When thinking about NFTs, most of us automatically imagine silly (and expensive) cartoon jpegs. But non-fungible tokens (NFTs) are a technology. Whether or not that technology is used to verify the ownership of ape drawings or multi-million-dollar Malibu beach houses is irrelevant. And it’s precisely that technology that will change the way we interact with each other, forever.
NFT technology is revolutionizing digital communication and asset ownership. Cryptocurrency, through immutable on-chain verification processes and smart contracts, created a unique and completely trustless environment for peer-to-peer transactions. Forget about stingy middlemen stealing money to facilitate purchases and trades; code and nodes will handle it.
And blockchain oracles are taking trustless transactions one step further. An oracle is a way for a web3 ecosystem to communicate with the outside world. It connects to existing off-chain infrastructures like data sources, legacy systems, and advanced computations. The most notable oracle is Chainlink, and it plans on allowing blockchains to instantly react to real-world events and connect to traditional financial systems.
Combining blockchain, NFT, and oracle technologies opens nearly limitless opportunities for web3 to bridge the gap between our digital and physical realities. And in a world where we’re increasingly living more virtually, bridging that gap is more important now than it has ever been.
Here are five ways NFTs will change the world.
1. Art, Collectibles, Wearables, and Gaming (2021-22 Recap)
We’ve already seen NFTs disrupt the art, collectible, wearable, and gaming industries. From a $69 million NFT sale at Christie’s auction house to global fashion brands entering the NFT space to the maker of Fortnite creating blockchain-based video games, the technology is quickly gaining mainstream adoption.
In March 2021, Mike Winkelmann (more commonly known as Beeple) sold his Everydays: The First 5000 Days digital artwork for $69 million at Christie’s. One of Beeple’s first-ever artworks, Crossroad, resold for $6.6 million via Nifty Gateway’s secondary marketplace in February 2021. Another prominent NFT artist XCopy sold his All Time High in the City for $6.2 million in January 2022.
But it isn’t all about the money. NFT technology democratizes the art world and makes highly-valued art more readily available to retail customers without connections to galleries or dealers. Plus, artworks can be split up into a large enough collection sizes to make them affordable for the more common consumers and collectors.
This happened when Damien Hirst, the world’s richest living artist, released his The Currency, a collection of 10,000 digital artworks that each correspond to a unique physical artwork stored in a secure vault in the UK. Each artwork, or NFT, cost $2,000, a far cry from his $19.2 million sale of Lullaby Spring in June 2007.
Similar to how NFTs disrupted the art scene, they also interrupted the world of collectibles.
In February 2021, Dapper Labs’ NBA Top Shot reached just shy of a $1 billion market cap. A LeBron James Moment (a term used to refer to the platform’s digital video trading cards) sold for nearly $400,000. And it wasn’t just digital trading cards; Bored Ape Yacht Club (BAYC) took the world by storm when major celebrities Tom Brady, Mark Cuban, Steph Curry, Justin Bieber, Eminem, Snoop Dogg, Jimmy Fallon, Kevin Hart, Madonna, Paris Hilton, Post Malone and others joined the pfp (profile picture) craze.
It sounds silly to outsiders, but owning digital property and the IP associated with it takes collecting to the next level. Eminem and Snoop Dogg are building a brand around their ape jpegs. Restauranteur Andy Nguyen created a fast food joint with his ape jpeg as the restaurant’s mascot. And it’s all possible because NFTs allow for creators and collectors to have a more symbiotic relationship than ever before.
With instant on-chain asset ownership verification and the digitization of those assets, NFT collectibles benefit from nearly instant, 24/7 online secondary marketplaces and a complete lack of physical asset deterioration. You can’t forget your LeBron James NBA Top Shot Moment in your mom’s attic before she sells her house. You can’t bend a corner of the card or drop it in the dirt. But you can list it for sale, sell it, and collect payment in minutes without ever having to deal with a postal service.
Major fashion brands are taking notice of the shift in how and where we collect. For perhaps the first time in history, collecting unique, non-duplicable online items is possible, easy, and cool. Gucci has partnerships with NFT marketplaces like SuperRare and NFT artists like Superplastic, an entire Gucci Town on Roblox and The Sandbox, and more. Dolce & Gabbana sold more than $6 million worth of fashion NFTs back in October 2021. And Louis Vuitton is rewarding players who use its Louis: The Game app to learn about the company’s history with NFTs.
Other popular fashion brands like Nike and adidas are creating wearables for the metaverse. Collectibles, especially wearables like sneakers and jewelry, are a way to signal wealth and identity. Signaling doesn’t stop in the metaverse. It’s just as important for our online selves as our IRL selves.
Gaming is another massive opportunity for blockchain and NFT technological innovation. Existing NFT projects are dipping their toes into the gaming space, and the upside is massive (see this list). But perhaps even more importantly, top video game and software developer and publishing companies are starting to experiment, too.
Epic Games entered into a partnership with Gala Games to create blockchain-based AAA games. Ubisoft is entering the world of NFTs. Nintendo has announced that it sees the potential of NFTs and is experimenting in house. Even GameStop is building an NFT marketplace.
It’s a natural fit for NFTs to enter the gaming industry with Fortnite skins (non-NFTs) selling for thousands of dollars. Other games like Minecraft, Roblox, Elden Ring, and others all could benefit from transferable, in-game NFTs.
2. Houses, Cars, and Other Physical Property
As of now, NFT technology has been largely focused on creating a more personalized and unique experience for online identities: Twitter profile pictures, digital collectibles, metaverse wearables, online gaming rewards, and whatever else.
But NFT technology has the capacity to change our IRL identities, too. It can provide fast, easy, and trustless proof of ownership for physical assets, removing pesky and expensive middlemen from some of our lives' most important transactions.
Buying, selling, and even trading houses, cars, and other physical property could be (almost) as simple as buying, selling, and trading cartoon cat photos on OpenSea. On-chain deed and title transfers remove a bottleneck for sellers and save buyers time and fees.
There is a long way to go in terms of education and blockchain safety practices, of course. Imagine boomers leaving their houses and cars on a hot wallet, connecting to the newest free Bored Ape Yacht Club scam mint, and losing it all in less than 10 seconds. But this can be overcome with advances in technology and better security procedures.
Note: it would likely be necessary to work in collaboration with housing and auto industries on this, too, which poses a significant hurdle because industries don’t tend to like when technology makes some of their jobs irrelevant.
Blockchain technologies and cryptocurrencies do more than just make people money; they’re helping build a decentralized, fairer, more transparent global financial system. At the heart of web3 is a commitment to a nondiscriminatory level playing field for all – an economy run by the people for the people, not by the banks and technology companies for their bottom lines.
It makes sense then that NFT projects have frequently committed profit and royalty shares to charity. Some NFT projects are even exclusively about giving back. But you could just donate to the charity, right? You don’t actually need NFT technology to do that.
Correct, NFT technology does not make it easier for you to send charities money (although, blockchain and cryptocurrency technologies do). But it does open up more opportunities to donate and can create a better way for charities to collect funds.
In addition to the purchase price of the NFT, charities can collect royalties on all secondary sales. Every time an NFT is bought or sold, the charity would collect funds. This creates a perpetual cash flow that holders (donors) don’t even think about when buying, selling, or trading. Charities can also collect royalties from NFT projects that were not created by them. For example, Bored Ape Yacht Club could donate one percent of all royalties to the Jane Goodall Institute.
NFT technology also makes charities more engaging and transparent.
At the risk of sounding like a detached robot, the charity game is mostly about status and virtue signaling. Donations are a way to show the world that you care about a particular issue, like animal welfare or curing cancer. And NFTs make it much easier to virtue signal. They gamify charity and make visible the corresponding status game.
Rather than screenshot your donation amount to the World Wildlife Fund for Nature (WWF) or tweet about how great of a person you are for making such a donation, you can signal your commitment to wilderness preservation with an image of a panda bear or giraffe. All the WWF has to do is create a verified NFT collection.
Screenshots can be manipulated and people lie all the time, but NFT technology (and blockchain technology, in general) adds an increased transparency to giving. Did you actually donate to the WWF? As those in the web3 space say, check the chain. The blockchain won’t lie for you. Either you purchased an NFT from the WWF’s verified collection, or you didn’t. It’s right there out in the open.
Plus, it makes it easier to track transactions for those beneficial tax write-offs.
4. Crowdsourcing (Music, Books, Entertainment)
Existing NFT projects have already explored the possibility of creating music, books, television series, movies, and other forms of entertainment. But industry leaders have yet to utilize NFTs as a way of crowdsourcing.
NFTs can operate largely in the same way that Kickstarter, GoFundMe, Patreon, Indiegogo, and others already do. But with the added capability of collecting royalties on purchases, sales, and trades and directly communicating (via wallet addresses and upcoming wallet address communication platforms) with true fans.
This method of crowdfunding could bolster creativity in the music, book, and entertainment spaces. From blockbuster films created by James Cameron to independent books written by unknown authors, NFTs can help fund new creative adventures. And it can give IP rights and profit shares directly to early supporters and holders.
5. Contracts and Temporary Ownership
Contracts and temporary ownership of assets is a bit more complex and will take some NFT technology improvements to become useful IRL, but it could completely change how we make deals, rent cars and houses, access events, and more.
Consider professional sports athletes’ contracts. They’re complex, full of contingent bonuses, and difficult to transfer to new teams. With NFT technology, bonuses and other guarantees can be added directly to the NFTs’ smart contracts. The smart contracts can access an oracle, and when certain criteria is accomplished, the funds are sent directly to athletes’ cryptocurrency wallets.
For example, if Tom Brady needs 4,000 passing yards this season for a $1 million bonus, the smart contract would indicate this milestone, read the oracle to see how many passing yards Tom Brady has accumulated, and when that number exceeds 4,000, it would automatically send funds. This is just one example of how contracts can be optimized with blockchain and NFT technologies.
Upgradeable, dynamic smart contracts can impact other industries, too. Consider renting a house or a car, or even a timeshare. Daily, weekly, and monthly NFTs that expire and automatically revert ownership back to a single owner or group of owners could provide verifiable ways to rent, own, and share properties.
Event passes and tickets is another area that could benefit from NFT technology. It would provide a level of security to buying, selling, and trading tickets on a secondary marketplace, make accessing events quicker and easier with platforms like Tokenproof, and open up a range of post-concert possibilities for creators and artists to reward fans (airdrops, custom POAPs, exclusive event footage, etc.).
The point is, NFTs are going to change the world. The technology is about more than cartoon drawings and vibez! (though these things are changing the world, too).
It’s about changing the way we communicate and interact virtually.
It’s about providing transparency, proof of ownership, and instant access to convoluted industries.
It’s about supporting creators, artists, and charities.
It’s about fairness and opportunity.
It’s about owning your online identity and assets.
It’s about community and sparking new relationships.
It’s about taking back control of the internet, one of our most frequently visited playgrounds.
There is a long way to go, but the ways in which NFTs and the technology behind them will impact our lives are infinite. Enjoy the ride.