NFTs Trends In 2022 and Beyond
Whether you like NFTs or not, some of these upcoming trends could change the relationship we have with the web, brands, commerce, the way we buy and sell art, and even how we create and experience music. And all signs point to 2022 as the year when the promise of Web 3.0 and NFTs will really take off.
If you still don't really understand what NFTs are (you're not alone), check out this article, our explanation of what NFTs are and how brands can use non-fungible tokens in their marketing and communication strategy.
To better understand the value of NFTS, let's make a comparison: I bought my first Apple computer in 1996 for the equivalent of 3000€ at the time. But if I had bought Apple shares instead, it is likely that I would not have written this article since I would not have needed to work all my life! In the new NFT world, when you buy a computer, you own part of the brand. So as the brand grows in popularity and business, you are then able to get a piece of it.
Let's now discover the major upcoming NFT trends that will have a lasting impact on 2022 and the years to come.
The gaming industry has been one of the first application areas for NFTs since the technology was created. We're already seeing this phenomenon in video games, with leading publishers like Ubisoft committing to a blockchain so that players can purchase and unlock tokenized items that now have real value.
In 2019, Ubisoft offered the acquisition of NFTs, called Digits on its Quartz platform: machine gun, helmet, pants to be used in the game "Tom Clancy's Ghost Recon Breakpoint"
Axie Infinity has been one of the most popular games of 2021, leveraging both NFT and crypto-currencies. Axie Infinity offers a "play-to-earn" program, which is now valued at "$6 billion" and where players can earn $15 per hour through NFT rewards. Axie Infinity's daily active player count has since reached over 2 million daily active users. The game is most popular in the Philippines, Venezuela and other developing countries, where players can earn more than the national average wage. Other popular play-to-earn games using NFTs include Sorare, The Sandbox, MIR4 and CryptoBlades.
The Japanese publisher Square Enix intends to rely on the technology of metaverse and NFT. In a CEO letter sent to its shareholders, Yosuke Matsuda states that the metaverse has attracted so much attention that the year 2021 has been dubbed the "Year of the Metaverse. According to him, the metaverse will likely see a significant transition to a commercial phase in 2022, with a wide range of services appearing on the scene. As this abstract concept begins to take concrete form in the form of product and service offerings, some leaders hope it will lead to changes that will have a more substantial impact on their business as well.
I see 2021 not only as "Metaverse: Year 1", but also as "NFTs: Year 1," since it was a year in which NFTs were greeted with great enthusiasm by a growing user base.
Yosuke Matsuda, CEO of Square Enix
If it is not specified exactly how NFTs will be used in future games to be released, all the craziest hypotheses can be envisaged: tokenized mods, accessories, unique items, therefore rare and expensive .... But beyond the purely speculative aspect, game publishers still need to find a more advanced use value for the integration of NFTs in video games and adopt a medium and long term vision. For example, will an object be usable and transferable across multiple games, multi-platform, or even multi-publisher? Whatever the case, NFT technology is revolutionizing the video game industry.
The trend that is really shaking up the gaming world goes beyond play-to-earn and has implications far beyond traditional games: the metaverse, a shared digital space that combines virtual and physical reality.
Many see the metaverse as the future of online interactions and the next step of the Internet. Mark Zuckerberg recently announced Facebook's name change to Meta, and the company's intention to become "a metaverse company." Meta plans to become a virtual space combining the realms of work, entertainment and social interaction. But more than that, it's the upcoming arrival of Apple with its VR headset that will bring the metaverse fully into usage and homes.
But what is the relationship between metavers and NFTs? According to Mark Zuckerberg, privacy, security and interoperability must be integrated into the metaverse. The more our lives move online, the more we will need secure ways to prove ownership of our identities and digital assets. And that's where NFTs come in.
Think of the metaverse as the real world, but digital. You can interact with other people, explore, shop, and take on challenges. What NFTs allow in this space is the same unfungibility of assets as in the real world.
The value of assets depends on their scarcity and utility. NFTs allow creators to introduce scarcity and utility into the metaverse, which means that a unique economic system can develop there.
Decentraland and Sandbox, two leading metaverse companies, use NFTs for just this purpose, symbolizing everything from usernames to game clothes to real estate. And from the looks of it, Twitter and Facebook (Meta) are planning to follow suit.
Take real estate, for example. In Decentraland, real estate is limited and can be owned as an NFT. Just like in the real world, the land you buy in Decentraland is yours. You can do whatever you want with it: build a house, a business, an art gallery or put up billboards to make your space profitable. And just like in the real world, your land is not only valuable because of its usefulness to you, but also because of its rarity and potential usefulness to others. This means that the more interest there is in an area, the more valuable the property in that area becomes. Things like location, square footage, and market trends affect property values. And because you own the property as an NFT, you can sell it at a profit and transfer the property to someone else.
That's why Republic Realm spent nearly $1 million to acquire a large piece of land on Decentraland. It was a high-traffic area, and the company wanted to capitalize on the game's traffic to build a virtual mall. They are now leasing stores in this block of land, which they have named the Metajuku Shopping District.
Avatars and NFT profile images
NFT profile picture and avatar projects are among the most successful in NFT history. And it all started in 2017 with the release of the famous CryptoPunks. Some 10,000 CryptoPunk NFTs were algorithmically generated and distributed for free in 2017 to anyone interested with an ETH wallet. Suffice to say, not many people believed in this NFT and predicted "No Future" for CryptoPunks! Now, five years later, the cheapest CryptoPunks is worth over $400,000 and over $4 billion has exchanged hands on the NFT series. 🤘
Today, you can spot CryptoPunks on the Twitter pages of Jay-Z, Visa, Snoop Dogg and Odell Beckham Jr. and even on the Met Gala red carpet.
NFT avatars have become more than just a series of JPEGs. For thousands of people, they act as a digital identity and provide access to and membership in very active communities. Many of these communities offer perks to their members, access to exclusive chat rooms on Discord, and offer the rights to the images they purchase. By replacing your profile picture on Twitter with an NFT icon and posting about it, you attract community members who will welcome you with open arms, follow you and engage with you.
This NFT profile picture trend shows no signs of slowing down, and a recent announcement from Twitter should only accelerate its growth.
Share the brand image with the community
The advantage of NFTs over traditional IP creation is that you can own part of a larger brand and profit from it. NFTs such as Bored Ape Yacht Club and StereoheadZ allow users to create their own art for the group, bringing a new form of creativity to a community of artists and musicians. In the case of Jace Kay's band NFTs, celebrity avatars were sourced from the community and payments were donated to those artists. The fact that a still-secret rock star was part of the StereoheadZ Music Club also contributed to this success.
Leaving control of a brand's intellectual property to a community to take it in new directions that the parent brand would never have done in the past adds value. Using a blockchain and NFT provides primary and secondary resale rights, ensuring that an artist is always paid for future use of their work. Losing a little bit of control over an intellectual property allows for growth and creativity, and artists are paid for their contribution and work every step of the way.
Until mid-2021, Bored Ape Yacht Club was virtually unknown and now it is one of the biggest NFT brands in the world, even managing to entice a major brand like Adidas through a partnership.
Will we see companies like Disney and major brands sharing their IP with NFT communities? At first glance it seems unlikely, but this type of community-driven co-branding approach will find its place even in companies that turn to NFT communities and groups to promote new products. A new form of co-creation in a way.
Fragments of NFTs
Since some NFTs are overpriced, why not split them up and buy a portion? After all, not everyone can afford a whole Bitcoin today, but only a part of it, so a new trend that makes high-value NFTs more liquid and accessible to investors is emerging: fragmentation. This is essentially breaking an NFT into smaller pieces (ERC-20 tokens) so that people can buy small parts of an expensive NFT.
The simplest way to think of NFT fragmentation is to think of it as shares in a company. When you buy a stock, you own a small part of that company. Similarly, by splitting an NFT into several pieces, it is then possible to buy one or more shares of it at a lower, affordable price. Curiously, dividing an NFT into non-fungible token parts makes those parts ... fungible, which means they can be exchanged or replaced with an identical item!
Going back to the analogy of company shares, although there is no identical company that Microsoft can be traded with, your Microsoft shares are the same as Bill Gates', although you certainly have less.
While corporations and NFTs are not fungible, shares of corporations and fractions of NFTs are.
The famous Doge meme was purchased as an NFT for $4 million in early 2021. Its owner then split the NFT into billions of coins, allowing users to purchase their stake in Doge for less than a dollar.
Who wants a piece of the doge? Investors can vote on future NFT decisions, trade fractions of $DOG and own a piece of Internet history
Even tokenized paintings are cut up - virtually, that is - into pieces: a Picasso painting was split up into NFTs, allowing 4,000 lucky bidders to acquire part of the ownership of the work "la fillette au béret".
After all, Picasso was a follower of cubism, so what could be more normal than to cut his painting into boxes?
NFT and the fine arts
Indeed, in the field of art, NFTs have found numerous applications since the beginning of the existence of this technology. Thus, this sector has been largely invested by NFTs, both in the creation and in the ways of marketing art, on the one hand to increase the market and also to democratize it and make it more accessible to all. And in terms of interest, we see that the crypto-art market continues to grow and is estimated to be worth $41 billion today.
For example, during 2021, Justin Sun, founder of the crypto platform TRON, purchased $30 million worth of works by Picasso, Warhol and Beeple and turned them into NFTs, a surefire way to capture the attention of the art world.
“We estimate that 50% of the world's leading artists and artworks will be registered as NFT in the next decade. And that's where JUST NFT can come in.” Justin Sun
If Sun turns out to be right, then it is likely that we will not only see new digital artworks created and sold as NFTs, but also galleries and private funds creating digital twin artworks.
QRcodes could appear next to each painting in galleries to verify their authenticity. Art investors could demand NFTs at the same time as they buy conventional art. Virtual galleries could accompany real-world ones, allowing people to visit the Louvre in the metaverse.
Auctions and galleries in the Metaverse
Sotheby's, the 250-year-old art auction house, is already moving in this direction. It recently launched its own metaverse, where it showcases the NFT art it has for sale and holds auctions.
Their latest event, Natively Digital 1.2, generated $18.6 million in revenue.
Disrupting art by creating NFTs
"Art is explosion", says Deidara, a character in Naruto. What if this applies to the world of art with NFTs? In the blockchain, cryptocurrency and NFT industry, "burn" means to destroy. Burning an NFT is typically used to create scarcity and increase the value of other NFTs.
In 2021, blockchain company Injective Protocol took NFT burning to a new level. They purchased a $95,000 Banksy artwork titled Morons, and literally burned it. They filmed the burning of the artwork and sold it as an NFT.
The NFTs also open the way to artistic creativity. For several months now, we have seen the emergence of new art forms and the arrival of brand new artists. Beyond the technology they bring, the NFTs sacralize societal evolutions and the new stakes. A new form of contemporary art?
Artificial Intelligence and NFT
Along with blockchain, artificial intelligence has been heralded for some time as one of the next technological revolutions. It is therefore not surprising that the two combine to create new trends.
One of the areas of application of Artificial Intelligence is now the possibility to create artistic NFTs, independently of human intervention.
Admittedly, this is not a new phenomenon. In 2018, Obvious Art sold a piece of art created by an AI called GAN at Christie's for over $400,000. But the introduction of NFTs has made the value of digital assets widely recognized, and today, new Artificial Intelligence projects are spawning new artworks in the form of NFTs every day.
Alicia studied over 9,100 paintings by renowned artists, performing 300,000 iterations of complex calculations to understand the artists' patterns and techniques. This resulted in Arlequín, one of many unique paintings created by Alicia. This one was purchased as an NFT for just over $400 (0.1 ETH) on the AI Made Art platform.
This may seem hard to understand for the technology-averse. The artwork is not only digital and stored on the blockchain, but it was also created by an artificial intelligence.
Intelligent NFTs (iNFTs)
The second major trend in Artificial Intelligence applied to NFTs is intelligent NFTs (iNFTs). iNFTs are actually NFTs with AI personalities. You can have conversations with them, they can learn new things and change their personality, and they live on the blockchain. Alethea AI is behind the iNFT phenomenon. They sold the iNFT below, Alice, for nearly $500,000 at Sotheby's.
Alethea AI recently received $16 million in funding from major players in the NFT space. They used this money to create their own metaverse called Noah's Ark, filled with iNFTs. They plan to introduce a new revenue model called "train to win" that allows players to train their iNFTs to become smarter and earn money by participating in "Battle of the minds".
These iNFTs could one day be dropped into other metavers like Sandbox and Decentraland, where users could interact with them as if they were other players in the game.
In the future, your iNFT could live in your virtual home in the Facebook metaverse. When you're not online, your friends could come to your virtual home to talk to your personal AI, which is infused with your personality. It will explain where you are and tell them a little about what you've been up to lately. The next time you log in, it will be waiting for you and tell you that Paul visited you and asked about your family.
Digital twins of products
“All consumer products - that can't be eaten - in the next 10 years will have digital twins. They will have NFTs.” - William Quigley, co-founder of Tether
What is a digital twin? A digital twin is actually a digital copy of a physical product or asset. It essentially allows you to digitally record ownership of physical assets. But why would someone need an NFT of an item when they own the actual physical version? What if the answer was to ensure that the asset in question is a real one, and not a fake, copy or ersatz.
The idea may sound far-fetched, but the global trade in counterfeits accounted for 3.3% of total world trade in 2019 according to the OECD. A recent report revealed that up to 20% of all paintings held by museums may be inauthentic, deceiving experts and art museums. In the sneaker space, this problem is so significant that StockX, a sneaker verification and resale platform, is valued at nearly $4 billion. And this problem isn't restricted to art; the textile industry is also affected, especially the highly prized speaker industry. Indeed, the problem is so significant that StockX, a sneaker checkout and resale platform, was valued at nearly 3.5 billion euros last year.
At the same time as the volume of counterfeit production and sales is growing, the quality of counterfeit products has improved dramatically from what it used to be, in virtually every sector. The history and authenticity of a real-world item is always uncertain, especially when purchased from resellers. Sure, the new shoes you bought on eBay look like Nikes, but if you don't buy them directly from Nike, how can you be sure? In short, it's getting harder and harder to tell the real thing from the fake.
The solution? Digital twin NFTs. With digital twin NFTs, physical objects would be linked to an NFT and stored on a decentralized blockchain that is nearly impossible to manipulate.
Again, the NFTs are not physical objects, but a verification tool for those objects. Think of it as a secure, publicly accessible receipt or certificate of authenticity containing the object's complete history.
Let's take the example of an NFT, the CryptoPunk 3348. We can see who the first owner was, who bid on it, as well as the person who bought it for $43 in 2019.
Now imagine if the same type of registration existed for physical objects. This would completely change the resale markets.
For example, when Nike makes shoes, it could associate NFTs with them. When you buy a pair of shoes, you will receive not only the shoes, but also the digital twin NFT. You can then sell the shoes and the NFT to someone else, who can clearly see the full history of the product.
Brands like Nike and Louis Vuitton have already jumped on the NFT bandwagon to combat increasingly sophisticated counterfeiters. LVMH, Prada and Cartier, meanwhile, have teamed up to create their own custom blockchain, Aura, which is used to symbolize ownership of real-world luxury goods. They are betting big on NFTs with Aura, and the service could soon replace the current standard of certificates of authenticity.
Nike has patented its own blockchain-based verification system, called CryptoKicks. According to the patent, CryptoKicks will not only verify ownership in the real world, but could also act as an NFT game, allowing users to raise, buy and sell shoes.
NFTs and Health
Data is now the most valuable asset in the digital economy. But most people have very few ways to truly monetize their personal data. Aimedis has sought to improve this by creating the world's first medical and scientific NFT marketplace, allowing people to buy and sell medical data in the form of NFT. With Aimedis, patients can turn their medical data into NFT to sell to pharmaceutical companies. This allows patients to own and monetize their personal medical information, providing new revenue streams for those willing to participate.
But medical NFTs are even stranger. Singapore-based startup Engin has created an NFT project called Health Hero, with a simple mission: to bring health and happiness (a huge agenda!) to more than a billion people. And to achieve this, it has created Well-being NFTs (W-NFTs, an acronym for Well-being NFT) in a play-to-earn dynamic.
When you sign up for Health Hero, you get a W-NFT that you link to tracking devices and apps like Apple Health, Google Fit and FitBit. By exercising, meditating and eating right, you can grow and develop your W-NFT, giving it new and unique features and making it increasingly rare. These W-NFTs can then be bought and sold, so the more you exercise, the more rare and valuable your W-NFT becomes. And, of course, they have their own metaverse, Health Hero City. The circle is complete.
Deloitte predicts that blockchain technology could transform healthcare by "placing the patient at the center of the healthcare ecosystem and increasing the security, privacy and interoperability of healthcare data."
Given the current problems with counterfeit health passes and concerns about the vulnerabilities of centralized storage of sensitive medical data, NFTs and blockchain may well be increasingly integrated into medicine and healthcare in the coming years.
NFTs and Finance
In the third quarter of 2021, NFT's sales volume was estimated at $10.7 billion. Such an amount of money is not spent without capturing the attention of the financial world. The NFT market is valued in the billions of dollars, but NFTs are speculative, non-fungible assets. Like real estate, you can't make money with NFTs simply by buying and holding them. They must be sold and circulated in the market for the NFT economy to work and for investors to profit.
New services allow this to happen by using NFTs as collateral for loans. Like fractionalization, this allows NFT investors to recover liquidity from their investments without sacrificing ownership.
Let's say you have a million dollar NFT in your digital portfolio, but no money in the bank. You see an investment opportunity that you think will bring you reliable income, but you're not ready to part with your precious NFT. Services like Drops allow you to take out loans using your NFTs as collateral. This works like a mortgage: you leverage the asset you own to create cash flow.
The world of crypto-currencies and decentralized finance is booming, and NFTs have definitely become a major focus of speculation:
Speculation about the future of NFTs in finance includes claims that NFTs could solve the problems of financing long supply chains.
Many venture capital firms are now exclusively dedicated to investing in NFT and Web 3.0 projects.
Even Visa is entering the NFT scene. It spent $150,000 to acquire a CryptoPunk and announced that it will "lay the groundwork to enable the adoption of NFTs and other assets in the future."
Blockchain, NFTs, websites and applications: more scalability
The biggest problem for NFTs today is the huge carbon footprint generated to create one. A single transaction on the Ethereum blockchain consumes as much energy as a typical household for a day and a half. Things are changing and the gradual rollout of Ethereum 2.0 in 2022 will alleviate this problem. Ethereum 2.0 will reduce fees, offer higher returns and increase the value of NFTs created on the blockchain.
Scalability is a hot topic in the crypto world. As the adoption of crypto-currencies and NFTs skyrockets, thought leaders in the crypto space are concerned that blockchains will not be able to handle the increase in data storage and transaction volume.
Beyond resolving the scalability of blockchain technology, there is also the issue of scalability of websites and applications. Like blockchains, websites and servers are not infinitely scalable. Websites have capacity, and many new NFT projects face the problem of not being able to scale their systems to meet the high demand of NFT.
With the growing interest in NFTs, there have been several website crashes in the past year at NFT sales:
This is the price of success for these companies who are powerless to see that interest in NFTs too often exceeds the capacity of their websites. With customers expecting products to be offered for sale in a fair, orderly and trouble-free manner, NFT companies are looking for new ways to control the traffic spikes that accompany NFT offerings.
And to deal with traffic management, virtual waiting rooms offered by companies like Queue-IT are the answer to this type of problem.
With a virtual waiting room, when the capacity of a site or application is exceeded, visitors are redirected to a branded waiting room on another server using a 302 redirect. They are then returned to the website on a first-come, first-served basis, allowing websites to control online traffic and create a seamless user experience.
Marketplaces like NBA Top Shot, DraftKings and Sandbox have implemented virtual waiting rooms to manage their traffic and ensure that their NFT deployments run fairly and smoothly.
As NFTs are adopted by large corporations and celebrities, and as they continue to make headlines and disrupt major industries, the demand for NFTs will continue to grow.
And while developers are working hard to ensure that blockchains can accommodate this demand, many NFT companies are not addressing the scalability of their own web services.
Conclusion: What Future for NFTs?
NFT technology and its application areas are evolving rapidly. Even as we published this article on NFT trends, new NFT projects were emerging every day. From the Busan Metropolitan Government in Korea announcing an NFT conference, to the International Cricket Council launching NFTs for cricket, to CoinRunners funding a movie by selling NFTs.
The few consistent trends in NFTs over the past year are their steady growth, increasing interest, and ever-growing applications. The future that these trends paint is interesting. While many people worry about the implications of the metaverse and the rise of AI, it's a future full of possibilities and brands can benefit from NFTs, the metaverse and Web 3.0 to better engage their consumers.
It's a future that bridges the gap between consumers and creators, gives value and security to digital assets and, for better or worse, will disrupt the world.
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