In the past year, NFTs became one of the most talked-about topics in the crypto-world, marking their biggest rise since their creation in 2014. So, if 2021 marked an incredible increase of NFT, what can we expect from NFTs in 2022? Will 2022 be the rise or the fall of NFTs?
Well, before making any predictions about the future, let us take a step back and analise what we are really talking about. What is an NFT?
What is an NFT?
Before discovering wether 2022 will be the rise or the fall of NFTs, let’s start understanding what they really are. NFT is the acronym of “Non-fungible-token”. It is “fungible” anything that can be exchanged or replaced with something identical, whereas “non-fungible” is everything that cannot be replaced, something unique. For example, it is possible to change/exchange any kind of banknote, that means that it is “fungible”, but it is impossible to change an NFT with another since it is not interchangeable. Each NFT has unique properties and is not worth the same amount as another one.
The biggest characteristic of the NFT is its “digital exclusive”, in the sense that an NFT can only be anything digital: a drawing, music, game-item, a video… everything that can be put in the digital world (so basically everything) and that can be traded with cryptocurrency (the most used in this field is Ethereum, but there are many more). Anyone has probably heard about the NFT of the first tweet in history, created by the Founder of Twitter Jack Dorsey, sold for over $2.9 million. Curious to know more about it, now?
Create and sell an NFT
Non-Fungible-Tokens can be bought and sold, exactly like other cryptocurrencies, on specialised platforms. One of the biggest NFTs platforms is OpenSea. OpenSea is a marketplace specialised in the buying-and-selling of crypto currencies and digital assets. It’s based on the Ethereum Blockchain (one of the most known cryptocurrency at the moment after BitCoin). The reason why OpenSea is gaining popularity day by day is its extreme simplicity. In fact, it is very intuitive and easy to use. All you have to do is create an account on the platform, connect an Ethereum wallet and upload the digital contents you want to sell.
How NFTs can change the art market
Needless to say, the art market, above all the others, is the one that, maybe, compose the biggest part of the NFTs, indeed, one of the most appreciated aspects of the NFTs is exactly its use for the digital art market. Until now, digital artists have always struggled with the economic and recognition part of their work since this idea of “an easy-to-replicate” kind of art and therefore the tendency of being less considered. With the “non-fungible” aspect, NFTs can totally reverse this factor and digital art creations, making every NFT unique. In this way, finally, the digital art world might have the recognition it deserves and be “treated” exactly like any other tangible artistic work. Apparently, the rise of the NFT in the art field is due not only to the possibility of seeing your artwork recognised, but also to the possible and appealing amount of money that an artist could do with its art, because of the tendency of taking as example some of the “ones who made it”, for example the Digital artist Beeple who sold “Everydays — the First 5000 Days” for $69.3 million or the famous CryptoPunk NFT sold for $1.8 million.
NFTs are not just related to art…
It must be said that Non-fungible-tokens are not only applicable in the Art area. As said, everything that can be digital can be transformed into an NFT, thus, you can now have access to certain events only by buying a special NFT ticket. The ultimate news makes it known to the world that in 2023 we will also be able to see the first NFT Restaurant directly from New York, where, by owning a Restaurant NFT you will somehow receive a membership that allows you to enter and hopefully dine in the Restaurant.
AR NFTs, the new frontier
2021 was the year of NFTs. Well, they actually existed since 2014, but this past year they experienced a real massive explosion and, whether you are an expert in the subject or not, you have probably heard this word at least once by now.
Thus, for 2022, the NFT world is beginning to speak about AR NFTs (Augmented Reality Non-Fungible-Tokens) as the new frontier of the NFTs. For the first time, NFTs which have always been restricted in the bidimensional world, could now have access to the three dimensional world. In other words, including the AR element in the creation of an NFT you add the ability to visualise it in your physical surroundings by using a specific app or a website.
Moreover, the use of AR NFTs could add the “scarcity aspect” even more. Indeed, especially for the tourism sector, it could be interesting adding some AR content only available with NFTs, such as a particular AR guide in a museum, 3D access to exclusive parts of the gallery or even the chance to see a work of art such as a paint or a sculpture in a deeper and more accurate way.
As we have seen so far, creating an NFT is quite simple and intuitive (especially using well known platforms). What could seem a little bit more challenging is creating an AR NFT, since it might require the addition of tools and platforms that allow the visualisation in the environment. The biggest advantage, though, is exactly this one: in a world where NFTs are created with an extreme simplicity, having the possibility to create a different work could make the creator stand out among the others, creating immersive and outstanding experiences.
Why NFTs could fall
According to a large part of the web, though, Non-Fungible-Tokens are going towards a slow fall, especially due to the several damages that they might be responsible for. Thus, it would be irresponsible to not mention the risks and disadvantages that occur in selling and buying NFTs.
Owning an NFT does not mean you can use it
The first incomprehension that seems to appear all the time is actually around the very definition of NFTs. Indeed, buying and “owning” a specific NFT does not mean being able to do everything you want with it, like copy it or using it for other purposes. You just own it. That might generate concerning thoughts about the very reason why you should buy an NFT in the first place, if basically it might be something that can be seen/listened/viewed anytime from any screen.
“Different” points of view about NFT art really is
Another concerning aspect of NFTs involves the art market. Apparently, the large amount of “artistic creations” in the NFT world may actually damage the NFT art market, because of the speculative aims that non-artists can have. That is why considering art something like code-made lions or monkeys for many users can appear difficult and people start asking if creations that do not seem very “artistic” (maybe because of a lack of emotions, soul and passion put into the creation of them) might not be worth buying and therefore create mistrust.
The risk of getting scammed
Despite its large popularity, NFTs world does not have legal guarantees yet that protect buyers and sellers, thus the chance of being scammed seem to be quite high. The buyer can never really know if the NFT bought refers to something created by the seller or if it is something taken from other parts. Something even worse could occur, like selling NFTs that are not even present in the digital world.
The negative impact on the environment
Another aspect that needs to be discussed is the environmental one. The super strong computers that generate NFTs consume an enormous amount of energy. These computers need very high capacity in order to work with the Ethereum Blockchain and guarantee proof-of-work (sort of security system that oversees transactions in the cryptocurrency world). In fact, when selling and buying an NFT, there is the so-called “gas fee” which is exactly a fee that needs to be paid for having used a large amount of energy. There are websites, such as cryptoart.wtf where it is possible to see the amount of emission that NFTs are making. According to cryptoart, the footprint of the NFT Space Cat seems to be not so far from the electricity usage for two months of an EU citizen.
At the end, it is quite impossibile to declare wether 2022 will be the rise or the fall of NFTs. What we can say is that despite all the risks and the disadvantages of selling/buying NFTs, it must be said that the predictions are quite positive. Apparently, the NFT market is going to change, improve and surely become bigger. There are already movements towards an NFT market greener replacing proof-of-work with proof-of-stake. According to the crypto experts, something about the safety of buying/selling NFTs will be made soon. About NFTs creators, instead, it appears that Augmented Reality will play a very significant role in the renewal of the 2022NFTs.