NFTs Will Soon Be Unavoidable. That's a Good Thing.
NFT Collectibles may have started off as a fad, but the market growth is undeniable. Soon, the technology behind them will put power back in the hands of the people.
NFT sales have been growing exponentially over the last few years and show no sign of stopping. Even celebrities and institutions have begun adopting the technology, bringing it to the mainstream. Paris Hilton recently released her NFT collection, selling some for $1 million already and another will start bidding at the same amount. The NBA sells Top Shot NFTs, Kings of Leon is sending their NFT to space, and a 12-year-old boy sold his collection for $400,000.
The news keeps coming, but that alone doesn’t necessarily mean that NFTs will become part of our daily lives. What’s important are the implications of the technology, not just the basics. NFTs are stored on blockchains, a technology for self-governance and self-sufficiency. It’s a tool that gives individuals power over their personal data and their own finances so they can be their own bankers. New projects can raise money for their platforms without turning to rich investors. Like-minded people can come together and create art held intact by smart contracts. The spirit is about the technology itself and how it unites us and empowers the individual.
Now more than ever, people crave to feel like they’re a part of something bigger. With large corporations and governments calling most of the shots, people want to find greater control over their environment with free speech. A movement that historically has inspired the art community to speak out against injustice through art is now digital. Many in the NFT community voice their values surrounding free speech and self-governance. NFT holders want to be involved on a more personal level with the institutions that they spend their time and money on — not only to help make them better, but to make sure that they aren’t acting in bad faith behind closed doors. The nature of transparency and democracy is foundational to the technology.
The decentralized nature of Decentralized Autonomous Organizations (DAOs) means that anyone who is a part of a DAO, even the founders of the project, can be fired if the DAO decides with their votes — in the form of utility tokens — to pass a proposal. For example, the Rarible DAO allows for the protocol to be community owned by way of a toolkit so that ownership of the protocol is distributed to the builders who add value to the network. Because of the transparent nature of blockchain technology, everyone can see what’s going on, and everyone can participate without “permission” from a higher authority.
This community-driven phenomenon is already starting to become a part of some people’s daily lives. An NFT project called Lucky Maneki is controlled, not by a single artist, but by the entire community of Lucky Maneki holders. Everyone gets a say in how the project operates and they get to vote with their NFTs. The little Manekis are cartoon cats modeled after Japanese lucky cats and are randomly generated, meaning the community does not need to contribute to the artwork. They simply vote on new initiatives paid for by the “Lucky Bank,” which is also funded by sales.
Putting the users in control increases engagement with the project and crowdsources the idea's spread throughout the community. When productive input results in higher profits, there is a high incentive to work hard and make meaningful contributions. Incentives build rewards into the smart contracts that compel users to devote hours to projects and identify with their community.
In today’s world, all of our data is owned by corporations, and all of the content we create is owned by social media platforms. It would make more sense if we owned the data that others make a profit on. This very thesis is a driving force for many entrepreneurs in the crypto space today. Yet as we see the separation of government and private data diminish, self-sovereignty is going to trend more and more toward emerging NFT marketplaces over the next 10-20 years.
Companies like HLTH.network, which recently revealed a genomic NFT marketplace as part of its ecosystem, help ensure third parties aren't the ones making all of the profits from your own data. This solution might not solve the privacy issue that many have recently protested against in New York City, but certainly, it would add a layer of transparency and ownership to the holders of their own data verified on a ledger. As such, no one will be able to steal or use it without their permission.
On a small scale, NFTs are beginning to reward users for participation. Play to Earn models let users play games to find valuable NFTs in the gaming world that can be sold in an open market. The players own the items earned in the game and have complete control over them. That means their earning potential isn’t dictated by anyone but themselves; they have control over their finances. NFTs are finding ways to fundraise as well. When Jack Dorsey famously sold his first tweet as an NFT for almost $3M, he donated the proceeds to a charity called Give Directly. Many charities are now experimenting with NFT fundraising.
TokenSociety revealed NFTs called “Snipetz’ that are used to raise funds for independent entertainment projects. Short clips, or snippets, of the TV show or movie are minted into NFTs and sold to fans who want to be involved in the production, prior to filming, to help fund the project while eliminating the need for investors. Each Snippetz includes real-world experiences and prizes.
When indie filmmakers turn to studios to raise funds, they usually give away control of the creative process. Fundraising through NFTs gives independent productions control over their own work and allows the community to become involved in one way or another.
The largest market activity is happening on the Ethereum blockchain, but there are others gaining that critical mass of NFT marketplaces on the rise (e.g. Tezos, Polygon). With Etherium gas fees being so high, the NFT marketplace is also seeing success on the Cardano and Solana networks, where the gas fees there are much less.
Coinbase announced they’ll be launching an NFT marketplace that’s likely going to become the market leader. Currently, Opensea is the most popular platform for buying and selling NFTs on Ethereum’s blockchain. Metaplex is a hub for buying, selling, and auctioning NFTs on Solana’s blockchain, one of the fastest-growing blockchains. HEN is a marketplace for buying and selling NFTs on the Tezos blockchain, and the list goes on. If you’re an artist or creator, minting fees are low on these smaller Proof of Stake chains.Related: The Intersection of Ecommerce and NFTs: How NFT Technology is Changing DeFi
Many of us are slowly beginning to realize how much power this technology gives to every day people. NFTs allow anyone to own their own data for the first time, and they give equal access with the ability to participate in global experiences. We’ve been watching life from the sidelines for too long, and now is the time we can all take part in the mechanisms that govern our daily lives with the power of decentralization.
Entrepreneur Leadership Network Contributor