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It’s likely that you heard of NFTs, or non-fungible tokens, for the first time when one of them was sold at an art auction this year for a headline-making sum—69 million USD, to be exact.
This news prompted articles attempting to address the most obvious question: What are NFTs? Many who read them still couldn’t figure it out. Meanwhile, the art sales kept coming, reaching billions each quarter and including works as diverse as Twitter founder Jack Dorsey’s first tweet, Nyan Cat GIFs, and a 50-second video by the musician Grimes.
But the scope for how NFTs may enter our lives in the future is far wider. Even if you haven’t bought a Cryptopunk (one of the most coveted unique, randomly generated NFT collectibles), one day you’ll likely own NFTs to do things you take for granted today like buy a house, attend sporting events, play online games, or stream TVs and movies.
NFTs explained, and how they’re related to crypto
In the real world, physical goods are bought and sold. NFTs allow you to do the same with digital goods. The term “non-fungible” refers to something unique that you can’t replace—so with NFTs, you are able to be the sole owner of a digital image, piece of music, etc.
This is achieved thanks to Blockchain technology, which is also what makes cryptocurrency like Bitcoin possible.
When you buy an NFT artwork (or indeed cryptocurrency) the token is transferred to your digital wallet that only you can access. The sale is recorded on a blockchain, and the token proves that your digital file is the original—even if someone takes a screenshot of your artwork or saves a copy to their device.
How NFTs might become part of your life very soon
Sure, being able to prove that you’re the true owner of Explosion of Colour #59 is cool. But the scope of what NFTs could enable is far wider. Let’s go into a few examples of how NFTs may soon enter your everyday life.
NFTs will change how we view art
How important is it that art be a physical object? Damien Hirst’s recent project called “The Currency” raises this question. The British artist hand-painted 10,000 unique artworks, which were also reproduced as a corresponding NFT version. All the buyers were then given one year to decide whether to keep the painting and give up their rights to the blockchain-based artwork or keep the NFT, in which case the physical artwork is destroyed.
Sure, it’s gimmicky, but it’s also a view into whether collectors think physical or digital formats will be more valuable in the future.
NFTs will revolutionize movies and shows
In July 2021, Hollywood power couple Ashton Kutcher and Mila Kinus launched their animated web series Stoner Cats (the couple voice characters in the show, as does Ethereum co-founder Vitalik Buterin). Stoner Cats NFTs were sold, which act like a “ticket” to stream the episodes when owners connect their Ethereum wallet to the project’s website.
Where this “direct to NFT” model gets really interesting is that NFT owners (a.k.a. the audience) also get to be directly involved in the show’s progress, voting on how they want the characters and plot to develop.
When it comes to calling the shots, communities of die-hard fans empowered by ownership in a project may soon hold more sway than Hollywood studios in shaping the narrative of entertainment trends.
You can play NFT games for profit
Games like Axie Infinity are pioneering a new “play to earn” model of mobile gaming that’s allowing users to earn money through gaming. Players buy, breed, and battle monsters called Axies, which are NFTs. Once they’ve created a rare or strong type of Axie—a process that requires spending various digital currencies—they can sell it for a decent profit.
It may be a while before such titles eclipse the popularity of top-sellers like Call of Duty or Fifa, but the “play to earn” model has taken off—so much so that in the Philippines, where around 40% of players are now based, many players were able to ease the financial struggles brought about by lockdown with income earned playing Axie Infinity.
Another variation on the theme is Genopets, a soon-to-launch Solana-based “move to earn” NFT game, which incentivizes players for steps they take in real life by synching with wearable fitness trackers or their phone’s step counter.
NFT sports tickets and collectibles
NFTs may soon act like tickets to a sports game. When you buy your NFT ticket, information like your name, the date, and the event are all coded into the token’s metadata. Your NFT ticket is unique and traceable back to you. Sure, someone could duplicate your ticket, but it won’t work because the record of the purchase is on the blockchain—unless you decide to sell it to someone else, transferring the NFT’s ownership.
Trading cards are another arena ripe for innovation. Digital NFT trading cards for NBA players, for example, could display stats that automatically update in real-time during games and over the season.
NBA Top Shot, an NFT marketplace centered around basketball, has taken a similar approach, except instead of photo cards you receive video highlights that allow you to own unique moments in NBA history, like an iconic LeBron James dunk.
NFTs for buying a house
Just like how buying an NFT artwork creates a unique record of that transaction on a blockchain that provides tamper-proof certification of ownership, this model could work perfectly for property ownership.
Transferring property ownership is currently laborious, expensive, and involves a lot of paperwork. Tokenizing property rights using NFTs and programmable smart contracts registered on blockchains would make them far easier to manage. The sale of the house can be registered on a blockchain, with an NFT given to you as proof of ownership much like a deed does today.
The uniqueness of each NFT is defined by the information stored in the token’s metadata. For house sales, this can include the purchase history or notes about the premises—all represented on-chain.