Are NFTs The Future?
If someone told you three years ago that the whole world would be racing to buy "jpegs" online, you might have laughed in their face. Fast forward to 2022, non-fungible tokens (NFTs) are now the new craze. From retail investors to brands and institutional giants in various sectors, everyone wants a Bored Ape or a Crypto Punk. In this piece, we will look into why NFTs may be the future of crypto adoption.
Virtual Identity Endorsed By Social Giants
One thing that has led to the virality of non-fungible tokens is the culture of using NFTs as profile pictures (PFPs). It all started with regular NFT owners and creators showcasing their favorite artwork on their profiles. This trend on Twitter began to take off when big names in the entertainment and sports industry joined in.
As big names like rap artist Jay Z and NBA star Stephen Curry began to use NFTs as their profile pictures, collections like Crypto Punks and Pudgy Penguins began to skyrocket in popularity. This also led to an increase in NFT PFP culture on Twitter. With everyone using NFTs as their profile picture, it was a no-brainer that the Twitter community embraced the trend. Twitter even responded with a new feature launch in January that allowed users to officially verify and use NFTs as part of their profile.
This feature is now set to become a major part of all other social media platforms in the near future. Meta has announced that Facebook and Instagram will integrate NFTs on both platforms. According to a report by the Financial Times, users will be able to buy and sell non-fungible tokens on these apps.
Also, YouTube's CEO has hinted at a possible NFT integration in a letter published in January 2022.
"We're always focused on expanding the YouTube ecosystem to help creators capitalize on emerging technologies, including things like NFTs, while continuing to strengthen and enhance the experiences creators and fans have on YouTube," the letter reads.
With most social media platforms adding NFTs, we are looking at a future where billions of people will increasingly gravitate towards crypto, beginning with NFTs. Everywhere you look, you will see an NFT PFP. The social characteristic of non-fungible tokens could be the missing piece for more community involvement in crypto. It could also lead to an increase in the integration of crypto into popular culture.
The Big Brands Are Coming
Besides social media companies that have had to adapt to user behavior in recent times, other major labels and names have caught on to the NFT craze.
Gone are the days when developing and creating NFTs was a niche activity reserved for only crypto natives. The similarities between NFTs and some practices in other industries have attracted numerous brands looking to leverage the new way of engaging with customers. For instance, NFT drops - minting events - are similar to other sales events like clothing or sneaker releases in the fashion industry. However, non-fungible tokens provide more utility, like providing an avenue for displaying a digital identity related to the brand or creating exclusive communities for loyal customers of the brand.
Adidas was one of the first to enter the world of NFTs with a drop that proved to be a roaring success. Holders of the initial Adidas NFT are expected to receive exclusive merchandise later this year.
An extensive range of brands from different sectors have also adopted NFTs recently; this includes Taco Bell, Coca-Cola, McDonald's, Ray-Ban, and Gucci. The trend is expected to continue as more companies engage with crypto for the first time through non-fungible tokens.
Play-to-earn and the Metaverse
Another important reason why NFTs are the future is the ecosystem that is being built around them. Newly launched NFT collections rely not only on beautiful arts to sell out but also on utility. Non-fungible tokens have added an interactive form of utility where owners can use their digital assets in other digital spaces like games and virtual worlds.
NFTs have created room for play-to-earn (P2E) games to flourish. These games break away from the traditional model by giving gamers rewards that have real-world value. The characters in these games are usually NFTs that users need to purchase before playing the game. Some NFTs are solely made for P2E games, while others can be used in selected games as an additional utility. With the popularity of games like Axie Infinity, P2E games are projected to skyrocket and trigger a significant wave of cryptocurrency adoption.
A buzzword that everyone cannot ignore in 2022 is the Metaverse. A concept so strong that it led the biggest social media company, Facebook to rebrand to Meta. This is another reason why NFTs are the future.
The Metaverse is a virtual world that mimics real-world interactions using audio-visuals running on blockchain technology at the core of the experience. People need to assume characters in the Metaverse and buy assets like land and much more.
All these assets are sold as unique digital collectibles on various NFT marketplaces. Prices for lands in Metaverse platforms like Decentraland and Sandbox Game have soared to all-time highs as the hype intensifies. With big names like Facebook and JPMorgan betting big on the Metaverse, growth is expected to continue in that sector.
This also means that NFTs are set for exponential growth since the Metaverse experience is directly tied to non-fungible tokens. In the future, everyone who wants to party in the Metaverse is going to need a cool NFT avatar.
The Future of NFTs is Upon Us
Non-fungible tokens are uniquely positioned at the center of various important aspects of the new digital economy and evolution of finance. The growth of other sectors in crypto is set to directly influence NFTs in a positive way. What's more, the distinctive nature of NFTs allows brands to develop new strategies that involve cryptocurrencies in ways never seen before. These big brands have a huge audience that could adopt crypto for the first time due to these new integrations, making NFTs an important part of crypto adoption.
Finally, there are several experiments adding utility to NFTs. Non-fungible tokens may be headed past the moon, with more innovation expected to flow into the space.
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