What is an NFT?
NFTs are ‘Non-Fungible Tokens’. Something that is fungible, like a dollar bill can always be exchanged for another one because they are always of the same value. Conversely, every NFT is unique and so non-fungible.
Ok so all NFTs are unique, how does that help?
NFTs allow for non-tangible items to be traded on the internet because an NFT is like a crypto coin that can be bought and sold and held in a crypto wallet.
When a Non-Fungible Token is created, or ‘minted’ it is assigned programmatically a set of values that are hard-wired into it by the dApp development company. For example, it could say that this NFT represents a specific image.
Before NFTs, a digital image could be copied infinitely and shared with an unlimited number of people across the world meaning they had virtually no value. But with the advent of NFTs, it is now possible to make a digital image into a unique original asset that can be bought and sold. But it doesn’t stop with images, any digital art can be bought and sold using NFTs. For example, video clips, audio recordings, drawings, and photographs are now all being traded as NFTs.
Real-World Investments
It is also possible to represent an original oil painting with 1 or more NFTs. This has recently been used as a way to split the value of an asset between multiple investors. By assigning say 4 NFTs to an oil painting, it can now be sold to 4 different buyers, each owning a quarter of the painting. And each of them can sell their part at any time online without consulting the other owners. The NFT is like an electronic contract so no paper contract is needed and no lawyers are needed either. NFTs have also been used to split the value of a property and allow multiple investors to each own a part of it.
As you may be starting to see, the application for NFTs is limited only by our imagination. So we can expect many more businesses to grow out of this space in the coming years. If you have an NFT idea that you would like help with, speak with our NFT development agency and we would be happy to help.
Smart Contacts
Making unique tradable assets is all well and good, but things really start to get interesting when you realize that NFTs can also be smart!
For example. It is possible to assign a number of plays limit to a movie video file and so recreating a digital version of a video rental. The same could be done with music, or perhaps a copy limit might be assigned so an album can be shared across the buyer’s 5 devices.
This kind of feature opens up a whole new world of opportunities for innovation and will over time create many new ways to do business.
Smart contacts also known as dApps can be designed by our NFT development team which also includes a dApp development company.
The Music Industry
Currently, the outlook for small artists in the music industry is somewhat bleak. 68% of the music industry is controlled by only 3 record labels, Warner Music Group, Universal Music Group, and Sony Music Entertainment. It is common for record labels to take more than 85% of the profit from the sale of an artist’s music which is already predominately digital downloads.
Then the streaming platforms, dominated by, Amazon Music, Apple Music, and Spotify, the artist can expect to only get $0.004 per stream of their songs with the companies like Spotify reaping a massive 80% of the revenue generated. But what is the solution? Now with NFTs becoming mainstream, it is now possible for an artist to publish their own music and release it for sale and get paid 100% of the sale price, finally cutting out the record labels altogether. This is also good news for the consumer because an artist can sell their music for much less than a record label would do and still be considerably better off.
It is now becoming clear that record labels are a throwback to a bygone era when a record needed a high-cost studio to record the music and then physical vinyl or a CD needed to be pressed and packaged in a factory and distributed to record shops and marketed at great expense. In those days a record label was required to cover all that upfront cost for the artist, but that is no longer the case. With NFT, the artist can make music on a computer with virtually no expenses at all and publish it online without on their own record label.
In-Game Currencies
It is common for each game to have its own currency that players can buy and use in the game for everything from upgrades to clothes and accessories to property. But this limits the assets and the currency to just one game.
We know that in the future we expect the many virtual worlds to all become part of the Metaverse and so a universal method of exchanging assets is needed and Non-Fungible Tokens fit the bill.
Already these in-game assets are being bought and sold outside of the game platforms and can be held in a crypto wallet in the form of an NFT. This adds a whole new dimension, one where rare and valuable game assets increase in value and are traded on the open market, and we are already seeing that happen.
If you are in the gaming industry or interested in developing a game or beginning the development of a metaverse application, speak to our NFT development agency to find out more about what is possible and how we can help.
Sport NFT for User Engagement
NFTs have really caught on in the sports industry with some of the first NFT success stories coming from sports, like NBA top shot which has made over $1 billion selling video highlights and sporting memorabilia in the form of NFTs. NBA top shot was an early mover but now many sports teams and stars are jumping on the bandwagon. This should not be surprising because with devoted fans sports memorabilia have been a huge part of sports merchandise for a long time. Where previously it would be trading cards and signed shirts and balls, now digital assets are all the rage in the form of NFTs like original video and photos, drawings, signed exclusive merchandise, and VIP tickets to name only a few.
It is clear that we are only just seeing the start of what is possible with NFT merchandising.
Restaurants
You may be wondering how NFTs could be used in the restaurant industry, but this is just another example of how any industry can get in on the NFT bandwagon. Now restaurants are selling pirate dining experiences as Non-Fungible Tokens, also exclusive tables in top-class restaurants. But it’s not all fine dining, chefs Spike Mendelsohn and Tom Colichio recently launched CHEFTY Pizzas NFT to give access to exclusive events and merchandise. And many restaurants are creating exclusive membership clubs using NFTs.
Fashion and Luxury
Of course, the fashion industry is on board the NFT train as well with designer clothes and accessories that you can only wear in cyberspace. Nike recently sold a pair of NFT collectible sneakers for $134,000 USD. And RTFKT Studios sold $3.1 million USD in virtual sneakers in the first 7 minutes of their sale. Buyers are able to collect a real-world pair of sneakers in the design they bought but the real value is in NFT because every design is different. This is just the tip of the fashion iceberg with a wide range of brands now working on or already selling NFT virtual products.
A Word of Caution For Investors
It’s easy to get swept up in the hype and excitement of an explosive new industry like NFT. But we should remember the experiences of those in the .com boom where any business adding .com to their name was immediately worth a crazy amount more for no other reason. Likewise, when Jack Dorsey sold his first tweet for $2.9 million US in the form of an NFT last year. The buyer Sina Estavi brought it thinking he was on to a winner. Recently he put the NFT on sale for $48 million US but the highest bid was only $280.
Don’t get me wrong, I think a lot of money will be made in NFTs in the coming years and businesses should absolutely get in on the act. And for buyers where the perks are something you will benefit from and use yourself, that makes it a great investment. But from a pure investment point of view, especially in the long term when the shiny new novelty of NFT might have faded a bit, I would proceed with caution.
NFT Development Agency
If you are a business that is looking to get into the NFT space or are looking for a dApp development company, we can offer a free consultation to discuss your project. We provide software development services and NFT development agency services.
Our NFT development team can design and build your project in whatever industry you are in, get in contact and we will be happy to help.
Ready to Discuss Your Project?
Our NFT development team can design and build your project in whatever industry you are in, get in contact and we will be happy to help.
