NFTs – the tokens that could change our world
In the past year, NFTs have exploded onto the global investment scene. A digital artwork by the artist Beeple sold for a record US$69.3m at Christie’s. Sotheby’s, one of the world’s oldest auction houses, recently opened a splendid new gallery. The most notable thing about the building is that it occupies prime real estate in an online ‘metaverse’, and auctions NFTs. CryptoPunk 7523, one of a randomly generated set of 10,000 unique digital characters, sold for US$11.8m at Sotheby’s Natively Digital auction.
But it isn’t the art that is revolutionary, but the technology behind it. NFTs are a method of granting people unique ownership of digital assets by registering them on a blockchain. That may not sound as cool as a video clip of basketball star LeBron James in action that sells for US$100,000, yet it’s a game-changing solution with significant implications for the future of human interaction, enabling an unambiguous framework for value in virtual exchange.
In the same way that blockchain itself is a revolutionary technology that transcends the price swings of Bitcoin, NFTs represent a paradigm shift in the way that non-physical assets are valued, stored, owned, and secured.
NFTs have reached the mainstream – ideal timing for Crypto.com to support an analysis of the current situation and provide prognoses on future trends.
We’re excited to announce a new interactive NFT hub hosted on FT.com, and a series of six white papers which will be published on the Crypto.com Research Content Hub later this month, outlining the findings from our research on market trends and technical evolutions in the NFT realm.
Highlights:
- NFT trading activity more than doubled between July and August, adding 185,000 unique buyers or sellers of an NFT – bringing the total to 280,00
- User-created metaverses enabled by NFTs may help return cyberspace to an earlier era of freedom by moving from a ‘closed-loop’ virtual environment (such as a gaming or social platforms) to an ‘open-loop’ one
- Prototype next-generation metaverses such as Decentraland and Somnium Space already show the beginnings of true society, with individuals settling land, interacting socially, exchanging goods, and asserting ownership rights
- In June, digital property investment fund Republic Realm bought a parcel of land in Decentraland for more than US$900,000. Such activity suggests it won’t be long before real estate investment trusts (REITs) begin sniffing out opportunities in the metaverse
Today, most NFTs are aesthetic. But there’s a lot of innovation being done enabling dynamic utility of these assets that you can program.
Eric Anziani, COO of Crypto.com
The Crypto.com NFT platform features curated NFTs from global artists and partner sports brands such as Formula 1, UFC and Paris Saint-Germain, and also allows users to mint and put their NFTs up for sale. He says we are already seeing this ‘dynamic utility’ in action: “NFTs really started initially with the digital art side. But it’s going to be a lot more powerful. It will be the tool that represents any digital type of assets in virtual worlds going forward. So the applications are tremendous.”
What does the future of NFTs look like?
Crypto.com not only hosts its own NFT gallery but also runs a full in-house research team of analysts with both academic research and applied finance and tech backgrounds.
The Crypto.com team took a closer look at emerging trends in the evolution of NFTs and will present a series of six white papers later this month.
Here are three of the key trends addressed by this research:
Owning gaming assets
NFTs have gone beyond collector value. One of the applications of NFTs beyond art is that they can be tradable items in gaming, an industry valued at over $173 billion. In traditional gaming, users can purchase items at additional cost, in-game. But the item de facto remained the gaming company’s. With NFTs, the items are fully owned by the gamer and can be sold or traded. The white paper explains how this is another big step into the world of decentralisation that blockchain technology is facilitating.
Making the metaverse a reality
The metaverse is a persistent online 3-D virtual space co-created and owned by its users. Here, with NFTs, digital assets can be owned, rented, shared, and programmed – for example, for creators royalties or fractionalisation. NFTs enable the metaverse where users truly own and control their assets, returning the internet to the open vision on which it was built, returning stakes back to its users. Crypto.com takes a deep dive into how this looks in (virtual) reality.
Improved security with better storage options
Storage is one of the hottest topics when it comes to crypto and NFTs. Where do I store my $69 million Christie’s NFT to keep it safe? While an NFT transaction is completed on a blockchain, it’s usually stored off-chain, on the project’s or another third party server. Crypto.com presents an overview of existing and emerging storage options in its white paper that will be released later this month.
For more details on the Crypto.com NFT analysis, please visit our Crypto.com Research Content Hub.
To read the full articles developed in collaboration with the Financial Times, please visit FT.com.
