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We all know about non-fungible tokens (NFTs), but we do not use them in our daily lives. With increasing exposure to NFTs, what will it take to fully bring these assets into everyday life?
What is mainstream and do NFTs already exist? If we consider “mainstream” as the normalization and wide use of NFTs by institutions, big names and, most importantly, the daily user, then NFTs are not (yet) 100% mainstream. Although many have come across the acronym, most ordinary people do not have the slightest idea how to use NFTs and what their true potential is. NFTs are already being popularized by large companies and celebrities, creating awareness and visibility. Nevertheless, there is still a lot to be done before this entrepreneurial activity around the asset class leads to actual use by the general public.
So where are we with all this reputation-brand-level buzz around NFTs, and what more do we need to make NFTs truly mainstream, rather than just the talk of the town?
Enter the big brands.
They are prominent and quite noticeable in the media – they are, of course, big brands, and given their impact, we should first unpack the institutional NFT adoption. In 2021, world-famous organizations such as Visa, Mastercard, Nike, Adidas, the NBA, Coca-Cola and many more have sunk their teeth into NFTs. Today, even Walmart is preparing to bring the asset class into its business. All of these companies had different approaches to how they “tried NFTs,” and each has a different impact on the assets. VISA first dived into the room in the most usual way: by purchasing a non-fungible token from the most sought-after collections: a * CryptoPunk * in this case. Adidas also made an eyebrow-raising NFT acquisition worth USD , buying the Bored Ape now referred to as Inigo Heart. These steps are investments that also address trending content and * draw people’s attention to NFTs*.
And yet it is not enough to push ahead with a real mainstreamification, since its effect remains focused on the company rather than on long-term customer loyalty with the asset class. This isn’t necessarily a bad thing; it’s a good place to start. Indeed, corporate NFT acquisitions help to develop the core competencies and capabilities of companies to expand their NFT offerings. Through such acquisitions, Christie’s and Sotheby’s have also led large companies to make NFTs the norm in the second half of 2021. As an alternative to simply acquiring NFTs as an investment, big names like Nike, the NBA, Coca-Cola and even Macey’s have taken the path of creating NFT versions of collectibles to promote engagement with their communities. Nike began issuing NFTs that guarantee the correctness of its sports shoes; the NBA coined NFTs of certain moments from past seasons that users could now own; and Macey’s auctioned thematic tokens of their Thanksgiving parade. While collectibles are not the pinnacle of practicality, relying only on a small part of the utility potential of NFTs (namely, possession), it is a step in the right direction, since the famous brands entice communities to engage with their NFTs and even own them. However, one of the problems with this approach is that it is only suitable for crypto natives – people who already know how to navigate the blockchain space (wallets, marketplaces and everything).
Big brands are bringing an undercurrent of NFT transmission to their retail user base by bringing NFTs to the public and even to people’s hands (or wallets, as is the case). The next step is for companies to contribute to the construction of NFT utilities. This means that NFTs will be further integrated into their daily customer offering, which will unobtrusively strengthen the commitment to those for whom these assets would otherwise not be accessible, since their technical character remains outside the comfort zones of most people.
NFTs as access & rights
Celebrity brands are probably drawing attention to NFTs as well as companies. Some, such as Mila Kunis and Orchard Farm Productions * Stoner Cats * Venture, also go beyond the classic investment in non-fungible tokens and publicity stunts, and actually popularize NFTs through one of their utilities that are different from property. Stoner Cats was among the first celebrity NFT collections to explode worldwide, grossing $8 million upon its initial launch. And in fact, these non-fungible cats are more than a simple vanity project: they are a means to implement the decentralized Web 3 ethos in the entertainment industry. Per the Stoner Cats team“ “.Content creators and fans should be able to connect and trade art directly and without all the bureaucratic bullshit.”
With subscription services such as Spotify, Netflix and HBOGo becoming increasingly popular and becoming central hubs for entertainment distribution, Stoner’S NFTs is the decentralized antithesis to the otherwise centralized power in the film industry. Aside from giving owners more than just easy access to Stoner Cats episodes, this endeavor can be developed to include owners in its governance, thus solving an age-old decision-making problem regarding what art is being funded and ultimately what is seeing the light of day.
What else could NFTs need?
Regardless of how far we get into NFT adoption through extensive brand awareness, only an estimated 106 million people are currently working with crypto assets. Global crypto adoption remains below 30% in most countries. Even in places with the highest values, such as Nigeria, crypto is used by just over 30% of the population.
With NFTs, this figure becomes even smaller, since even experienced crypto natives still deviate from the asset class. The solution to this is not only the improvement of technical competence. In an increasingly complex world, people will specialize, and that’s okay, even good. But it places the responsibility on those who focus on blockchain and Web 3 to make its cornucopia of possibilities (such as the non-fungible ones in question) accessible to others.
So why do NFTs seem to have only one foot in the mainstream door, despite the extensive institutional and brand campaigns, mentions, celebrity virality and social media dynamics?
The gap probably lies in the lack of benefits and services for NFTs that would make them useful for everyone, and not just for the technologically savvy, the corporate and the ultra-rich. We have developed an NFT utility, mainly in view of the property rights to art and access to exclusive clubs. But this is not enough, and frankly it is the equivalent of spitting, given the actual capacity of NFTs. Currently, the range of services lacks such basics as financial instruments, the development of the NFTs potential for fractional ownership, and user-friendly minting, storage, and purchasing facilities.
Fortunately, there are already organizations – see below – that have started creating such services.
Financial Services for NFTs
NFTs as financial instruments represent fascinating possibilities, such as the collateralization of loans. If you look at NFTs like Bored Apes in the traditional world, the next equivalent would be arts financing, which enables capital efficiency on behalf of NFT investors.
More complex instruments are also emerging, including derivative trading products, which lenders can use, for example, to hedge their exposure to certain downside risks by holding NFTs as collateral. In order for NFTs to continue to progress, these tools need to be further expanded, popularized and hosted on user-friendly platforms.
Web 3-native partial ownership
Partial ownership (ex. Owning 1/1000 of a zombie * CryptoPunk *) and building on existing options for collective ownership are options that are currently multiplying the space of the decentralized autonomous organization (DAO) with examples such as ConstitutionDAO, which raised funds to buy the last private copy of the US Constitution. If the decentralized autonomous organization had won the auction, all its contributors would have received fractions of the ownership and government rights to the artifact. A similar example is a DAO raising money to buy an NBA team called Krause House. The possibilities of NFT Fractional Ownership are limitless and could empower many people to own, use and participate in decisions about teams, valuables, events, real estate, anything that is currently completely out of their reach.
Social Media Tools for NFTs
The industry is already being given an insight into the possibilities of providing user-friendly features for less blockchain-native users, such as in Meta’s press message, bringing NFT minting, selling and sharing features to Instagram.
While previously mentioned cases like Nike, Stoner Cats, the NBA and others are just beginning to tease the interface of integrating NFTs into their respective industries, Meta is on the verge of integrating the NFT craze into an existing user interface (UI) everyone is familiar with. Similar to how Nike Nikeland builds on Roblox – a centralized virtual world – and brings its users closer to a metaverse-native brand experience, we need to think about moving from popularizing the Web 2 versions of these activities to their decentralized Web 3 counterparts such as Decentraland, Somnium Space, Axie Infinity and others. Translating these experiences into Web 3 will inevitably lead to more users migrating to these worlds where NFTs define everything from access, property, fashion, investments, items and even gameplay.
The metaverse ownership of digital goods has also developed its own version of traditional business models. Decentralized finance companies (DeFi) such as Enter DAO’s digital real estate lending model Landworks, where you can lend your digital SAND or MANA real estate as passive income, just like your own apartment.
Other exciting niches created in this area are GameFi guilds (Gaming + DeFi), which provide NFTs of the highest quality to talented players in the play-to-earn area to improve their performance in the game. In a win-win scenario, players can generate additional income, while NFT owners can earn additional passive income in addition to their NFT.
While the metaverse will survive and thrive and we all need to learn to use it and the items it contains – such as NFTs – humans are still biological creatures; we still live in bodies attached to a physical reality, one that can enhance the metaverse. In this sense, for the ultimate triumph of NFTs, it is essential that the metaverse is only the first place we work with these assets.
In addition, we must find ways to integrate them into the physical world. For the time being, progress is slow, but not non-existent, and as with many NFT developments, it begins in the art field with engagements such as an NFT museum in the Netherlands. If big brands, innovative FinTechs, DAOs and art entrepreneurs continue to build on their current NFT initiatives, there is a bright future ahead for the mass use of non-fungible tokens.