Here’s to new beginnings – the birth of NFTs
Ever since they hit the stratosphere in 2021, NFTs have been inescapable, both online and off. Like other online trends, NFTs change quickly. Development is accelerated by rapid boom-bust cycles accompanied by shifting tastes. Naysayers predicted that NFTs would be a flash in the pan and quickly disappear once consumer interest shifted to the next promising innovation. Over a year after one NFT sold for $69 million, it’s clear that NFTs have enough staying power to warrant serious interest and analysis.
2021 was the year that NFTs went fully mainstream – NFT was even Collins Dictionary’s word of the year. Major brands across industries bought into NFT hype and started releasing their own collections. Sports giants like the NFL and NBA found a way to connect with fans. The NBA’s Top Shot collection cleverly exploited fans’ desire to own a piece of basketball history. Fashion giants Gucci, Nike, Adidas, and Prada minted NFTs marketed toward customers interested in the intersection between fashion and technology. Both the fashion world and NFT scene rely on hype, which brand participation certainly helped drum up. Major auction houses Sotheby’s and Christie’s both engaged in high-powered NFT sales, with Christie’s selling an NFT of artist Beeple’s magnum opus for 69.3 million USD.
Why are JPGs of random apes trending?
The major trend to emerge in 2021 was the profile picture NFT – recognizable collections like Bored Ape Yacht Club or CryptoPunks that could be used as a status symbol in a social media avatar. BAYC took it a little further, offering utility to customers in the form of exclusive parties and a clubhouse. Twitter engaged with the NFT boom by allowing users with NFT profile pictures to have a special hexagonal profile picture to signify the ownership of an NFT. This was a strategic move, as anti-NFT Twitter users and self-described “right-clickers” had taken to saving JPEGS of popular NFTs and using them as their own profile picture.
Profile picture NFTs are still popular, but other trends are emerging. NFT creators are trying to build collections that can withstand the trend cycle and continue to offer value to customers. Active communities, some form of utility, and owner-only perks are some of the traits that characterize successful new NFT collections. Here are three trends to watch out for in 2022:
NFTs have gotten a lot of bad press for their ecological impact. Some creators are trying to turn things around by creating NFT collections specifically designed to raise money for good causes. There is a logic to this – NFTs are recorded on the blockchain, so it’s possible to avoid bureaucratic bloat by tracking exactly how funds are used. Examples include a charity donation to the Freedom of the Press Foundation, which raised 5.4 million USD. One upcoming collection to watch out for are the Metacubs, an NFT collection designed by French collective PLEIX and Coincub. Metacubs proceeds are donated to wildlife-focused charities chosen by members of the community.
Fractionalized digital collectibles are non-fungible tokens that are a part of an ecosystem, and thus can be owned in fractions. In other words, if a certain NFT is worth $10 and there are 5 different people who own 10% shares in it then each person will be able to trade their share for $1. Proponents argue that fractionalized NFTs reduce barriers to entry and allow NFT owners to profit off their NFTs while retaining control of the asset.
NFT gaming is a hugely lucrative market. NFTs used in metaverse games can be used within games or sold on a marketplace for real-world currency. More traditional gaming studios are also looking at in-game NFTs as an option, although skepticism can cause a backlash. In-game NFTs are incredibly diverse and can represent anything from digital land to a cute set of armor for your half-elf paladin. Studios are interested in NFTs for their potential to generate new streams of income, while players appreciate the chance to own a unique in-game item.