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Recently, numerous reports and stories have indicated a decline in the floor price of popular non-fungible tokens (NFTs), with vast sums of money seeming to disappear. Nobody seems to be immune to this downturn, with the cryptocurrency industry being closely watched by investors and speculators alike. Frequently, however, it seems that news headlines predominantly focus on inconsequential market changes driven primarily by sporadic bursts of trading and minting NFTs.
The Perception of NFTs
It’s vital to move beyond the mainstream view of NFTs as strictly being used for purchasing and selling of pixels. The possibilities in this domain are vast and it’s time for the industry leaders to turn their collective focus towards these potential opportunities as we step towards the boundary where the digital world merges with the physical one. Here, the synergy needs to be directed towards fostering actual use-cases for NFTs.
The Value of NFTs
Popular NFTs have been rumored to peak at incredibly high prices before experiencing a steep drop. The key question that arises here is: without any true intrinsic value other than what the market determines, how valuable can these pixels be?
Initial discussions around NFTs optimistically highlighted the fact that they could ensure an artist’s work remained in their portfolio or the buyer’s possession, effectively combating the unlawful usage and theft of digital art.
Digital artists like Beeple and Pak managed to break records with the sales of their NFTs but they are the exceptions rather than the rule.
Abuse of NFT Technology and Overvaluation
While there is undeniable potential for the technology to be utilized in art and collectibles, it has unfortunately also been misused largely as a novelty. Marketplaces have seen elementary jpegs being sold for exorbitant prices without any substantial intrinsic value underpinning these transactions. More often than not, NFTs are significantly overvalued.
Intrinsic Value of NFTs
The crypto industry needs to introspect and reflect on what an inherent value for NFTs might look like.
NFIS (non-fungible items) present a new way forward. This implies taking a physical asset, like a ring, and providing it with a software development kit. Conceptually, these items cannot be stolen since each asset using NFI technology is unique.
Brands like Yvel and Crurated are incorporating this technology into their business models.
Potential of NFI Technology
Despite being a nascent technology, NFI has shown immense potential in terms of traceability, proof-of-ownership, and loyalty rewards association. This marks the beginning of what could be possible with NFT and NFI technology. It emphasizes the importance of focusing on the practical use cases, which exhibit tremendous potential.
Cases in point include the application of NFTs in real estate, cultural, and political information preservation, as well as fundraising for disenfranchised individuals globally. Looking ahead, we need to concentrate on these tangible and more importantly, useful use cases. Merely observing price fluctuations in NFT markets could lead us into falsely believing that these patterns will persist, but the potential of NFTs is truly limitless.
This is just the beginning of understanding the potential that lies in the convergence of digital and physical worlds.