NFTs: Unleashing Creativity and Shaping the Future

The digital revolution has given birth to a remarkable phenomenon in the art and technology world - Non-Fungible Tokens (NFTs). These unique digital assets have taken the world by storm, captivating artists, collectors, and investors alike.

| Stormborn | 8 min read

NFTs: Unleashing Creativity and Shaping the Future

Hal finney theorising NFTs in 1993

The digital revolution has given birth to a remarkable phenomenon in the art and technology world - Non-Fungible Tokens (NFTs). These unique digital assets have taken the world by storm, captivating artists, collectors, and investors alike. In this article, we'll delve into the current state of NFTs and explore the exciting possibilities that lie ahead.

Over the past few years, NFTs have experienced an unprecedented surge in popularity. From digital art and music to virtual real estate and collectibles, NFTs have become a hotbed of creativity and innovation. Artists are embracing this new medium, using blockchain technology to authenticate and sell their digital creations directly to collectors. This has opened up a whole new world of possibilities, empowering artists to monetize their work and reach a global audience like never before.

As eminent crypto investor, Degen Spartan portends - "I find myself leaning towards a bearish sentiment regarding NFTs’ efficacy as a collective wealth-building mechanism. However, I believe its fundamental value lies in providing artists and consumers with a direct channel to interact and transact, which in itself is a highly valuable utility".

NFT by Artist Hani Haya

Indeed it is, for many artists such as Hani Haya, NFTs truly gave them wings. Here’s Hani’s winsome story - “In the midst of stressing over medical school exams, I sought solace at a nearby McDonald's. There, I stumbled upon the concept of NFTs on Twitter, with immense potential to monetize art. Determined to pursue my passion and prove its profitability to my parents, I invested three years' worth of savings into art supplies and minting NFTs. The journey of listing my first NFT, anxiously awaiting bids, and ultimately achieving my first sale was both nerve-wracking and thrilling. This experience validated my creativity and solidified my aspirations as an NFT artist.”

What was once considered a niche market has now gained significant mainstream recognition. High-profile celebrities, musicians, and athletes have jumped on the NFT bandwagon, creating their own unique digital assets and engaging with their fan base in novel ways. The integration of NFTs into popular culture has not only fueled interest but also sparked conversations about the future of digital ownership and the evolving art market.

NFT communities that enable organising people into tribes also extend beyond the digital realm. They often facilitate in-person meetups, events, and conferences, allowing members to connect face-to-face, forge deeper relationships, and strengthen their sense of belonging. These physical gatherings create opportunities for collaboration, mentorship, and collective experiences, further solidifying the bonds within the tribes.

The Pudgy Penguins, for example, is a wonderful testament to a community united in their efforts to rescue their cherished NFT brand. A well-grounded strategy has been set in motion, to broaden the adoption of their intellectual property, demonstrated through preliminary initiatives like the creation and sale of Pudgy Toys. These endeavours not only hint at a promising future but also serve to uplift the spirits of "the Huddle."

The Pudgy Penguins stand as an inspiring fable for other beleaguered NFT communities, showcasing the importance of taking charge and implementing course corrections when necessary.

Anata NFTs that let you plug in to meetings and streams as your exalted anime self

Despite their undeniable success, NFTs have faced their fair share of challenges and criticisms. Environmental concerns surrounding the energy consumption of blockchain networks used for minting and trading NFTs have raised valid questions about sustainability. Additionally, the presence of counterfeit or stolen digital artworks has highlighted the need for enhanced security measures and standardised practices within the NFT ecosystem.

For now NFTs aren't just pretty pictures in your wallet, collecting dust. Decentralised protocols like NFTX help you bundle and trade NFTs with higher capital efficiency. NFTX introduces the concept of fungible tokens backed by NFTs; These tokens, known as "funds," represent a collection of NFTs that share a common characteristic, such as a specific game, artist, or theme. By combining multiple NFTs into a single fungible token, NFTX enhances liquidity and enables fractional ownership of NFT portfolios.

The NFTX protocol with a seeded liquidity pool offers a solution for maintaining stable floor prices in NFT projects. Without a liquidity pool, the floor price in an open market scenario is determined by the cheapest price someone is willing to sell their NFT for. This can lead to a race to the bottom, where sellers continuously undercut each other, potentially tanking the project's value.

However, with a liquidity pool, the NFTX project takes action to stabilise the floor price. In this scenario, the project acquires a portion of the NFTs listed for sale at the floor price from the open market. These acquired NFTs are then added to the NFTX vault, which has a liquidity pool. The project also contributes additional funds to the liquidity pool.

Likewise Blur Lending aka Blend, allows users to unlock the value of their NFT assets, by using them as collateral to secure loans. Borrowers can temporarily transfer ownership of their NFTs to Blur Lending's smart contract and receive a loan in return, providing them with immediate liquidity without needing to sell their prized digital collectibles.

Bonkler NFTs are a fun melange of art & finance. There are only ever 400 bonklers and the traits are revealed over a period of a year, retaining an aesthetic element of surprise. They are also reserve backed, encoded with shares at mint which can be redeemed for ETH from the treasury by burning the NFT.

The Promised Land of NFTs:

Looking ahead, NFTs hold tremendous potential for various industries. Here are a few exciting possibilities:

  1. Digital Identity: NFTs can play a crucial role in establishing digital identities, enabling individuals to own and control their online presence securely. This could revolutionise the way we authenticate and interact with digital assets, from social media profiles to virtual avatars.
  2. Tokenization of Real-World Assets: NFTs have the potential to tokenize real-world assets like real estate, collectibles, and intellectual property rights. This could unlock liquidity, fractional ownership, and new investment opportunities, making traditionally illiquid assets more accessible.
  3. Virtual Metaverses: NFTs can shape the future of virtual reality and metaverses by enabling users to own and trade unique virtual assets within these immersive digital environments. This opens up a vast array of possibilities for virtual economies, social interactions, and entertainment experiences. The burgeoning interest in VR and projected surplus in revenue from a new product is not lost on conglomerates, with Apple launching Vision Pro early 2024.

NFTs have disrupted the art and technology landscape, democratising creativity and redefining notions of ownership in the digital realm. While challenges persist, the potential applications of NFTs across various industries are immense. As the technology continues to evolve, we eagerly await an exciting future where NFTs will continue to unleash creativity, empower artists, and transform digital experiences.

Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions. As always, please do your own research. This is not financial advice. Every strategy is not for everyone. Each investor needs to understand what is right for them.