Their name is clunky. They’re not user-friendly. And they can easily be construed as worthless. Yet I keep talking about them - yes, NFTs, my friends. Why should you (still) care?
In this article, I’ll go over 3 reasons why NFTs will be much bigger than you think.
Property Rights
We, as humans, tend to enjoy owning things. However, on today’s internet, you don’t own jack squat.
Let’s say you upload a video to YouTube. They not only capture almost all of the advertising revenue but can also remove your video and suspend your account should it please them to do so. Artists receive a small fraction of a penny when someone streams their song on Spotify.
If you create artwork or music as an NFT, it can be verified as a unique asset on a blockchain.
If you can stand to look at the above image for more than a few seconds, those feet belong to “Drifter Shoots”, a US special forces veteran turned photographer. If he was only publicizing his work via Instagram, for instance, he might be able to make some money if he garnered enough followers. But if he created an NFT of the above image, someone might be willing to pay a lot of money for it (spoiler: they are willing to pay a lot of money for it). This enables talented creators to more easily profit from their work.
This is probably a good time to address the “right click → save” argument: if I own the original NFT of that photo and you save a copy to your computer, isn’t your image effectively the same as mine?
To answer that question, let’s think about why I bought the NFT in the first place:
I enjoy knowing I own the original
I get to show it off. Since we’re all online all day, I have a wide audience to flex to - maybe by displaying it as my profile picture, or in a virtual gallery of the art I’ve collected
I can easily sell it on an NFT marketplace like OpenSea.
The photographer might make additional pieces available only to official owners of his original NFTs
There might be an event open only to official holders of one of his NFTs
If someone saves a copy of my image, the blockchain easily proves I’m the original owner, and it’s about as cool for them to display the copy as it would be for me to wear a fake Rolex or hang up a fake Mona Lisa in my house.
Future Use Cases
Currently, NFTs have primarily been used for collectible images and digital art. However, there are huge things to come in gaming, brands, and even physical assets like real estate.
Games like Fortnite already sell billions of dollars of in-game outfits for players like the ones pictured above, and with gaming becoming increasingly popular and immersive, there is a huge opportunity for game publishers to sell more verifiably scarce items to players.
Brands can offer status to fans that buy NFTs, and like artists, can offer unique opportunities to holders. Imagine a Coach NFT that gives you access to a limited run of each new handbag and tickets to a yearly fashion show.
Real estate paperwork is pretty much the same as it’s been for 100 years and is cumbersome, slow, and annoying. If the deed of a house was an NFT, then ownership could be verified or transferred in seconds.
Future Markets
There are only about a half a million NFT users thus far. Coinbase’s NFT marketplace is launching in a few months and companies like Meta (the former Facebook) and Reddit are incorporating NFTs into their platforms. Once the tech becomes easier to use and more widespread, more people will be able to participate. So far, many NFT owners have been “crypto natives” - people who had already been using cryptocurrency like Ethereum and Bitcoin. The burgeoning normie market is much, much bigger.
The Bottom Line
Though NFTs might seem like the whimsical froth atop an asset market that’s been climbing since 2009, the technology enables innovative ways of ownership for our increasingly digital lives - and we’ve just scratched the surface of what they can do.