The non-fungible tokens, better known as NFTs, are conquering the country and abroad. In addition to retail investors, more and more large international companies are seeing the benefits of this new technology. Whether it’s major sports competitions, such as the Super Bowl, or lingerie brands, such as Victoria’s Secret, they are all captivated by these NFTs.
Due to the nature of these unique tokens, the possibilities are endless and they are indispensable in the development of our digital future. But why are NFTs sold for hundreds of thousands of dollars and why are NFTs so sought after? Find out in this article!
What is an NFT?
An NFT is a non-fungible token and therefore a unique asset on the blockchain. Everything can be recorded and managed on the blockchain. But this goes much further than just digital art that sells for millions of dollars. An important part of this development is the decentralized character. Along with the development of web 3.0, it is the first time that you can own something on the internet, thanks to the technology of NFTs. This is a true revolution where everyone likes to sit in the front row!
There is increasing criticism and awareness of the power that one central party has. They can make unilateral decisions that have consequences on a large scale. Thanks to the decentralized nature of both blockchain technology and NFTs, everything will be done on a consensus.
More and more we see large international companies that implement NFTs in their marketing strategy. Of course, everyone wants to be a pioneer in this development, but despite the fact that NFT is now a well-known concept, not everyone knows what impact this development has. NFTs are so sought after, among other things, because they can distort society as a whole and its functioning.
Let’s think back to the early days of the Internet. With the knowledge we have now, everyone would have invested in this technology back then. Blockchain technology can create a whole new world through the use of NFTs. Think of both government documents, which can be recorded on the blockchain, and therefore become transparent and immutable. As a result, corruption is no longer possible, but financial abuses can no longer take place either.
In addition to the pioneering technology of NFTs, they are also an important source of income. You can make money with NFTs in different ways, whether or not in a passive way, thanks to the use of royalties. Generate your own income stream with NFTs.
The majority of crypto traders see it as an investment. Of course, you want the highest possible return on your own investment. Although the market is volatile, there are still opportunities to maximize your returns. We saw earlier that the purchase of virtual land in the metaverse increased exponentially. These, too, are non-fungible tokens. In 2021, someone paid a whopping $450,000 to be Snoop Dogg’s virtual neighbor.
While these amounts are fairly absurd, an investment in real estate can be very lucrative. Just like in the physical world, the prices of the housing market are rising. The more favorable the location of your virtual property, the higher the yield in the future.
For the seasoned gamer, the development of NFTs is groundbreaking in their game. As long as we know, they are game dependent. In the game, you can only choose between 4 avatars, or between a certain number of weapons. With the development of NFTs, gamers themselves determine the game. To date, the game can get an update, which changes everything again. So you are constantly dependent on the makers. With the advent of NFTs, gamers can own certain assets themselves. Think of in-game assets such as certain clothes, certain weapons that give you faster rewards, and so on.
With the development of play-to-earn, NFTs are more sought after than ever before. These in-game assets can then also be traded through various trading platforms. Dedicated gamers will therefore purchase these NFTs at exceptional prices to take their game to the next level.
Another reason why NFTs are so popular is that you can earn a lot of money by flipping these NFTs through various NFT marketplaces, such as OpenSea or Rarible, and then sell them at a higher price. You can think of this as an art gallery, where the owner buys a certain work of art, exhibits it to all interested parties, and then sells it to the highest bidder.
Flipping NFTs can be a lucrative business, but it is not without its risks. In addition to the speculative value of these NFTs, mostly digital art, the payment currency is also subject to price fluctuations. Most NFTs are traded in Ethereum and this price fluctuates as well.
Thanks to web 2.0, the internet has also become a place for each of us, where we can create and share content ourselves. For example, think of text or photos. As a (hobby) photographer you can share your work via your own website or various social media.
Have you ever seen the same photo or video through different sources or through different channels on Instagram? It often happens that certain Instagram channels become big, thanks to images from other creators, without the rightful creator being named. These accounts are growing in reach and number and in this way can unjustifiably monetize their channel. What was not possible until recently, is to be the rightful owner of digital work. We credulously assume the goodness of man that no one abuses or steals this work. Yet in practice, we see that certain intellectual property is often stolen.
Another example of this is plagiarism. Text is copied and distributed without permission, without the rightful owner being aware of this. This is theft and has not been punished to date, because there are limited possibilities to connect digital properties to a person. With the advent of NFT, this is now possible. Photos, texts, tracks, and the like are all recorded on the blockchain as NFT, with the owner receiving digital proof of ownership. This copyright protection ensures that fraud happens less quickly so that digital art is increasingly seen as a valuable investment.
This opens up many possibilities for almost all sectors. Marketing agencies, photographers, copywriters, and artists can now use NFTs without their work being stolen for commercial purposes.
NFTs are a very broad term, as they are all unique assets on a blockchain. This technology is perhaps the biggest threat to central parties. In society, much is done through intermediaries who in turn earn significant amounts of money from their services. An example of this are the major streaming platforms. Youtube and Spotify are major central platforms responsible for the distribution of both music and video. Anyone using these streaming services is subject to a policy. This means that as a maker you are not allowed to make just any artistic expression. As a maker, you are therefore somewhat limited in your own creative process.
These platforms pay creators per view or per stream. Where in the past CDs were sold, both Spotify and Youtube are replacing this source of income for musicians. Thanks to web 2.0, anyone can earn money through Youtube. But how lucrative is this for musicians?
Reportedly, a musician only gets 15% of his/her own turnover. This means that these major streaming platforms are earning monstrous amounts, thanks to the musician’s work. Also, don’t forget that they have decision-making rights over your work. They can take your videos or your music offline at any time, completely eliminating your source of income. In practice it is small, but it is certainly possible. There have been several vloggers in the past who lost their community and their source of income due to Youtube in an instant. By placing music themselves on the blockchain as NFTs, musicians, and artists can sell their own work and earn up to 85% of the turnover. This is in contrast to 15% when using intermediaries.
Identity on the blockchain is becoming increasingly important. Your avatar in the metaverse is no longer a random person, but a virtual representation of your own personality. Just as we attach importance to our appearance in real life, we apparently find this more than important in the metaverse. Not all NFTs have a particular utility, and they certainly don’t have to.
We are increasingly seeing the importance of digital wearables. In 2021 Dolce & Gabanna launched a collection, where each item also had an NFT, which you can wear in the metaverse. Many other major companies have followed suit, even Victoria’s Secret has announced in early 2022 that they will be selling their unique lingerie in the metaverse. Even the choice of your lingerie becomes important in the metaverse!
In addition to a certain speculative value of an NFT or a certain utility, these non-fungible tokens can also provide a community. Having a certain NFT can give you a certain status or image. An example of this is the Bored Ape Yacht Club. This highly exclusive NFT collection of digital monkeys is incredibly popular. These NFTs are worth hundreds of thousands of dollars. While the value of this NFT art is rather speculative, it does give you access to a very exclusive community. Several Hollywood stars have a Bored Ape in their possession, such as:
- Steve Aoki
- Jimmy Fallon
- Kevin Hart
- Paris Hilton
- Justin Bieber
- Snoop Dogg
- Gary Vaynerchuk
To get access to the same digital community, you will have to pay a lot. Rather, this is a status symbol, a true showpiece. Owners use this NFT almost everywhere as a profile picture to show their status to the world. You can compare it with the effect of a very exclusive Lamborghini of which only 10,000 were made, worldwide. Owning one copy is exceptional and shows that you are part of a select group of wealthy people. With this Bored Ape Yacht Club, the effect is the same, just based on NFT as digital art.
In addition to the financial aspect, certain NFTs also have a certain utility. In exchange for owning this unique asset, you get benefits. The very first band to also sell their album as NFT was King of Leon. Anyone who bought their album as NFT will get lifetime access to exclusive seats at their concerts. In this way, they give extra back to their fans and provide themselves with an extra source of income.
GaryVee did just the same with his own collection called VeeFriends. The public speaker and motivator sold beastly pictures like NFT, each of which had its own function. Some give you access to a monthly call with Gary, while others give you a weekly 1-on-1 coaching session with Gary himself. Here you pay for certain services, by means of NFTs. An additional advantage here is that these NFTs are also a digital ticket for all events of Gary, worldwide. This value here is not in the NFT itself, but in the utility that comes with it.
Why are NFTs so popular? One of the reasons NFTs are popping up everywhere is because of the diverse nature of these tokens. Thanks to its uniqueness, anything can exist as a unique token on the blockchain. This gives all these digital assets a rightful owner and musicians and artists are also protected by copyright. This opens up a whole new world of digital art. In the past, physical art was traded, while now anyone can create and trade digital art.
An additional advantage of these NFTs, in addition to the financial aspect, is the utility. Certain collections give you a range of perks that are priceless to fans. Think of the private sessions with Gary Vee. As an entrepreneur, these coaching sessions can be invaluable for growing your own business.
For years you can earn money in different ways thanks to the internet, but never before have we been able to own anything digitally. With the arrival of NFTs, we get a digital proof of ownership which creates a whole new economy. Everyone is involved in this new financial market where every individual can trade peer-to-peer and therefore earn a lot of money.