NFTs or non-fungible tokens emerged almost a decade ago as digital art closely linked with blockchain technology. Since then, the technology has further developed and matured, with businesses exploring many other use cases leveraging NFTs, moving beyond digital pictures and art collectibles. More thoughts on this read in this blog post by our writer Natasha Chavdarovska. She had a chance to talk with Timothee Semelin, Founder WEBTROIS, Asia Web3 and one of the trainers at SLDxDigital certification training program.
It has been several years now since the first NFTs appeared. It was called Quantum – a generative piece of art created by digital artists Jennifer and Kevin McCoy in 2014. After that, the digital space and blockchain technology provided the momentum for more art pieces and collections, creating and enabling a market to monetize digital art. Most of the digital pictures and art collectibles were only known among NFT aficionados at the beginning. However, with time, buying and selling of digital art or NFTs came into the mass market.
What exactly is an NFT? Short for ‘non-fungible token’, NFTs are unique, stored on a blockchain network, and cannot be replaced. Some examples of NFTs are digital assets or digital formats of:
- Comic books
- Sports collectibles
- Domain names
- Essays and other types of artwork
For comparison, cryptocurrencies are tokens in a blockchain network as well, but the key difference is that they are fungible and can be traded or exchanged for one another. While NFTs contain a digital signature (proof of ownership) that gives the right to the owner to protect any digital photo, video, or audio files and put it for sale, exchange, or trade on a marketplace. There are several blockchains for this type of marketplace, but Ethereum is the most used cryptocurrency to buy and sell NFTs.
In this blog post, we want to address some potential use cases of NFTs and see if we can move beyond digital pictures and art collectibles with the revolution of the internet around digital ownership. We will also discuss some potential risks and, most importantly, highlight trends to keep your finger on the pulse.
Opportunities and Potential Risks With NFTs
With the ‘normalization’ of cryptocurrencies, NFTs are still gaining popularity as its potential continue to be uncovered. Some of the most commonly cited examples of NFTs use cases include:
- Financial investments: A niche group of investors identify NFTs as a potential avenue for investment. Some marketplaces allow sellers to get royalties for the sold assets.
- Empowering artists and content creators: NFT marketplaces provide a channel for the publication and distribution of the art and content of artists and creators, even the ones with physical versions of their products.
- Linking physical products to the digital world: As the Internet becomes more decentralized and participative, users own digital assets the same way they own physical assets. At the same time, companies continue to find ways to make their physical products (and services) compatible with NFTs.
- Community and inclusive growth: NFT marketplaces bring participants (sellers, buyers, investors, etc.) from different fields into one ecosystem to harness its advantages.
This is of course a non-exhaustive list of benefits and opportunities with NFTs. Just like every emerging technology, there are also potential downsides to note.
“The world of NFTs is still in its infancy. Organizations need to adopt NFTs with caution, and they need on their team experts or to work with partners who really understand the world of NFTs depending on what they want to achieve,” says Timothee Semelin, Founder WEBTROIS, Asia Web3.
Among the main risks are scams like deceptive links and pop-ups promoting NFT projects and drops on social media. They are called Phishing scams. Others are the fake marketplace websites and social media accounts advertising NFTs collections, also known as Catfishing. Pump-and-dump schemes are the ones that build hype around an NFT, so it sells at a high price, but then quickly cashes out, leaving investors with worthless assets. The scammers that sell other people’s work as if it is their own original work are known as Counterfeit NFTs.
These risks can be mitigated through the following:
- Awareness of cybersecurity practices
- Having a hardware device where keys and assets are stored offline
- Carrying out an initial transaction with a small amount of money
- Ignoring spam direct messages, offers, and contracts
- Keeping information and cryptocurrency safe
- Reading online guides, reviews, and testimonials to understand the market
Scalability of NFTs
Some industries like luxury, sports, or art were ahead of the curve when it comes to experimenting with NFTs. Today, companies operating outside of these industries can also explore use cases of NFTs to see how it can benefit them or their customers. The gaming industry, for example, is already seeing players leveraging NFTs to drive loyalty marketing. Another industry with a potential to make NFTs “the next big thing” is advertising due to the ability to track and verify digital assets in a safe and secure way.
“Mostly big projects make news headlines every week, but there are already a ton of NFTs projects in most B2C industries today,” says Timothee Semelin.
Another reason for the scalability of NFTs projects is the Metaverse. This link between NFTs and Metaverse is still a new concept but it’s important for the wide spread of the NFTs projects for one main reason: security. Metaverse reduces some of the risks linked with the NFTs (scams, fraud, or theft) by providing a secure environment for owning and trading digital assets.
However, NFTs are generally associated with websites and transactions that occur through web browsers, while the Metaverse is VR-based.
So, is there a space for confusion? Possible. But anticipating that the next phase of the Internet will see the convergence of the Metaverse, virtual content, and virtual AI, anyone interested in utilizing the NFTs must be adept on these different concepts. Some creative approaches to use both NFT and the Metaverse simultaneously are the virtual marketplace. Lifestyle brand Nike has a great example of how its Metaverse “Nikeland” includes NFT shoes for a virtual world. Another approach is the art galleries. Many Metaverse museums see the possibility to place NFT artwork.
In the next blog post in our SLDxDigital series, we will further explore the topic of the Metaverse so you can better understand the relationship that NFTs have with it. What we want to emphasize now is the fact that the scalability of the NFTs opens additional opportunities, and what’s particularly interesting are the ones for NFT careers. A lot of companies are hiring people who have Web2 and Web3 experience and a good understanding of how NFT can enhance the customer experience. According to some sources, the job opportunities linked with NFT projects will continue to increase in the following year. Developers, account managers, community managers, marketers, UX designers, and cybersecurity experts are some trending titles in this context.
“NFTs is a whole new world that needs people to build, execute and manage like any other marketing or e-commerce projects.Talent is scarce, but also it is important to realize the market is highly unstable and we see many stories about people joining NFT projects and not getting paid or being associated with bad actors,” adds Timothee Semelin.
With everything said so far, how can anyone interested in NFTs projects get involved and utilize the advantages they bring? The starting point is – to follow your interest and passion!
“Today there are NFT projects in every aspect of our lives. What I often tell students or newbies is to start your research about NFT related to a hobby of yours or something you know very well. For example, if you like fitness, start to search for fitness-related NFT programs and start to understand what they are trying to do,” advises Timothee Semelin.
To learn more about NFTs, join our SLDxDigital class conducted by Timothee Semelin: https://www.shelovesdata.com/programs/sldxdigital/