Non-fungible tokens (NFTs) have come a long way since the debut of Crypto Kitties back in 2017; at the time, only a handful of people within the crypto ecosystem understood how they worked and the underlying potential. Half a decade down the line, this nascent industry enjoys massive support from crypto natives and other stakeholders, including celebrities, tech giants, and the gaming community.
So, what have been the pivotal moments in NFT developments? This article will dive deeply into the evolution of NFTs as we narrow down on what the future holds for Web 3.0 citizens. First introduced in Meni Rosenfeld’s 2012 ‘Colored Coins’ paper, the concept of NFTs has been around for over ten years. However, it was not until recently that this new area of innovation started attracting mainstream users.
According to historical stats, the best performing year for NFTs was 2021, with the market recording over $23 billion in total revenues. Some highlights included Beeple’s $69 million NFT collection deal, marking one of the largest art sales to date. Not long after this event, we saw the debut of popular NFT collections such as the Bored Ape Yacht Club (BAYC) and CryptoPunks.
The most interesting development, however, was the sudden surge in value as more people rushed to acquire the much-coveted NFT collections. For instance, the BAYC collection launched at a mint price of 0.08 ETH on April 23, 2021; as of press time, a single BAYC retailed at 93 ETH. NFT collections are now evolving beyond the speculation narrative into hyper-realistic objects with tangible use cases.
What’s in Store for the Future?
Like most technological innovation cycles, NFTs are slowly becoming more practical and easily accessible for crypto newbies and veterans. Developers have started launching collections on cheaper Layer-1 chains such as Solana and Avax, ultimately avoiding Ethereum’s high gas fees. Unlike in the early days, NFT market participants now have various options depending on their preferences and monetary ability.
“1/ There are now more NFTs on OpenSea than there were websites on the internet in 2010.
Very soon, NFTs will outnumber websites, maybe even webpages. This growth has major implications for how we should index NFTs…
— Alex Atallah (@xanderatallah) March 9, 2022”
More importantly, there is an ongoing integration between NFTs and the emerging virtual worlds, also popularly known as the metaverse. Today’s NFT collections are not only designed as digital collectibles but on-chain resources, enabling Web 3.0 enthusiasts to game and live in alternate realities. To this end, we have NFT projects such as Looking Glass Labs (LGL) that have launched a metaverse-compatible collection dubbed Genzeroes.
Contrary to the collectible-only approach taken by BAYC and CryptoPunks, the limited Genzeroes NFT collection features 3D aspects, making it suitable for a hyper-realistic virtual world. With the metaverse becoming a digital hub, LGL, through its leading brand House of Kibaa, plans to introduce more advanced NFT architectures for the metaverse and play-to-earn ecosystems.
As we can see from the fundamental growth of NFT the market, it is evident that collections will dominate the future with quantifiable use cases. Most notably, the intersection between NFTs and the metaverse will set the stage for futuristic gaming environments and virtual reality (VR) explorations. No wonder big tech companies such as Meta are gradually joining the wave.
“The defining quality of the metaverse will be a feeling of presence — like you are right there with another person or in another place. Feeling truly present with another person is the ultimate dream of social technology.” noted Zuckerberg in Meta’s 2021 Founder’s letter.
Though a new kid on the block, NFTs prove to be more than most people imagined. Based on the ongoing developments, it is more than likely that NFTs will be the lifeblood of virtual worlds, a $1 trillion potential market, according to JP Morgan. Other areas where NFTs are set to play a major role include decentralized identities (DIDs) and asset tokenization, both of which have a huge untapped opportunity in decentralized markets.