NFTs as the “digital renaissance”: What are the next use cases and how do we achieve it?

NFTs are perhaps one of the black boxes of the Web3 world. While cryptocurrencies are viewed by many as a volatile asset that can make or break one’s fortune, NFTs do not seem to get the same attention. 

One rarely hears of someone gambling on NFTs and yet, the market for NFTs is huge. The global NFT market size is, after all, expected to reach US$97.6 billion by 2028. 

But aside from a few items that are being traded online between collectors and traders, what can NFTs really do? And how does one get from now — where NFTs are niche interests — to a market with revenues comparable to some countries’ GDP?

At the Token2049 conference yesterday (September 29), Vulcan Post attended a panel discussion that discussed the state of the NFT market, the future of NFTs, and what the industry needs to do moving forward.

The panellists included Mia Deng, a partner at Dragonfly Capital; Anthony Cesar, founder of the 6529 NFT fund; Robbie Ferguson, co-founder and president of Immutable; and Joseph Young, a senior associate at Hashed.

Making NFTs useful

Anthony and Mia both noted that NFTs, as they are now, are not particularly useful.

While owners might get some bragging rights with the ability to display the NFTs that they own as part of their profile picture, the panellists urged creators to go beyond this and for NFT enthusiasts to demand more from these creators as well.

Anthony, in particular, expressed approval that the novelty of NFT profile pictures was wearing off, though he suggested that the concept was not dead per se, but could be taken further.

People have emotional attachment to the NFTs that they own. We can move into getting these avatars in a more 3D environment, for games or other purposes.

At the same time, all the panellists noted that it was not only collectors who were buying NFTs. Traders were also buying in, and while the panellists appreciated the attention that these trades were bringing to NFTs, they also conceded that this attention was not necessarily the best for community building. 

In fact, Mia suggested that the idea of soulbound tokens, which could not be sold or transferred out of the wallet, would be very helpful in seeing if buyers of NFTs were traders only interested in profiting from the project, or collectors who were part of the community.

In this way, NFTs could really live up to the promise of becoming identity markers for community members.

What do NFTs need to make it big?

But how exactly does one use these new and upgraded NFTs?

For a start, the panellists believe that games will be the next big thing, and that these games will provide new ways of monetisation and revenue generation for developers and artists.

Yet, Mia cites her own personal experience that many Web2 developers see the gaming sector as a mature market for monetisation under the Web3 model, within NFTs and cryptocurrencies as possible rewards for players.

In particular, Mia pointed to the redevelopment of MapleStory, a game released in 2003, into a crypto game as an encouraging example of how such monetisation can be done.

To Robbie, this means exciting new frontiers for NFTs and ways for NFTs to be used in games, with methods of financing that could be very different from how gaming publishers today would be used to.

Game developers spend billions of dollars every year on advertising and getting people to play their games. This money can be better spent actually giving back to players who play the game — it makes it more likely for people to play the game, share the game with their friends, and more likely to stick around.

However, the panellist also admitted that the blockchain gaming space needs significant improvement. As Immutable invests primarily in the development of crypto games, Robbie is keenly aware of the many issues that crypto games face. 

“There is no one right way to do it. The most important principle is that the economy is sustainable, and that means the value that you give out has to generate some demand for the in game economy,” he summed up.

Can NFTs change Web2 companies?

If games are the way forward for NFTs, then platforms like Apple App Store and Google Play Store will be critical in getting mass adoption for NFTs. 

However, these platforms, in particular Apple App Store, often impose fees on transactions that occur on the platform.

And with Apple’s growing interest in claiming its share of the pie in the metaverse, the panellists noted that Apple may try to impose trading fees for NFTs or other in game items. In fact, Robbie actually called Apple a “trojan horse” within the industry.

That being said, the panellists did admit that the NFT and NFT gaming scene is still not as big as they hoped, and that “integration with Apple can mean we get people on board quickly”. 

As for Apple’s platform fees, Robbie hopes that consumers and collectors of NFTs can convince Apple to take a step back.

Spotify and Netflix have proven that if there is sufficient motivation, people will support the app and the app can monetise outside of the app store. For some people, that 30 per cent fee will be fine.

But over time, as the value of players increases, and as whales begin to build up larger NFT collections, there will be more and more pressure for them to transact outside of the platform. So there will be significant pressure for them (Apple) to lower their fees or to come up with an entirely different business model.

The advent of NFTs may be something considerably new, but as the panellists have shown, NFTs are still evolving and their impact has not yet been fully felt.

Clearly, this is a key technology to look at in the next few years going forward — and if the future is as the panellists suggest, Web2 companies, both tech giants and small developers alike, may have much to consider about how NFTs could affect their businesses.

Featured Image Credit: Token2049