The Value and Potential of NFTs
Disclosure
Disclosure: The views and opinions expressed herein are those of the author only and do not represent the views and opinions of the News Agencies editorial.
The minimum price for non-fungible tokens (NFTs) is dropping.
Across the board, we see stories of massive amounts of money disappearing and no one is immune. All eyes are on the cryptocurrency industry. All eyes are watching to see where innovation takes us. However, the headlines often seem to focus on insignificant market fluctuations driven largely by random bursts of activity in forex trading and minting.
The future is clear: we must move beyond the prevailing perception that NFTs should be limited to the buying and selling of pixels.
It is time for industry leaders to focus our joint efforts on possibilities. As we march toward the new frontier where the digital and physical worlds converge, it’s time to focus our collaboration on driving actual use cases for NFTs.
The perfect value
The news lately has seen countless stories change about the value of the incredibly popular (and liquid for some time) NFTs and the subsequent sharp drop in their prices. These stories raise the question: without any intrinsic value outside of what the market determines their value, how valuable are these pixels really?
Early conversations about NFTs enthusiastically pointed to the fact that digital ownership ensured that the artist’s work would retain its place in the artist’s wallet or buyer’s hand, truly combating theft and illegal use of digital art. This opened a new avenue for technology and propelled some artists into the stratosphere (and for many, rightfully so); Beeple broke records with “Every day – the first 5,000 days” and it sold for $69.3 million, even the Buck Series of NFTs.mergeIt brought in $91.8 million.
In art, and in collectibles, there are clear use cases for using the revolutionary technology behind NFTs. However, technology has been increasingly misused and used as a novelty, more than anything else. Markets have seen plain JPEGs sell for well into the tens of thousands of dollars, without any real intrinsic value backing up the offering. The main value proposition of these NFTs has been largely betting on the fact that buyers can sell the images at a higher price.
As time has shown time and time again, the vast majority of NFTs are painfully overvalued.
Non-fungible items
The industry has been overdue with some soul-searching, and it’s time to really think about what the intrinsic value of NFTs might look like. The new horizon is approaching. For COZ, this represents the digital world that you can touch and interact with physically. In other words, the non-fungible element (NFI) has arrived.
In practical terms, NFI means taking a physical asset, say a loop, and giving it a software development kit. In theory, these items cannot be stolen, as all assets using NFT technology are unique, which means you can prove ownership of the item. On a more technical level, the technology exposes a controlled, anti-counterfeiting payload associated with on-chain and object cryptography. So, in general, it takes any physical item (be it a ring, a piece of art, a T-shirt, or a handbag) and gives it a software development kit capable of interacting.
Brands are taking notice. Fine jewelry house Yvel has launched the Independent Non-Fungal Security Program (INFS), a trading platform that integrates blockchain with real collateral in the form of unique gold coins adorned with diamonds and other precious stones. Crurated, a wine community, benefits from blockchain and NFTs with every bottle of wine that enters their warehouse. Each bottle is assigned an NFT – recorded on the blockchain – to validate it and provide key information, which is then updated as wine is bought and sold.
Use cases
Despite being an emerging technology, NFI also shows huge potential via traceability (as each physical asset is cryptographically unique and information stored on the blockchain), providing proof of ownership (as blockchain is critical in managing and confirming ownership in a decentralized manner)., and linking loyalty rewards to distinct physical assets.
Marking the beginning of the conceivable possible, these examples illustrate the key defining factor that is often missing in conversation: intrinsic value.
Increasingly, NFTs are being used across real estate, maintaining relevant cultural and political information, and even facilitating fundraising for the underprivileged around the world, which in time will positively influence the path of innovation.
Looking ahead, we must focus on tangible and – most importantly – useful use cases. It represents too much potential to be dismissed in favor of the headlines.
As we watch the prices in the NFT markets go up and down, it is very easy to believe that the cycle will continue in repeating patterns. However, when we take a step back, it is clear that NFTs have endless potential.
We are simply beginning to see what is possible. Where the digital and physical worlds converge is where opportunities lie.
