What is an NFT and why they are here to stay?
NFT here, NFT there, after the 2021 boom and the 2022 splash we are hearing voices “NFTs are dead” “it was just a scam”….
Let’s get back to the basic and set a common ground on what are we talking about and then go through the reasons why NFT is not just a trend and are here to stay.
What is an NFT ?
An NFT, or non-fungible token, is a digital certificate of authenticity for a digital asset. An NFT creates digital scarcity and ownership in the digital world. This is made possible because NFTs are stored on a blockchain.
Let’s make an experiment, remember your Panini albums and the stickers you had when you were young, now imagine this transposed into the digital world where your stickers are unique/limited NFTs and your album a sort of digital wall displaying your collection.
Now you can tell me, “I can download the JPEG associated to this Panini NFT and make my own NFT out of it”. The response is yes you can (even if you could have an intellectual property issue — check this use case if you’re interested in the matter) but you won’t own the original one because everybody could see on the blockchain that you created this NFT and not Panini.
See an NFT as a unique ownership certificate that is forged into the blockchain and cannot disappear. Forever.
NFTs can be bought, traded, sold like other assets on marketplaces like Opensea, Rarible …
Why NFTs are not just a trend ? My 3 main reasons
1) Their Intrinsic value is safe
As long as the blockchain will be running, your NFTs will exist. The characteristics of Blockchain, transparency, security, decentralization, digital scarcity, are properties required to make NFTs secure and recognized.
NFT’s can lose their financial value (like any other collectible) but not disappear unless an entire blockchain network disappear.
2) Their use cases can be applied to almost all industries
In a world where digital is part of our reality, NFTs are a key to secure and provide digital ownership. This notion can be useful in almost all industries, and not only within the digital art world. Here are a few industries where NFTs can be used : Identification, Supply chain, Retail, Entertainment, Fan experience, Art, Gaming … all type and sorts of industries.
I’ll create specific articles on how NFTs can be applied to those industries…
3) The brands are just starting
We’ve seen many brands getting involved with NFTs, with different approach (have a look at this report) some has created their own web3 platform (Nike) others are creating NFTs collections to create a club and provide benefits to NFT holders or to finance CSR projects (Renault, Lacoste)…
Overall, we are still in an experimental phase, but the interest is here and brands won’t give up on a unique opportunity to connect with their fans and provide them unique and personalized experiences.
4) NFTs can be seen as an investment mean
NFT allows individuals to purchase unique digital or tangible assets (through tokenization) that have a potential to see their value appreciating over time.
For example, the sale of the NFT “Everydays: The First 5000 Days” by the artist Beeple for $69 million at Christie’s auction in March 2021, shows the potential of NFTs as a new form of investment and store of value. Art investments are not the only type concerned, fractions of houses, apartments, are being sold through NFTs, metaverse lands, gold.…
NFTs are changing the way we think about digital ownership and the value of digital assets. Today, NFTs are mainly used within the art, gaming, and collectibles industries and are demonstrating their potential and the wide range of use case’s in which they can be used.
My prediction is that NFTs will expand on many industries and new use cases will emerge. Real use cases will be created and people will stay away from scams or useless collections, the lesson has been learned.
We are getting into a building time when the focus has to be on creating value, utility for the holders.
In a digital world, there is no doubt that NFTs are here to stay as they are the instrument to create, keep & transfer digital ownership. Their potential is immense.
Thanks for reading me, on my next article, we will explore the notion of tokenization.
S.
