5 Reasons Why NFTs Are The Metaverse's Ideal Revenue Model
These audiences are not just enormous, but they are also likely to differ in fundamental ways from your typical brand consumer.
Non-fungible tokens (NFTs) have become the latest buzz in the crypto world, with investors popping in worldwide. Moreover, crypto enthusiasts are ready to part with thousands of dollars to own an NFT. Consequently, many platforms have come up to act as a middle man to purchases. Among the best performing is the NBA Top Shot, created by Dapper Labs.
So, what is an NFT? Non-fungible tokens run on a blockchain network and cannot be exchanged from one to the other. Hence, each is unique and accrues value independently. So far, NFTs' infiltration is widespread into various sectors, including art, sports, virtual real estate and even gaming.
How the Metaverse and NFTs Relate
The metaverse, meanwhile, is a shared virtual space that gives experience across platforms and the real world. So, metaverse allows anybody to create, buy, and see NFTs in an engaging manner; it is working to merge disparate online worlds into one seamless entity. While holding such potential, enthusiasts are naming it the next evolution of the internet.
Several companies are making moves into the innovative cryptoverse. The KuCoin exchange recently announced that it allowed metaverses to showcase their tokens to the world with genuine reliability; hence, the first-ever Metaverse Trading Board. The new section includes Axie Infinity (AXS), Enjin (ENJ), Decentraland (MANA), The Sandbox (SAND), Smooth Love Potion (SLP) and SENSO (SENSO) for open trading, and its founders think that such a tailored format will promote newer and established metaverse projects. And in turn, that it will make them available to potential investors and broader user audiences.
Now that we have established the relationship between the two, let's break down why NFTs are ideal revenue models for the metaverse.
1. Virtual reality in the NFT world
The idea of an alternative digital universe is not new at all, having been conceptualized in the past by developers for implementation in games and on some websites. However, there has been a boom in the digital-asset craze fueled by NFTs. In turn, it is boosting digital products and platforms dealing with them. Some of these platforms have gone a step further into virtual reality to showcase the NFTs to the extent that they mimic reality. As the world shifts online, folks want to create and provide insight into their NFT products uniquely.
2. Scarcity of NFTs
As we have mentioned, each NFT is unique and has its value. Considering this, investors argue that NFTs are scarce, generating their value. Last year, the total value of NFT transactions hit $250 million, according to a study from NonFungible and L'Atelier; thay value is four times higher than in 2019. Also, recorded digital wallets dealing in NFTs stood at 222,179, double the previous year. Meanwhile, some traders were able to attain profits amounting to $100,000.
In turn, the new traders in the NFT market are a new generation of digital natives and looking into emerging asset classes. Most have previously amassed wealth and are looking to put it into virtual assets.
3. Massive audience
The video-game industry has eclipsed the sports and movie industries in global popularity. Even if you can't make a fortune selling virtual products right now, you can start leveraging enormous brand-equity improvements momentarily. Whether or not your product has a use case that corresponds to one of today's virtual worlds, you have a brand that you may use on virtual clothes, signage, artwork and other items.
These audiences are not just enormous, but they are also likely to differ in fundamental ways from your typical brand audience. Businesses are using NFTs and virtual products to reach out to younger audiences. Two-thirds of Fortnite players are young adults. The user base for Roblox is even younger, with 66% of gamers under the age of 16.
Luxury brands, in particular, find value in letting users buy virtual replicas of their expensive products long before they can do so in the "real" world.
4. NFT safety
The first concern most people ask regarding virtual items is how to retain its value if it's easy to create a counterfeit. But while counterfeiting is a problem in most real-world businesses, from footwear to fine art, it gets more complicated in the virtual world.
A blockchain can seem incredibly sophisticated at first glance. Nonetheless, the best way to think of it is as a record of ownership for a given virtual item. The distinction between a blockchain and another owner's record of ownership — say, your bank account's ledger — is that no one owns the blockchain. It is decentralized, and there is no authority to be altered, changed or destroyed.
Blockchain technology is at the root of creating and making NFTs secure. An NFT is worthless in itself and essentially an unchangeable and indestructible proof of ownership. It applies to any virtual object, from a piece of 3D digital art to a video.
When a virtual product is protected with an NFT, it points directly to the product file, not to any other copy or fake. When you sell an NFT, you're proof of the sale of asset ownership.
5. The future is bright
NFTs are undergoing a maturation phase and are bringing tangible value across industries. Taking into account the massive infrastructure in place, it's evident that they are more than baseless hype. Their unprecedented growth thus far shows the start of a seamless evolution of the space. The emergence of mixed reality offers more collectibles and marketing opportunities that will stimulate more growth. NFT use-cases will only grow in the future, and developers may eventually be able to tie them to everyday activities like ticket sales, proof of attendance and fraud detection.
If you can manufacture and sell items in the actual world, you can make and sell them in virtual worlds. The value of such products will only rise as we move closer to an immersive multiverse. And while obstacles remain — according to Blockchain.com, only around 70 million people have a cryptocurrency wallet — these factors do not dismiss what the crypto world stands to gain through widespread adoption o fNFTs.
Entrepreneur Leadership Network Contributor