Before the age of smartphones allowed the average person on the street to take a selfie with their favorite celebrity, autographs and signed memorabilia were in high demand among collectors. Of course, the value of these real, authentic and rare souvenirs is and remains so today.
Thanks to the usefulness of blockchain technology, however, digital collectibles become modern autographs or unique, priceless works of art. People don’t have to look any further than the $ 69 million that was paid at auction for the now famous “Everydays: The First 5000 Days”, a digital collage by digital artist Mike Winkelmann, better known as Beeple.
The auction of the digital work of art with around 5,000 digital works of art created by Winkelmann is the most expensive NFT ever to be auctioned by the world-famous auctioneers Christie’s. With one blow on the auctioneer’s hammer, a piece of crypto art not only shook the world of digital collectibles, but immediately brought NFTs into mainstream consciousness.
The art world isn’t the only industry enjoying the fruits of NFT’s popularity. Various sports icons, brands, and teams have entered the battle by minting trading cards and digital memorabilia that have also attracted million dollar bids from sports-loving NFT collectors.
NFL veteran Rob Gronkowski raised the bar for the sports NFT arena after recently auctioning off a limited series of trading cards to commemorate his four successful NFT campaigns. Each successful NFT title was represented by an NFT trading card consisting of 87 digital versions, while a fifth “Career Highlight Refractor Card” was created in homage to these four successful campaigns.
Gronk managed to sell a total of 349 trading cards at auction as well as the unique Career Highlight card to 95 different owners. The total trading value of the auction was 1,014 ethers (ETH) worth 1.8 million USD, with the one-time career highlight NFT being sold for 229 ETH worth around 435,000 USD.
Digitally signed tweets are also becoming increasingly valuable as NFTs. Twitter CEO and co-founder Jack Dorsey sold a token version of his and the platform’s first tweet for $ 2.9 million. The proceeds from the sale were donated to an African charity that supports efforts across the continent to address the ongoing COVID-19 pandemic.
In the meantime, it is questionable whether all of the artworks on offer add value to the industry as, for example, some commentators, even outside of the core crypto community, are starting to question the price tags of NFT artwork, such as the single red pixel that became up for sale for $ 900,000.
Non-fungible tokens took the cryptocurrency space by storm in 2021 as various forms of digital collectibles attracted multi-million dollar price tags. But are there more fruitful use cases for burgeoning space than just selling NFTs as art?
A single red pixel that sells as an NFT for $ 900,000. Right. Got it. pic.twitter.com/OM9DidPbA0
– Marques Brownlee (@MKBHD) March 25, 2021
As these astronomical values for various NFTs continue to amaze viewers, the question arises whether the prices paid for digital collectibles are creating a hype that negates other potentially more beneficial use cases for the NFT space.
Vitalik Buterin hopes NFTs will support blockchain ecosystems
Ethereum co-founder Vitalik Buterin plunged into the NFT discussion through a blog post on his website, outlining his hopes that NFTs would be used more often to fund or support efforts and charitable organizations.
The co-founder of Ethereum addressed the relatively small percentage of funding that critical elements of various blockchain infrastructures actually receive in their ecosystems. Using Ethereum as an example, Buterin drew a stark contrast between the roughly $ 37 million spent on daily block rewards and transaction fees and the annual $ 30 million spent on research, protocol development, and grants for the blockchain ecosystem.
Buterin’s contribution examined the concept of legitimacy and how and what society considers legitimate, which plays a crucial role in the acceptance or use of this object: “Legitimacy is a pattern of higher order acceptance.”
Buterin believes that this coordinated social behavior will enable the blockchain space to support platforms and ecosystems that reward and support the work it supports. He acknowledged, however, that the current hype in the NFT space and the potential for big capital gains could detract from the cheaper results, adding, “If the concept of legitimacy for NFTs can be dragged in a good direction, there is an opportunity to create a solid funding channel for artists, charities, and others. “
Hype is justified?
Other industry experts have also expressed their belief that the astronomical worth of some of the leading NFTs is warranted, while admitting that there might be more beneficial use cases for digitally verified collectibles.
Mattison Asher, who conducts research on Ethereum, NFTs and DeFi at ConsenSys, believes favorable market conditions contributed to some of the high prices for NFTs. However, he added that crypto experts have been trying to give back to the space and support crypto artists as their portfolios have grown in recent months.
While Asher admits that it’s difficult to say whether some of these NFTs are really worth the prices paid for them, he believes it marks a major psychological milestone for the industry and reflects the burgeoning success of the cryptocurrency ecosystem:
“Both Beeple and the crypto industry as a whole have had to overcome an incredible amount of adversity to achieve the success they are now seeing. Similar to the entire crypto industry, Beeple has been creating digital works for years, often with little recognition. The work auctioned by Beeple tells the story of the artist Beeple, but also reflects the history of crypto as a whole. “
Stephen Young, the founder of the South Africa-based decentralized financial platform NFTfi, which allows users to use their NFTs as collateral for a loan or offer loans to other users for their NFTs, believes that the hype and value that is being paid for NFTs is is justified. given that these projects were developed and published through the cryptocurrency bear market.
However, with ongoing monetary stimulus measures around the world, asset prices have also increased, which has impacted the world of cryptocurrencies and NFTs. Young told Cointelegraph that the popularity of NFT art and other collectibles is also being influenced by the relatively low cost of minting and trading NFTs in their current forms, and that given the current limitations of art, it makes sense for art to be the first form that is reaching the mainstream the Ethereum network:
“For example, digital content doesn’t require nearly the same throughput as games. With media, you only need transactions to mint and transfer the asset (which doesn’t happen too often). For games and other uses, you need much higher throughput and lower costs. As things like Flow and Eth2 mature and become widely available, games and other use cases that require higher transaction throughput should become more prominent. “
Craig Russo, Director of Innovation at Polyient Games, told Cointelegraph that NFT use cases focused on digital art and other collectibles are the tip of the iceberg and will be the foundation for the growth of space:
“NFTs are a very broad asset class that can work in a number of exciting industries, and I don’t think the excitement about the creative use cases will hinder growth in other industries, especially as technology advances.”
Better use cases will show up
While NFT art and various digital collectibles continue to make headlines and a greater imagination of the cryptocurrency ecosystem, it seems like a natural evolution that more use cases will be explored and developed in the months and years to come. NFTs could eventually find their way into various industries, with the potential for financial services and processes flowing into the technology.
Financial documents, including invoices, purchase orders, and master data, could be converted into NFTs to help manage the logistics of the financial supply chain. Playing and tokenizing in-game assets has already emerged as prominent use cases, while NFTs can also be used in insurance, as well as for securitization and asset-backed lending.
Meanwhile, Young stressed the fact that NFTs in their simplest form are just “unique digital things,” but the sheer amount of value that will be locked into space will cause these asset use cases to multiply:
“As more and more value is tied up in NFTs, it becomes very important and useful to be able to use them as productive financial assets at the same time. If you can use your NFTs this way, they’ll be more valuable and useful too. In the years to come, as blockchain throughput improves and crypto penetration accelerates, we will see a number of opportunities for the blue ocean in NFT space. “
Young noted that the scope for NFTs is wide and the potential of the space will expand from its current use in the arts, collectibles, games and metaverse to ticketing / memberships, loyalty programs, financial contracts and tokenization of Real-. World objects, intellectual property and patents, to name a few.
Asher suggested that as property contracts, NFTs are a still under-explored area that could also become an important use case as the arts and games industries continue to expand their use:
“NFTs as an art will continue to find acceptance. Certain types of contracts, in-game assets, and tickets are also created within an NFT structure. We are just beginning to experiment with all of the different forms that NFTs can take and what they can represent. “
Russo believes the next major growth point for the NFT market will be in gaming and distributed finance: “Right now, the market is able to understand NFTs as something that can be bought, sold or held. The next phase of this market will depend on what you can actually do with the asset class. “
As these industry experts point out, the possibilities of NFTs are as endless as the blockchain technology that powers them. A lot of attention is paid to NFTs, and it seems like only a matter of time before exciting new use cases emerge.