Despite 2022 proving a tough year for many cryptocurrency and blockchain projects, NFTs and NFT collections seemed to ride it out well.
Just two years ago, few people had heard of non-fungible tokens, let alone understood how they worked. Now, though, NFTs are a firmly established part of the blockchain tech industry.
NFTs have made an impact and are here to stay. Artworks have sold for tens of millions of dollars. Major brands like Disney, Nike, and the NBA have entered the space with their own NFT collections and projects.
As more use cases emerge, we will see NFT collections move from art to more practical and useful purposes.
Before we get to that point, though, we will see many more NFT collections launched by major companies to enhance customer engagement and gain a toehold in the expanding NFT industry.
But why?
What is an NFT?
It’s worth recapping what a non-fungible token is. NFTs are unique electronic certificates of identification that cannot be copied, altered, divided, or substituted and are recorded on a blockchain to verify proof of ownership.
Currently, the NFT market is dominated by digitised artwork. However, as you can surmise from the above explanation, NFT technology has the potential to expand into many other aspects of everyday life, such as digital IDs, event ticketing, souvenirs, and in-game purchases (an area where NFT collections are already very active).
Interestingly, regardless of the dubious crypto market health status in 2022, some of the biggest names in commerce continue to push ahead with carefully planned NFT collections.
To be precise, an NFT collection can is ‘an assortment of digital assets released by an artist (or group of artists) containing a limited number of individual NFTs’.
One of the most famous NFT collections is the Bored Apes Yacht Club (BAYC), a selection of 10,000 pieces of digitised artwork. With each piece displaying its own set of characteristics, demand has been high. The general rule is that the more scarce the feature, the higher the price paid for the NFT.
Traditional Actors
Most NFT collections are released as assemblages of artwork with variations on a style and provide a broad range to cater to all tastes in demand and pricing. However, due to the potential of NFTs, we are beginning to see more and more traditional actors entering the market.
Disney, one of the largest names in entertainment, released its first NFT collection in November 2021. Existing as digital art, users can purchase, collect, and sell NFTs of their favourite Disney characters through the Veve marketplace.
Furthermore, the NBA has a collection, TopShot, which allows buyers to not only purchase collectables of individual sport stars, but also classic moments from within the game. The NBA collection shows the versatility of the NFT to incorporate animated and still images, as holders can use their NFTs for in-game challenges and other online activities. NBA Top Shot even has its own marketplace.
What is the Point of NFT Collections?
One of the questions many people ask me is, ‘what is the point of NFTs?’. Beyond collection and investment, for the average person, it is a legitimate question.
While collectables and art in digital form may not be for you, and you may scratch your head about the high values involved, they have played an important role. NFT collections have demonstrated how non-fungible tokens work, creating the foundations for future use cases with more practical, useful applications.
Additionally, the attention created by the eye-watering costs of some NFT art has highlighted the broader potential of blockchain technology.
Some critics are correct that there is no obvious nor immediate benefit to buying and selling digital art – especially given the outrageous price tags and low quality of some. However, it must be admitted that the headlines have created a wider awareness which may make future adoption of new use cases, like event ticketing, easier.
No one really knows what 2023 holds, but as I said in a recent Moni Talks newsletter, I predict NFTs will continue to rise in profile and popularity this year.
