As a seasoned tech veteran with over two decades under my belt, I can confidently say that NFTs aren’t dead; they’re just misunderstood. The 2021 boom and bust cycle, fueled by speculation and hype, tarnished the reputation of this innovative technology. But like a phoenix rising from the ashes, NFTs hold immense potential to revolutionize digital ownership.
Non-Fungible Tokens (NFTs) aren’t obsolete; instead, their purpose has evolved beyond the hype surrounding the PFP market in 2021. While Profile Pictures, Digital Art, and Collectibles are some of the basic applications for NFTs, they represent a groundbreaking type of digital asset where each item is distinct and usually cannot be swapped effortlessly with another, unlike cryptocurrencies.
Regrettably, the idea of NFTs has been misunderstood as merely expensive digital images due to the 2021 NFT fad. This misconception not only harmed the perception of cryptocurrencies overall and NFTs in particular, but looking back, it was quite foolish. Consequently, just a year after the initial surge, trading volumes dropped by over 90%.
The runaway speculation on NFTs was a human problem, not a tech problem. The situation was similar to any number of precedents, for example, collecting baseball cards back in the ‘80s. Buying packs or boxes at a time, you’d pay very little for a bunch of cards on a per-unit basis—and only a select few would end up being worth a significant amount of money in the long term.
Typically, items like sports cards, music records, or popular memorabilia start off as numerous, with little value or cost attached to each one, making it difficult to determine which ones might become valuable later on.
Million-dollar zoo animals
In 2021, people found themselves swept up in the excitement of the bull market, often losing sight of what was reasonable, as they splurged on digital zoo creatures for staggering seven-figure amounts. It’s no surprise that some trendsetters and famous figures chased expensive PFPs (Profile Picture Tokens), desiring them not just for their value, but also to flaunt their wealth. NFTs soon became a symbol of status, suggesting the (alleged) affluence of their owners.
It’s quite absurd to think about spending large amounts on brand-new digital collectibles, hoping they’ll become more valuable. Given this fact, it’s not surprising that when you tell an average person (or ‘normie’) that NFTs are beneficial and will significantly impact the future digital economy, you might get ridiculed. All they seem to recall is people spending exorbitant sums on “art” that could be easily created using MS Paint.
Breaking down the fundamentals
The perception of NFTs among the general public has suffered significantly and hasn’t bounced back, even as the wider market recovers. It’s truly unfortunate because NFTs, being a means for digital ownership, held great promise in attracting large numbers of new users to the web3 ecosystem.
Understanding the transformative potential of Non-Fungible Tokens (NFTs) begins with grasping their basic principles first.
An NFT is a data structure for modeling data that has unique properties.
With more and more aspects of life transitioning online, it’s only logical to anticipate the emergence of products that people desire specifically in a digital format.
Modern ownership
In the realm of web2, the concept of owning digital items can seem futile due to their ease of duplication and dissemination. This is particularly true for meme creators who frequently use the ‘save-as’ shortcut on their keyboards. To counteract this, content creators often utilize various digital rights management strategies like paywalls, encryption, or limiting access. However, these measures can create unnecessary obstacles, making it harder to engage with the creator’s audience and keep their attention.
In this context, Non-Fungible Tokens (NFTs) step into the scene. They have a wide range of applications – not just for creating digital versions of real-world items (tangible assets), but also for establishing ownership of digital-only entities.
It’s crucial to grasp the specific rights associated with owning an NFT. Unlike a physical Picasso painting, does your NFT merely provide you with the ability to display the digital artwork? Does it allow you to produce merchandise such as T-shirts featuring the art and receive royalties from their sales? These are aspects that need careful examination to ensure they’re handled correctly. If NFTs come with extensive licensing agreements, it could potentially diminish the enjoyment associated with them.
Utility beyond PFPs
Apart from handling digital ownership issues, Non-Fungible Tokens (NFTs) can also be infused with various functionalities: access to exclusive members-only events, collateral for loans, rights for DAO voting, representations of positions in DEX Liquidity Pools, and so forth. This versatility makes NFTs a highly potent tool for creators. Notably, the applications of NFTs aren’t limited only to art, and they can function behind the scenes as essential elements driving intricate systems and protocols.
It’s common for people who are new to crypto to confuse the technology with the asset, leading them to blame blockchain for human mistakes or misconduct. However, despite the drop in value of some popular PFP collections, NFTs are far from dead; their groundbreaking potential is simply being overlooked. In reality, you might be amazed to find out just how much NFTs are driving the current revolution in the blockchain sector, known as the RWA movement.
Aaron Evans serves as the leader of fundamental operations at the Moonbeam Foundation, which is a smart contract platform designed to create interconnected apps that can tap into users, assets, and services across various blockchains. With more than 25 years under his belt in tech, Aaron brings a wealth of knowledge from his software engineering background. Before joining the Moonbeam Foundation, he held the position of senior vice president at Fuze, a company specializing in unified communications. In this role, he contributed significantly to the annual revenue, helping the firm generate over $100 million.
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2024-10-16 14:14