NFTs: The Importance of Unique Utility
The increasing popularity of NFTs has been one of the most unprecedented crypto trends of the last year. Though this innovation has existed since 2014, it appears the world is just starting to catch on to the potential of NFTs and their ability to disrupt a variety of sectors. Earlier this year, the world was stunned by news of the ‘Everyday: The first 5000 days’ collection’s sale for a massive $69 Million. In addition, recent reports show that sales of NFTs increased from $1.2 Billion in the second quarter of 2021 to a whopping $10.3 Billion in the third quarter. As a result, many speculators have begun calling NFTs the future of digital revenue generation and a bridge to equal opportunities for wealth creation regardless of social strata.
Could a Lack of Originality Slow the NFT Train?
These awe-inspiring sales and the increasing awareness of what NFTs are capable of have led to great excitement and expectations in the space. However, this high level of interest has been accompanied by an oversaturation of this budding market, now populated with recycled, low-effort NFTs. Many digital creators are now selling ‘original artworks’ that are just slightly modified versions of previously existing art. At the moment, there seems to be a thin line between parodies and original works. With no clear laws to prevent people from making a profit from these uninspired spin-offs, NFT buyers often do not get full value for their purchases.
This originality problem is also seen in the crypto-trading space, where the debates over meme coins are still rife. The rapid rise of Dogecoin caused a spike in demand for similar cryptocurrencies. We have now seen the launch of various celebrity and community-driven meme tokens such as Safemoon, Shiba Inu, and Monecoin. Attempts at replicating Doge’s success have also led to many other less creative token releases, such as ‘Dogelon Mars’ and even ‘BabyDoge Coin.’ According to a Fox Business article, there are currently over 100 meme coins, each bearing a name that has some form of connection to Dogecoin. The lack of utility and seemingly unlimited potential supply of many of these meme coins often lead to rapidly diminishing value after an initial price pump.
Improving NFT Utility — a Crucial Factor for Increasing Value
The massive appreciation of various cryptocurrencies and sales of NFTs have created a skewed view of the market. As a result, many now see these ventures as quick avenues to generate a considerable profit. However, these expectations must be tempered with a hint of realism. The fact remains that, while million-dollar sales like the above-mentioned Beeple collection, Ocean Front, and the various versions of Crypto Punks usually grab headlines, most NFTs typically sell for below $200.
One of the reasons for this is that many NFTs have no utility. Many creators ignore the question of utility, expecting their NFTs to create somehow enough buzz to sell at a high price. Unfortunately, unless you are a public figure or a globally recognized brand, it may be challenging to maximize profits from NFT sales using such an approach.
NFTs: Beyond Digital Artwork
Reliance on artistic appeal has, over time, proven to be an unsuccessful method of generating revenue from NFTs. Similarly, the narrow view of NFTs primarily as tools for selling digital artworks also limits the realization of this groundbreaking technology’s potential. The best way to maximize the capabilities of NFTs and increase their utility is to consider other functionalities beyond ‘just art.’ For instance, fashion brands are now exploring using NFTs as a means of authentication for their products. Whereas previously buyers had worries about the originality of their purchase, with NFTs, these fears can be alleviated. This is because owners of physical products would now have a digital token equivalent, which reduces the possibility of being sold a knock-off product.
The clamor surrounding NFTs is bound to increase as the metaverse begins to grow in popularity. Speculators are already considering the potential of a metaverse-NFT collaboration in every industry. In addition, technology big-wigs are looking to the metaverse as they begin to chart the course for the future. Most notably among them is Facebook who has recently announced that it will become a metaverse-focused company and rename itself “Meta.” This is excellent news for NFTs as they can serve as a bridge between the digital and physical worlds. Furthermore, it is widely believed that as use cases for the metaverse increase, there will be a proportional rise in NFT utility and, consequently, value. Therefore, creators seeking to increase the value of their NFTs should explore possible metaverse applications.
Gaming is another area where NFTs can be useful. NFTs can turn the fun up several notches by giving players the chance to actually earn from games. Many gaming companies and NFT creators are increasingly becoming aware of the growing demand. They are building games in which NFTs can be used to purchase in-game assets and other rare collectibles such as gaming cards. The play-to-earn (P2E) community is growing rapidly and quickly gaining attention from other industries that implement unique NFT use cases. The gaming industry is just scratching the surface of how NFTs can transform it, but the future looks bright for this union.
Building the Future with Lovelace
The NFT space will continue to develop rapidly in the coming years. Businesses that commit to harnessing the power of NFTs and the metaverse will have a much better chance of surviving and thriving than those that choose to ignore the rapidly growing potential of thus disruptive, new technology. Fortunately, Lovelace has the knowledge, tools, and network to help businesses develop and execute their NFT strategies.
About Lovelace World
Lovelace empowers creators to realize the potential of the metaverse through its NFT marketplace, Play-to-Earn gaming engines, smart contracts, launchpad, and partner integrations.
Our Metaverse-as-a-Service toolkit helps creators breathe life into their NFTs, games, digital economies, and worlds across Cardano and other blockchains.
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