Part 4: How NFTs will change EVERYTHING
If you’re new to Crypto and NFT, or just tired of explaining it, here’s a mini-series that explains it quickly and easily. Feel free to share. This is not financial advice, do your own research.
Here are three examples that help illustrate how NFTs will be used and why they’ll change everything:
ART / MUSIC / FILM:
Artists are now able to retain ownership and/or royalties as their art is sold on the aftermarket.
Visual artists (painters, etc.) have never been able to effectively capture any value from sales of their art on the aftermarket. So, even as their art appreciates in value, they only make what the original sale was.
With NFTs, which are built on a “smart contract” on the blockchain, that contract and funnel royalties back to the founder/artist in perpetuity.
For musicians, they can now sell fractional ownership of a song, then everytime that song or album is played (same applies to video, though I haven’t seen this done…yet), anyone who has ownership in that song/album can receive a portion of the proceeds.
Meanwhile, the artist retains 80% or more of the profits, as opposed to 5% or so under traditional music label management.
METAVERSE:
If you’ve seen Ready Player One, then you know where we are headed as a society.
At the very least, it’s where entertainment is headed, but you’ll soon see all manner of applications headed here (meetings, tourism, education, etc.).
In Ready Player One, the “Oasis” is the metaverse (and I’m not talking about Facebook’s Meta exclusively, though they will likely capture a massive part of this market), and all of the objects within the Oasis area NFTs.
The Orb of Osavox, Holy Hand Grenade, the weapons, skins, cars, spaceships, etc….all NFTs. This allows each of these items to be bought and sold, traded, or “burned”, which means to destroy by using.
So, if there was only ever one Holy Hand Grenade made, that would be extremely valuable if it had good utility. But once you used it, that’s it, it’s gone forever.
In Sandbox and Decentraland, two of the most popular metaverses currently online, players can buy NFT items. Avatars, clothing, tools, buildings, decorations, etc.
They can also make and sell them, which creates a viable economy on its own. And since it’s paid in cryptocurrency (usually in a native token for that platform), that revenue is (for now) outside the purview of any nation.
Only until it’s converted into a fiat currency does it become taxable (for now), and as crypto it can travel with you anywhere you go, and you alone own it.
GAMING:
Everyone who plays Minecraft, Fortnite, Halo, Apex Legends, etc., is flushing their money down the toilet when they buy skins, weapon upgrades, or other items to use in the games.
If you upgrade your weapon in these games, then decide you don’t like the upgrade or end up getting something better, that original upgrade is wasted money. It’s just going to sit there in your inventory, unused.
In contrast, if these games were built on the blockchain, then all of those weapon upgrades would be NFTs. If you didn’t need it anymore, you could sell it, trade it, or simply give it to someone else.
They maintain value after you buy them.
And like the metaverse, these items could have rarity, making some more valuable and allowing for all new game mechanics and game theory.
There are currently “P2E” (play to earn) games where some folks earn their living playing to mine native tokens, which have enough value and, in some countries, can even be used to pay utility bills (Philippines) and other real world items.
WHAT ELSE?
Anything that’s membership based can use NFTs to prove membership or ownership. Anything that needs digital goods to be unique, sellable, transferrable, or individually ownable can benefit from NFTs.
Smart contracts can be written to dictate what happens to an NFT after it’s sold, and every time its sold or transferred.
They can even be written to tie into real-world phenomena. Surf Club, which is built on SOL, has tokens that show different famous surf breaks from around the world…and the image backgrounds change based on the local surf conditions at each of those breaks.
At the end of the day, it’s code. It’ll do whatever we tell it to do. How creative can we get?
