It will soon be a year since non-fungible tokens, aka NFTs, had their “moment.” On March 11, 2021, a collage of digital art by the artist Beeple sold for $69 million at the august Christie’s Auction House in New York City. Five months later, NFT trading/minting platform OpenSea rang up $95 million of NFT sales in forty-eight hours, which was roughly four times its trading volume for all of 2020. Last month, OpenSea was valued at more than $13.3 billion in its latest round of venture funding.
Over the past several weeks, celebrities from DJ Steve Aoki to Melania Trump to K-Pop sensations BTS have minted NFTs for their fans and collectors. Meanwhile, companies and even governments are either jumping onto the blockchain full-force or, at the very least, hedging their bets with small purchases of crypto and/or ceremonial NFT sales.
While no one can accurately predict how a new, dynamic technology will play out in the near term, it’s safe to say that blockchain has left the conceptual stage and, thanks largely to NFTs, has moved on to a new phase of actually solving real-world problems. As with any new technology, it will take a while to shake out the lasting applications from the opportunistic plays. More importantly, a raft of individuals–from executives and politicians to consumers and students–will need to be educated on how the technology works and what it all means for them.
Eleven months since the Beeple sale, NFTs are still mostly associated with artwork in general, and avatars in particular. This is because 1) NFTs appear to offer digital artists (and some scammers) a way to get rich quick; and 2) gamers were some of the earliest adapters, and in-game sales of NFT art has proven remarkably successful. So too has “avatar art” in general.
Earlier this month, for example, double jump.tokyo’s NFTPLUS solution successfully supported “Astro Boy,” the first official NFT project of Tezuka Productions Co., Ltd.. “The 1000 items comprising the Generative Art NFT sold out within one hour,” recalls double jump.tokyo’s CEO Hironobu Ueno. “We also auctioned Mosaic Art on OpenSea for 120 ETH.”
Another popular collection is the ubiquitous Bored Ape Yacht Club, a collection of algorithm-generated, non-plussed ape faces. BAYC is upping its game by attaching benefits to each ape sold, an innovation known as utility NFTs or uNFTs. “When you buy a Bored Ape, you’re not simply buying an avatar or a provably-rare piece of art,” the company’s website says. “You are gaining membership access to a club whose benefits and offerings will increase over time. Your Bored Ape can serve as your digital identity, and open digital doors for you.”
NFT In-game Purchases
BAYC is a rare example of a successful NFT that is not based on a game or a known creative property. “The key is creating digital assets that players want,” says Tomi Brooks, double jump.tokyo’s director of business development. “Nowhere is this more apparent than in the rewards offered, which more and more means NFTs. Ecosystems that do not provide these will eventually disappear, while those that mint the most desired tokens will literally create the Metaverse.”
During the Covid lockdowns, games were extraordinarily popular. This trend is expected to outlast the pandemic lockdowns, and not only because remote and hybrid work mean that more of us will be spending a lot more time at home with our consoles. The more people play, the more attached they become to the game itself–and to their in-game avatars. Facebook, the world’s largest social media company, renamed itself Meta Platforms recently and has spent $10 billion building an immersive “Metaverse” that allows players to play anywhere, anytime, with anyone. Avatars and NFTs are both central to Meta’s strategy to monetize the Metaverse, in the same way that Facebook and Instagram monetize social media.
Some smaller developers, like double jump.tokyo, which provides creators with technology and tools, are already on board. “Those who wish to at least survive will successfully incorporate blockchain technologies into both their games and company strategy,” Brooks says. “Mainstream adoption of NFTs and blockchain technologies will continue to accelerate.”
Art, in whatever form, is hardly the only or even the most exciting application for NFTs, however. As many technologists have pointed out, NFTs are essentially contracts. They are coded to exist on blockchains as licenses–digital contracts that validate and clarify the transference of digital rights. These rights could entail ownership of an original piece of art, or they could be something else entirely. In other words, there is just as much opportunity in managing NFTs as creating them.
The advantage of embedding licenses in NFTs comes down to simplicity. Rather than spend time drafting, revising and executing multiple contracts, the NFT is the contract. Transfers are verified by the blockchain and recorded irrevocably.
Brooks’ company has rolled out a product called N-Suite, an enterprise software-as-a-service (SaaS) that extends simplicity to the minting, managing, and tracking sales of NFTs. Brooks says that N-Suite’s toolkit makes minting digital assets into NFTs easy, scalable and secure. And not just for gamers and artists.
Meta Platforms, Gamestop and the NBA are all examples of where NFTs are right now. But JP Morgan, Universal Music, YouTube and the NYSE, which happens to be the largest stock market in the world, have all committed to the technology as well. So has Alfa Romeo, which will assign each of its new luxury SUVs an NFT. This token will then contain all of the vehicle’s digital information, from servicing to driving anomalies like hard braking to ownership.
Some of these companies are further along than others conceptually, but none claims to have figured out exactly how they’ll be using NFTs in the future. What’s exciting is that none of them are looking to make much money off of selling digital collectibles or art. Though NFTs do offer some pretty exciting branding possibilities for corporations, organizations are far more interested in the solutions that NFTs offer in areas like security, efficiency, transparency and safety. After all, if you can tokenize something as embedded in our culture and as utilitarian as an SUV, you can probably change the world.