After starting with blockchain games, non-fungible tokens (NFT) are now merging with the concept of the metaverse and are expanding their field of action. Now, NFT have moved beyond games to cover virtual real estate, the arts, popular culture, memes and more, creating new value in a wide variety of areas.
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Riding the metaverse wave, NFT move from games to real estate
NFT first began to be used in games in combination with the metaverse concept – which refers to a virtual world.
The purpose of NFT is to enable exclusive ownership of in-game characters, items, real estate, and more by assigning them a unique number. This has also allowed participants in virtual worlds to use NFT as a means of buying and selling goods or engaging in other economic activities.
The first game to popularize the use of NFT was CryptoKitties. With the rapid growth of the cryptocurrency market at the end of 2017, CryptoKitties became so popular that it even paralyzed the entire Ethereum network at one point. Even though CryptoKitties was a simple game where you raise your own cat, as word of mouth in the community spread, one digital cat was valued at over $100,000.
Since then, numerous projects have appeared to create tokens for various game items. One project that drew attention is called Decentraland, where land in a virtual world can be bought or sold at auction and then developed.
Axie Infinity has further expanded the possibilities of NFT by combining games and real estate. In Axie Infinity, users can make money by breeding and trading the NFT yokai character ‘Axie’, by trading other items or virtual land. In February, ‘land’ (i.e. digital real estate) adjacent to the Genesis Block in the ‘Epic Nine’ area of Axie Infinity was traded for 888.25 Ethereum (ETH). At the time of trading, the dollar-equivalent value was more than $1.5 million.
NFT entering traditional industries starting with the digital art market
NFT are now moving beyond games and are being used as a means of creating digital ownership in traditional industries such as art and fashion. Based on its strong community, NFT are entering new fields such as digital art.
The person who pioneered the use of NFT in the digital art market and opened opportunities for the technology in the wider art and fashion industries is renowned digital artist Mike Winkelmann. After his digital artwork “EVERYDAYS: The First 5000 Days”, also known as “Beeple,” sold for $69.3 million, many digital artworks were registered on multiple NFT trading markets, allowing anyone to easily participate in auctions.
Many unknown artists, who previously struggled to find sales outlets, now have a way of showing their work to the public. As a community is formed, NFT has also enabled them to sell their works at a high price. The singer Grimes, wife of Tesla CEO Elon Musk, also posted 10 of her digital paintings as NFT and earned $5.8 million in 20 minutes.
Another notable fact is that when Michael Winkelmann’s work was sold, it was auctioned by Christie’s, the world’s largest and most established art auction house. This shows that NFT have moved beyond the blockchain industry and are now also being used in the traditional art market. Recent coverage also revealed that Sotheby’s – the other giant in the art auction market besides Christie’s – now also supports NFT transactions, while Damien Hirst and British ‘street artist’ Banksy, two of the world’s most renowned contemporary artists, are now also producing NFT.
In addition, traditional fashion brands such as Louis Vuitton and Dolce & Gabbana are also using NFT. For example, Louis Vuitton recently released an adventure video game called ‘Louis the Game’ as part of the ‘Louis 200 Project’ to commemorate the 200th anniversary of its founding. This game includes a quest to collect 30 NFT. Following Louis Vuitton, Burberry recently collaborated with Game Blankos to release an NFT collection, and Dolce & Gabbana also launched an NFT collection under the name of ‘Genesis Collection’.
Collectibles, Tweets, memes – the era of digital creation is now wide open
The scope of NFT is growing ever wider and the technology is now being applied to various digital creations such as digital collectibles, tweets, and memes.
A prime example of how NFT are being used to create valuable digital collectibles is NBA Top Shot, an NFT platform showcasing US National Basketball Association (NBA) plays. On NBA Top Shot, NBA athletes’ game highlights are turned into NFT and in February, a 10-second match highlight video of LeBron James sold for $208,000.
Another leading digital collectible project is CryptoPunks. Founded in 2017, the CryptoPunk Project has 6039 male and 3840 female characters. The remaining ‘punks’ are aliens, zombies, and apes. At first, users could get punks for free by paying only the gas fee, but in 2018, as their value increased, some punks started selling for around $5,000. Since then, punks have only risen further in value. In March 2021, punk no. 3100 sold for $7.58 million, and punk no. 7804 sold for $7.57 million.
The founder of Twitter, Jack Dorsey, created an NFT for ownership of the first tweet and sold it for $2.9 million, opening the door to Tweet NFT. In July, English computer scientist Tim Berners-Lee, the founder of the ‘world wide web (www)’, created an NFT for the original www source code, which sold at auction for $5.4 million.
The type of things that can be turned into NFT are endless. Thanks to communities formed in virtual worlds, NFT are continuing to create new economic value that did not exist in the physical space.