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If you think that NFTs are only cryptic art in a playpen for crypto millionaires, then that's a fully understandable notion. But if you are keen on web technology and web strategies, then you should dig for a deeper insight. We believe that NFTs are going to be one of the most important building blocks of the future internet.
Morten is CEO and founder of the Media startup Kaupr. Background as a journalist (Dagens Næringsliv), communication advisor (Cox Kommunikasjon & Dinamo), and digital business consultant (The New Company). Today exploring Web3, the Metaverse, and the Next Generation Internet as a founder and editor of Kaupr.io.
This article was written by Morten Myrstad. Myrstad is entrepreneur and editor in kaupr.io. Myrstad has a versatile career as a journalist in Dagens Næringsliv, entrepreneur in the communications agency Cox and digital business advisor in The New Company. This article was first time published in The New Company's blog, before kaupr.io was launched.
NFT is short for Non-Fungible Token, i.e. an entity that is unique. The opposite of a non-fungible token is naturally a fungible token, i.e., an entity that is not unique. In a digital economy, a cryptocurrency such as Bitcoin will not be unique. Similarly with the 5 to 6, 000 other cryptocurrencies that exist. But these cryptocurrencies are simultaneously possible to buy, sell, exchange and exchange, based on pricing and exchange rates in the market. In the same way that you can exchange a Norwegian 1000 note for 100 notes or krona coins. Or exchange a krona currency into Euros, Dollars or other international currencies.
Unlike a cryptocurrency, an NFT will be unique. Yes, even if an NFT art project, for example, has released 10,000 NFTs, these will be unique and limited in number. In principle, in the same way as a graphic print that is issued in a limited and numbered edition. This implies that where an NFT will be an asset, an asset, then a cryptocurrency will primarily be a means of payment. To buy an NFT today, then in 90% of cases it will also be necessary to pay with ETH (Ethereum), i.e. the most used cryptocurrency after Bitcoin. But new blockchains and marketplaces are popping up every single day to be able to offer the purchase of NFTs in cryptocurrencies other than ETH.
On the surface, an art NFT may appear to be just a JPG file. But the JPG file is again connected to a so-called smart contract that documents unique ownership, confirmed by many nodes in a blockchain. Similarly, a change of ownership will be confirmed via a new or updated smart contract in the same blockchain. So while it may be possible for many people to share a JPG file, in the same way that one can take and share a photograph or screenshot of a Picasso painting, only one will be able to document ownership.NFT art first use
NFT art has proven to become the first known area of use for NFTs, where last year, with the largest marketplace OpenSea in the lead, were traded NFTs for $13 billion. What has become most famous are NFT projects where new digital art uses algorithms to be able to produce, for example, 10,000 copies that differ slightly from each other, but still belong to the same family.
The most famous, which have also given the highest awards, are Bored Ape Yacht Club and CryptoPunks. Yes it is certainly possible to tear one's hair over the prices that many of these projects achieve. But the best of these projects are distinguished by a very active community, usually with more than 100,000 social media followers or Discord members. They are also happy to have an active core team that works as hard as any startup or scaleup. And some of them are actually turning the venture process upside down by using their newfound knowledge to build and launch new products or to partner with Hollywood or fashion houses, for example. In parallel with the fact that the best NFT projects can become mega-successes, the vast majority of new NFT projects will probably see prices drop towards zero, similar to when the internet bubble burst at the turn of the millennium.
So far, most NFT projects have bet on 2-dimensional images, but 3D animations are now in rapid growth. We also believe that we will increasingly see that physical art, what many people will still call “real art,” will be digitized to increase accessibility and distribution, and at the same time document ownership. Also a renowned artist like Bjarne Melgaard, for example, launched his project before Christmas “The Lightbulb Man“, an NFT project with 1122 unique works. At the same time, many designers, photographers and creators who have long carried on a dream are now engaged in NFT art. In just a few weeks, for example, the Facebook group has “NFT and Digital Art Norway” gathered over 3,000 members, and activity is high.
The first physical NFT exhibitions have already arrived, also in Norway. NFT images or animations are displayed here on high-resolution TV screens, and can be included in a permanent exhibition, a sales exhibition, a vernissage or an event. First out in Scandinavia with a pure-grown, physical NFT gallery was Verse in Pilestredet in Oslo. Here, entrepreneur Sophia Adampour has exhibited both photos, videos and animations that are part of her own collection of NFT art. She also wants to develop the gallery in Pilestredet into a meeting and learning venue.
We also predict that NFT photography and especially NFT music are now facing explosive growth. For a musician struggling to get a few bucks off Spotify, or who isn't big enough to gather bigger crowds at a concert, it's now actually possible to establish a financial direct relationship between musicians and fans, regardless of intermediaries. The marketplaces for NFT music are also in the process of being established, where among others. Royal recently brought in 55 million USD. Another music platform, Audius, is described as a competitor to Spotify. Yes, both the libraries, user interface and functionality are currently limited, but in this world development is happening at a record pace, based on web3 technology. Already now we have identified a 20th century of new music platforms, which we have collected in a separate Twitter List.
So far, several indie artists have experienced being sold NFT music for amounts that they would have had to wait years to achieve, if they were to bet on streaming alone. Several new business models in music sales and distribution are also being tested. Some platforms function more or less like free marketplaces, where a musician can upload their tunes and set a price. Another model is being tested out of The Sound , where they daily release a new artist and a new song that sells a maximum of 25 copies. One of the most successful breakthroughs in this way is Daniel Allan, which now also achieves good prices in the secondary market on OpenSea. In a third model, one invites music-interested collectors and investors to buy into an entire music project, consisting of an album, single tracks, concerts and perhaps clothing and other products. Investors here enter the forefront of developments via crowdfunding. Many of these music projects are now being launched on the new publishing platform Mirror, directly in an article or blog post.
Even bigger artists and stars are now curious about what NFT music can bring of opportunities, not least when it comes to establishing a new relationship between artist and fans. Several well-known musicians have also stepped in as investors, not only in NFT art, but in new music distribution platforms. IN Royal For example, we find artists such as 3LAU, Nas and Norwegian Kygo on the owner's side. Now Royal is embarking on major launches of NFT projects, including together with Nas.
So what about games? In sheer numbers, actual gaming is much bigger than both the music industry and Hollywood. Many therefore believe that gaming will help ensure that both NFTs, blockchains and cryptocurrency reach a larger mass market. One of the early players to have offer bets on blockchain technology, Axie Infinity, has refined a so-called “play-to-earn” model, where many of the players are able to earn a living by winning in games. Partly, this new virtual economy is built by Axie having its own cryptocurrency, but it also happens by the fact that characters and other items inside the game can be bought and sold - like NFTs! Both established and emerging gaming players are therefore now betting hard on developing attractive games based on a combination of blockchain technology, cryptocurrency and NFTs.
Now we move beyond the creative industries and ask: If, with the help of a smart contract, it is possible to document ownership of an image, animation, photo or song, can't NFT technology just as easily be used to document ownership of any other kind of asset? The answer to that question is yes. Right now, we think it's almost only the imagination that sets the limits for new uses for NFTs. Examples we have seen so far include physical property, cars, products, services, events, subscriptions, as well as art, music and games.
Long before Facebook changed its name to Meta, various startups have been working on creating new virtual experiences in the metaverse, where one can enter as oneself or as an avatar, i.e. a role one occupies. Contrary to popular belief, a metaverse experience does not depend on wearing VR glasses, but can also be experienced via web technology and mobile devices. One of the best known metaverse platforms is Decentraland, which has already had both major gigs and music festivals. In Decentraland it is also possible to buy virtual property, yes the different parts of Decentraland are divided up into thousands of allotments that can be bought - like NFTs! A British actor, boson, has also opened a portal in Decentraland for so-called dcommerce (= decentralized commerce), where it is possible for virtual stores and brands to buy and sell both virtual and physical products. Again - like NFTs! With Boson's technology and smart contracts on an underlying blockchain, an agreement can also be reached for the delivery of a physical product, contractually secured via an NFT.NFAs a central building block of the future InternetThere are already millions of NFTs, hundreds of NFT projects and dozens of uses. And the number grows with each passing day. We therefore believe that NFTs are going to be one of the most important building blocks of the internet of the future, just as important as URLs for web pages. So the next time you're developing a new web service for your own company or for a customer, it might be worth asking yourself if you should take a closer look at NFTs as a possible element.