What are NFTs, Why the hype, How it can be the future?
NFTs are the most fashionable obsession in the world of crypto. The hype is real and people are buying them for high prices. “NFT” has even become the Collins Dictionary’s word of the year for 2021. If we look into the volume traded in 2020, it was below $100 million, whereas last year, it reached around $20 Billion. What are NFTs? Why are these JPEGs being traded at such high prices? And why is it predicted to have a strong future scope? Let’s discuss it.
NFT stands for Non-Fungible Token. Non-fungible means it is unique and non-interchangeable like the other fiat currencies or cryptocurrencies like Bitcoin. NFT can be anything digital, like art, music, videos, etc. but these are stored and transferred in the blockchain. Since it is in the blockchain it will be exclusively owned by an address in the blockchain. We can compare NFTs to land wills in the real world.
The NFT holder will have full authority over it as it exists in a decentralized platform. The key benefit of NFT- Ownership is that they can hold, transfer or sell it as they like. As the scope of this idea is unlimited, ownership through a digital medium is very innovative.
Most of the NFTs will have certain utilities. It can be art itself — art pieces of well-renowned artists will have a very high valuation. The art can be visual and auditory. Some NFTs will also offer owners entry to certain communities, exclusive events, white-lists to specific token launch events, etc. that are not accessible without owning the NFT. A person can even have their own identity in the form of NFT which will act as an alternative to the domain names we use now, which are handled by a third party. NFTs allows you to take part in decision-making in a Decentralized Autonomous Organization. Another important role of NFTs is in the gaming sector especially in Play to Earn games which we will discuss in a jiffy. NFT use cases are being improved day by day and the future looks promising for it.
Even though the idea and technology behind NFTs are futuristic, why are some of these traded at such huge prices? Before that, let us take a look into the growth of the NFT market during the last cycle.
Terra Nullius is the first NFT project which allowed holders to engrave a message in the blockchain. Then came the Ethereum Name Service which allowed the holders to claim their identity in the blockchain. It also had a transfer function. The first NFT project that went viral is a profile picture NFT project — CryptoPunks which are being traded above $100,000 now.
CryptoKitties is the first gaming NFT project. But, a Play to Earn game called Axie Infinity took its game to next level. Created in 2018, Axie Infinity had huge adoption last year because of the network effect NFTs had created. Axie Infinity, released in 2018, suddenly had a huge adoption last year because of the network effect NFTs had created. It used NFTs to accrue value to the game and its token by implementing NFTs into the gameplay. People in several countries even went full-time into playing this game since it created more income for them than the traditional jobs. This game currently has over 2.5 Million players thus creating a huge demand for their NFTs.
Gamers could buy, sell or exchange in-game assets as NFTs with people who are playing the game or want to trade them for a profit. Last year’s trading volume created by gaming NFTs is about $4 Billion which is very huge as the adoption is yet to happen on a large scale. All this happening on the blockchain ensures that it is safe to invest and make use of this opportunity.
When it comes to Sagaverse, NFTs play a key role in various aspects. Sagaverse will be hosting a number of games where open and interoperable features of NFT will be used efficiently. Sagaverse will have different sets of NFTs which will have specific roles assigned to them. The Guardian NFT holders will take part in the decision-making in Sagaverse and will receive incentives for holding. The Avatar NFTs enable the user to have their own identity in the ecosystem. Also, these Avatar NFTs can be used as collateral to take loans, can lend them to other players on basis of a commission, and participate in lotteries which are conducted periodically. Moreover, in-game NFTs can also be earned by the players that can be sold in the secondary market. Being implemented in a safe and efficient blockchain, Sagaverse allows players to have a low gas fee for their activity on the chain. All these make Sagaverse NFTs stand out from the other Play to Earn games.
Being valued at just above $1 Billion, Gaming NFTs are only a small part of the whole NFT ecosystem and NFTs are just a fraction of the cryptocurrency market which is about $2 Trillion. This will change in no time as huge adoption is happening and efficient NFT- Game economics is deployed, so the expected growth for NFTs and Play to Earn games is very huge. Yes, we are still early!
