How NFT Technology Is Revolutionizing Creativity
Ivan is responsible for navigating Infobip toward becoming a developer-centric organization through dedicated programs and initiatives.
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Whether it’s articles about artistic monkey avatars or seeing new crypto opportunities emerging online, there has been a lot to absorb about NFTs recently. The media is replete with stories about fortunes being made with NFTs — from celebrities investing in NFT art runs to school children coding their own sets. But how do NFTs fundamentally work, and are they more than just the latest craze?
NFT stands for “nonfungible token.” As part of a recent wave in crypto design, developers can code new sets of tokens, and their finite design ascribes value as currency. Attached to this digital identity (the coded token) is a visual: a piece of art. And in the same way collectors covet rare prints, buyers are increasingly snapping up NFT artworks. For the right price, you can be the owner of one token in a limited set.
With certification, NFTs can be bought and sold on the crypto market, and they present radical new ways to trade and invest online. Detractors see them as a volatile option, but this hasn’t stopped NFTs from skyrocketing in popularity over the last few months. From this surge in interest, developers are finding new opportunities to create revenue streams — you only have to click around online to find stories of developers earning a mint from NFTs, ranging from thousands to even millions of dollars. Justin Bieber, for example, joined the Bored App Yacht Club, an exclusive community for holders of 10,000 unique Bored Ape NFTs living on Ethereum’s (ETH) blockchain, after buying Bored Ape NFT #3001 for $1.3 million.
The Story Behind The Art
Despite their intangible nature and a looming question mark over their value, NFTs have managed to cultivate hype and luxury status. The monkey NFTs of the Bored Ape Yacht Club have become a well-recognized part of the crypto industry, and an expensive circle of owners has developed around it.
Among the star-studded roster of investors are Snoop Dogg, Eminem and Paris Hilton. Many celebrities have even gone as far as to throw their hat into the developer ring. For example, Ozzy Osbourne has partnered with a coding team to create a series of NFTs called CryptoBatz, a collection of 9,666 blockchain dwelling bats.
Why NFTs have more of an understandable footprint is their art representation. Images, animations and GIFs are some of the most common forms of tokens — these are the digital goods attached to NFTs. After creating a series of surreal animations set to original music, the singer Grimes managed to sell $6 million worth of digital art as NFTs. Like investment in any stock, the gold rush is enacted in the hope of future worth, and many believe that growth is on the cards for NFTs.
The Future Is Bright
But just because celebrities are taking their slice of the pie, does that mean everyone else should follow suit? If the performance of other cryptocurrencies is anything to go by, then it’s easy to see why many are keen to get involved in NFTs from the get-go.
Bitcoin is a great example. Even though the changing winds in global markets are buffeting its value, the general trajectory of Bitcoin is upward. In March 2018, Bitcoin was worth approximately $8,200. As of March 2022, it reached as high as $47,000, with analysts predicting it could hit $100,000 soon. Those investors who feel they missed the Bitcoin boat are now far more eagle-eyed when it comes to purchasing NFTs.
Investment and art aside, new ways of building a business are emerging from NFTs. As part of a nascent trend, hotel chains are looking into using NFTs and tokenization to provide financial resources for stability and growth. The five-star hotel Ca’ di Dio in Venice is auctioning off a night’s stay through bidding on NFTs. You might ask why a hotel would do this, but in the wake of the pandemic, hotel guest levels fluctuate, meaning revenue levels become unpredictable. By digitizing assets through blockchain technology, parts of a hotel can be parceled off to investors — a new way to liquidate and introduce fractional ownership to generate short-term cash flow.
And Secret Island Club (SIC) plans to buy exclusive plots of land within various metaverse worlds in order to create a chain of SIC Hotels.
Is The NFT Hype Justified?
It’s hard to be anything but diplomatic in response to this question. Inflated value is a real concern, and NFTs are the new kid on the block. We need to wait a while longer before we can accurately predict their destiny. There can be lessons learned from history and the dot-com bubble of the late ’90s, where the value of internet stocks plummeted at an alarming rate.
It’s also true that a lot of aspects of crypto are unregulated — and in the darker corners of cyberspace, cryptocurrencies are used to launder money and commit fraud. Until legislation and protective measures catch up, there will remain an element of volatility in the NFT industry.
But the value is far greater than just the monetary worth. NFT creators profit by taking a cut on future trades of the NFT. Bored Ape Yacht Club, for example, grants the owners of the NFTs rights to it, so they can use the visual to print T-shirts or create films, taking home 100% of the profit. Through tokenization, coding is now creating new hybrid stock options for businesses and could offer a way forward for many ailing companies.
As we see time progress and more innovators think of ways to use tokens as corporate or consumer resources, we’ll then start to piece together a better picture of NFTs and their value in the working world. As digital ownership increases and crypto becomes more established, NFTs could prove to be the next big thing.
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