- Non-Fungible Token (NFT) boomed in 2021 and sales totalled about $2.5 billion by the first half of this year. The interest in NFT has been increasing and Google Trends showed the search term popularity is at its all time high currently.
- Big brands such as VISA, Nike, Adidas, Universal Music Group, Dolce & Gabbana and more have jumped onto the NFT bandwagon which helps to bring NFT awareness to the masses.
- Digital artist, Beeple, has made a name for himself after his artwork became the most expensive NFT ever sold for $69.3m. It inspired a generation of artists in seeing the potential of NFTing their artwork as well as speculators piling in for outsized profits.
- Is NFT just an expensive JPEG and a bubble waiting to burst? Or NFT offers true utility in the digital world? I think it is both.
- There is hype around NFTs right now and I think that the continual price increase isn’t sustainable. It is probably in the early stages of the Gartner hype cycle (before the peak of inflated expectations) and it has to crash at some point before stabilising. This was what happened to crypto in 2017 and tech stocks in 2000.
- That said, NFT plays a crucial role in actualising digital ownership. It goes beyond art and include virtual real estate, fashion items, avatars and identities, or anything that is digital in nature.
- Let’s use the physical world to explain. Why would you dare to buy a piece of real estate? This is because you have faith that the law would honour your ownership. Without which, you wouldn’t dare to buy. The confidence to own something lies in the faith in the society recognising your ownership. This is the bedrock of capitalism.
- Similarly in the digital world, you want to be assured that your ownership of a digital asset can be proven and recognised by everyone else. Digital stuff are notoriously easy to duplicate and that makes ownership even more important. That’s where NFT comes in. It is like a title deed and everyone can trace who is the rightful owner of the NFT.
- This is why JJ Lin is willing to splash $123k on 3 plots of virtual real estate. The items are intangible but the ownership is real.
- Metaverse needs to have an economy by itself and you can’t have an economy if it offers no ownership protection. Hence, NFT resolves the problem for the metaverse and we will see more applications and utility of NFTs in the future. For one, we would have a digital identity or avatar that is an NFT. This becomes our identity card or passport in the metaverse.
- NFTs are hyped up now but yet at the same time, the potential utility of it is immense.
NFT is crucial to the metaverse
Last modified: December 22, 2021