Roman Korzh: The Growing and Changing NFT Community (VOICES)
NFT technology lives a fast and high-profile life. No one knew what NFT was two years ago. Then suddenly it was all over the news, captivating the minds of many business people. By mid-2022, the technology experienced more ups and downs than a traditional technology would see in a decade.
It started as a way to digitize art and prove ownership. That is still the case and is considered to be a “classic usage.”
It continued as collections of photos that you could use on your profiles in place of your photo. This idea went mainstream so quickly that today, profile photo compilations are no longer a sexy trend. Too many gatherings out there, too much noise, even the psychological value is diluted.
But you can still prove that you own something cool. Combine that with the need to belong and you get the newer trend of NFT usage: proof of being part of a VIP community. The NFT pass will open the doors to a first class restaurant, luxury services or expensive resort. You need different NFTs for each business, and you still have to pay a good price for the services, and the NFTs are still expensive – but hey, you’re part of a privileged group now!
The good thing about the current state of NFT is that we are moving from digital imaginary values to real values. And the move is happening quickly, like everything in the Blockchain / NFT sector. The typical technology adoption cycle is between 10 and 20 years; with NFT it can be closer to 5-6 years.
The early adopters of NFTs are very aware that the technology is still in its infancy and they know that sometimes it is easier to take a leap of faith and buy something rather than digging into project details and understanding what it is the true value of an NFT. Many NFT owners call themselves an “NFT deg”, which means they buy too much too fast, because it’s more fun that way. Fun is a big part of NFT culture, and a big part of it is built on memes and inside jokes.
If you’re a gamer, you’ve probably heard of the Play to Earn concept. The pioneer in this area, a game called Axie Infinity, made a big splash in the digital world. It was possible to make good money just playing the game 5/8, compared to what you would earn from a “normal” day job in some countries.
A number of games followed that model, raising big money in funding rounds. Interestingly, while some games were funded by VCs, a number of them were crowdfunded, where people bought an NFT that would allow them to be more successful in the game at a later stage, when the game would actually be developed.
On a related note, many who invested in NFT games were not gamblers. They were only in it for the opportunity to make money. Even if the NFT games were fun to play (they aren’t in most cases), investors would only care about how much their digital property is worth in an optimistic future. The games promise high returns, much more lucrative than the traditional investment tools.
NFT used to be a way to combine fun and make money. However, the recent bear crypto market makes it harder and harder to profit while selling the NFTs at a higher price. While that’s bad for traders who jumped into a falling market, it’s also good for technology as people move from pure trading to useful applications. And as I mentioned, this process is happening very quickly, so we will definitely see new NFT-powered projects in the near future.
Here is what the NFT evolution will look like.
The digital you
- Previously, you needed a login and password to prove you were you.
- Now you must have a wallet to prove you are you in the crypto space.
- In the future, your wallet will need to own an NFT to prove you have enough privileges.
- In the past, your username and password could have been stolen (and it happened a lot).
- Now it’s much harder to steal your wallet. The number of successful hacks is much lower.
- In the future, NFT will be a reliable authentication token because no one can tear NFT from your wallet (you can still sell it if you want).
- Previously, you bought an NFT for a profile picture because everyone else did.
- Now you only do it if there is a bigger reason behind the NFT project, like charity or empowerment.
- In the future, the pure art NFT will be treated in the same way as the classical art is treated now. The artist, or the project manager, will define the value of the NFT medium.
- In the past, people invested in Blockchain projects (including NFTs) because they were promised APYs of 30% or higher,
- Now people invest in projects with clear and sustainable tokenomics, after carefully analyzing the project details.
- In the future, the APY promise will have no meaning, because the NFT price will only be defined by the crypto market. The crypto market will grow in the same way as traditional stock markets, with bull and bear periods.
A good example of “healthy” NFT use is the combination of investment and property. You buy part of a house and get a part of the profit generated by renting out that house. With the traditional ownership model, you can’t do that because of the mandatory paperwork if you urgently need to pay out. In the NFT-based model, you only sell your NFT on the specialized market. If the price is right, you’ll get your investment back in less than an hour.
There are three pillars in future NFT projects:
- Proof of ownership
- Financial incentive
- Ties to the real world
Whoever manages to combine all three has a good chance of building the next big thing. The market and the public are ready.
Roman Korzh is vice president for development at Zfort Group. Zfort Group is a leading worldwide software development agency, specializing in complex projects and cutting-edge technologies, including NFT, Blockchain, Artificial Intelligence, Machine Learning. The company was founded in 2000, and has been working with Blockchain projects since 2016. If you have a project idea, or need help with web app/mobile app development, contact Zfort Group at [email protected]