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Discover the Revolutionary Trends for NFT in 2022

The popularity of non-fungible tokens or Non-fungible tokens (NFT) has skyrocketed in recent months and, with it, the doubts surrounding this new phenomenon. For this reason and to clarify possible doubts about what exactly this concept consists of, in this article we explain what NFTs are and we predict their evolution and trends for 2022. Do you want to know more? Keep reading!

What are NFTs?

A token is a “contract” that stipulates that a person owns a unique and irreplaceable copy of a digital asset, along with that asset. To ensure that the “contract” is safe and true, it is stored on a public network, which is blockchain technology. The fact of being in the blockchain guarantees that it is auditable and that, if these buyers decide to sell the said contract of possession of a unique asset, it can be followed up.

Value is usually conferred on tangible goods that can be touched and seen, such as stamps, works of art or jewelry. Now more and more it is also being done with intangible goods that, although we see, are not material. Although cryptocurrencies come close to this definition, NFTs go further, applying this concept to objects oriented, above all, to collecting.

Unlike cryptocurrencies, NFT’s are not tradable because they are unique, even though there may be copies out there. However, an NFT can be sold to another person. Also, most of these “tokens” are written on the Ethereum network.

The relevance of the NFT’s comes from the fact that their origin can be ensured by introducing a code in the programming. This means that if the work ends up being sold to another owner, the transaction is recorded on this public network, which can be Ethereum or another, and the creator or artist will be paid a percentage for each transmission of the same. In this way, digital targets with many business possibilities can be uniquely represented.

Examples of NFTs

As in the world of cryptocurrencies, tokens work as something speculative. One of the most famous sales of NFT’s was carried out by the renowned American boxer and YouTuber Logan Paul. A year ago he released 3,000 NFT’s of Pokemon cards and in a few days, he sold all the assets for 5 million euros.

The interesting thing about this action is the value that these cards will have in the future since in 2021 they cost 2,000, but it is estimated that in 2030 it could increase to 30,000.

Another well-known case is that of artist Mike Winkelmann, nicknamed Beeple, who sold his NFT “Every day – The First 5000 Days” in March for $69 million.

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“EveryDay – The First 5000 Days”

On February 19, the Nyan Cat or “cosmic cat” GIF, probably the best-known cat meme since 2011, sold for $500,000.

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GIF of Nyan Cat or “cosmic cat”

A few weeks later, Canadian singer, Grimes sold a collection of digital works for more than $6 million. But art is not only sold through NFTs. Jack Dorsey, the founder of Twitter, decided to put his first tweet on the social network up for sale for $2.9 million.

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NFT art thefts

With the rise of NFTs, thefts of digital works of art have also increased. At the end of March, the NFT platform Nifty Gateway reported the theft of their entire collections of NFTs, their accounts being hacked, which triggered the theft of digital assets valued at $150,000 and the purchase of others through their credit cards.

The platform assured that the users who had been hacked were due to not having two-step authentication activated. This is the main problem with tokens. Although there is an original version of the artistic product, it does not prevent multiple copies from being made. However, there is only one original, whose ownership is recorded in the blockchain.

How to make an NFT step by step

An NFT is simply the stamp we put on something to say that it has single or multiple owners. We can make NFT’s with everything, with music, images, land in a virtual field, etc. It is a new way to verify ownership.

Everyone can create an NFT and the process is very simple. You just have to follow the following steps:

1. Digitize a file

The first thing we have to do is digitize a file. Although it sounds very complicated, we all do it every day. For example, when we take a photo with the mobile, a screenshot, when record audio on WhatsApp, etc. We are making something digital that surrounds us tangible. If we take a photo of a plant and upload it to a social network, there we already have an image that, if we wanted, we could create an NFT with it.

2. Register a “node” in the blockchain network

We could auction this image that we have created so that someone could buy it from me for the value of one ether, for example. Let us remember that this contract that we put on the image to say that it belongs to someone, what we do is deliver the digital asset (image) with the seal.

To be able to transfer this image with the seal to someone, you must be within the blockchain network, which is the one that works. To do this, you need to register a node. This is like registering your IP address on the blockchain network. It has an associated cost that is moderately low, currently ranging from $19 to $40.

3. Minting or coining

Finally, once inside the network, all that remains is to put a seal on your digital asset, which is the process called minting or minting. It is currently a fully automated process with many platforms. One of the platforms with which you can do it is Open Sea.

How the price of an NFT is measured

To understand how the price of an NFT is measured, one must understand where the value resides. It basically depends on three factors:

1. Rarity or scarcity

When we talk about rarity or scarcity, the fact that an item is unique or that there are very few series of something gives it a lot of value. Imagine a painting by Picasso. We have a unique copy of a painting that has been hand-painted by Picasso. It is scarce because only that painting exists, despite the fact that there are thousands of replicas. No matter how similar they are to the original, that does not mean that the copies have value since the value of the painting is given by the fact that it was painted by Picasso.

Therefore, that scarcity and that rarity is what give value to that digital asset.

2. Utility

Secondly, the usefulness of the asset must be taken into account. You may be selling tokens of something that has value. For example, you can sell a piece of land from a virtual world, since that virtual world is a kind of game and people can do things in it. This has a specific utility which is that you can then build a house or whatever you want.

3. Ownership history

Lastly, ownership history is also very important. If I have created an image because I am a digital artist, I put it up for auction and it is bought by a very famous person that you know, this will also give a lot of value to the NFT.

If you try to sell any digital asset they can buy it from you but surely you cannot give it the value you want because it does not depend on you.

The future of NTFs and trends for 2022

This market for crypto art and non-fungible tokens or NFTs is expected to maintain the same growth curve despite the slight drop in popularity in recent weeks. According to a report by blockchain analytics firm Chainalysis, NFTs moved $26.9 billion in cryptocurrency transactions in 2021.

The popularity of these digital assets skyrocketed making it a global trend. In fact, NFTs have had a boom in the press due to these large purchases that we have mentioned before since there has been a lot of them that apparently may seem useless to us. In this sense, it is likely that such large purchases will stop because in the end, it is a technology that is being born.

However, it is a great opportunity for digital artists to have control over the ownership of assets and then have a greater right to royalties. It is a system that greatly benefits artists and digital content creators.

Aside from what happens with NFTs, blockchain technology and decentralized finance are here to stay. Fairly large growth in the market is expected and it will create a huge disruption in terms of the accessibility and availability of basic financial products.

With that said, let’s look at some NFT trends heading into 2022 :

The Consolidation of the Metaverse

One of the NFT trends for this year has to do with the Metaverse boom. Apart from learning the many benefits of an ever more connected world, it is possible that in the coming months we will start to see certain metaverse projects in the world of NFTs.

In what we could conceive of as a saturated market, everything indicates that we will see investors, creators and users, in general, begin to gravitate towards the Metaverse with greater traction.

The advantages of blockchain, cryptocurrencies, and NFTs will be offered directly within the Metaverse, removing barriers to entry. Experts in the field say that it will be Apple that takes the lead by offering a high-end device, the only thing that could take steps back would be the price. It is rumored that this technology could cost the user around 3,000 euros, which could let Meta (Facebook) and Oculus take the lead.

Asset tokenization could disrupt traditional industries

Beyond creating NFTs in the metaverse, they can also be leveraged to tokenize both tangible and intangible assets.

For example, the film industry has also been affected by this potential. None other than Quentin Tarantino became one of the first great directors to auction off seven uncut scenes from the famous Pulp Fiction movie as NFT. The NFTs will include the film’s first uncut handwritten scripts, as well as exclusive commentary from Tarantino. This content, as expected, can only be seen by the owner.

Another case would be that of the publishing industry. One of the oldest newspapers in Hong Kong, The South China Morning Post has already started to enter this world. In July, the newspaper announced the launch of Artifact, a standardized metadata structure for recording historical assets such as NFTs. By tokenizing accounts of major historical events, the newspaper hopes to create more transparency in the publishing industry, as each tokenized news story is publicly traceable and resistant to censorship.

New opportunities for charity

As the world understands the benefits of tokenization, NGOs are starting to see the potential as well. NFTs can help develop charitable initiatives in a decentralized and online way with less overhead compared to classic auctions.

The application of smart contracts to NFTs creates even more charitable places. This is because these algorithms can program NFTs to automatically transfer funds to a good cause with every transaction. NFTs and smart contract algorithms are protected by blockchain technology. This offers a transparent and traceable database that ensures funds reach charities.

Additionally, donations made with cryptocurrencies offer lower transaction fees and near-instant payouts.

Without a doubt, the application of NFT to charitable initiatives could introduce new sources of income for organizations. For example, an awareness video can be tokenized and programmed to automatically send payments every time the video is played or shared.

New subscription models

The benefits of NFTs are multiple and all sectors are looking for ways to exploit this world. Another newer application is to use as an alternative subscription model.

For example, the American magazine Time is leading the way among traditional publishers in experimenting with NFTs as alternative digital subscription models. Their new initiative, TIMEPieces, offers NFTs from 40 different artists and also makes the owner a member of the community. TIMEPieces works as an alternative to Time’s digital subscription, unlocking all content for NFT holders and giving them access to exclusive digital experiences and events.

Another example would be the Loud Market. This NFT music marketplace aims to cut out the middlemen from the music industry. In this sense, it allows musicians to coin their songs as NFTs and sell them directly to their fans. This is a great example of how NFTs can cut out profit-seeking middlemen and make transactions easier.

What did you think of this article about what are NFTs and trends for 2022? Leave your comments and share!

 

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