtual avatars all will have NFTs attached. You can listen to NFT music, watch NFT art or NFT movies. Its application is a matter of exploration.
In hindsight, multiple glitches and challenges have been discovered as NFTs as a concept has grabbed attention of individuals around the world:
To a layman NFTs sound as a complicated process and therefore it is imperative to produce processes that are easy to use so more and more individuals adopt the technology (financial inclusion for individuals). Ultimately it will have its relevance in the metaverse. Individuals need to be comfortable with the technology. In the near future NFTs are required to be compatible with different applications and potential different virtual worlds so they can be accessed from anywhere. Compression of big audio/video files is a challenge being worked on so it finds a place for itself on the blockchain. An NFT without the digital asset on the blockchain can jeopardize the rights of the owner in case the file gets lost or inactive. The cost of creating or minting a NFT (new technical jargon!) costs a hefty amount or a gas fee!
However, what about the glitz and glamour of the art auctions and exhibitions? The coivd- 19 outbreak was immensely responsible for the cancellations of these events. As gaming became a new mantra of life for many, art enthusiasts discovered a method to buy and sell art online, hence NFTs become stronger competitors to the traditional commercial art galleries, that were once a monopoly. It also eradicated the needs of art dealers, the middle men in the chain.
Surprisingly enough NFTs have a negative impact on the environment! And there are grapevines suggesting that individuals will produce carbon neutral NFTs soon, utilizing renewable sources of energy. Mike Winkelmann (Beeple) sold his art work Everydays: The First 5000 days for $69 million and claims he will produce sustainable, carbon free NFTs using renewable energy, a trend he believes will catchup. Actually, the creation of NFTs and blockchain activity supposedly requires massive amounts of computing power given its intricate and complex activities.
Believe it or not NFTs have a carbon footprint, apparently a GIF named as space cat is believed to have carbon footprint equivalent to 2 months of electricity usage by an individual in EU (according cryptoart.wtf- though these estimations may not be as reliable). The systems behind Ethereum i.e. proof of work crave energy adding to energy consumption! A solution to this problem is the system of proof of stake (decline in energy consumption) running Flow blockchain. In fact, Ethereum probably would incorporate proof of stake soon, but it not yet decided. And then the other solution is using renewable energy but critics believe it’s a waste using it for blockchain.
All in all, NFT’s future may be certain considering its application in the arts, media and gaming space. It may soon penetrate into numerable industries, as blockchain is the ultimate technology to ensure safety and authenticity. NFTs is believed to provide chances of inclusion in society as individuals can sell their art and earn a good living. However many argue that collecting has been the luxurious hobby of the affluent and still it is them who purchase these digital assets. The environmental concerns can be solved as technology is both the boon and bane, innovation will propel a solution with a bang. However not to forget the need of quantum resistant blockchains and its impact on NFTs. Well nobody’s sure how things will turn out! Tax and legal (and don’t forget ethics) systems need to be created around the use of NFTs in different industries as its application becomes mainstream.