5 Reasons Why You Should Pay Attention to NFTs in 2022
Non-fungible tokens have gone mainstream. It’s no wonder that Collins Dictionary named ’NFT’ as Word of the Year 2021.
Despite the crypto market’s rocky start to the year, the NFT market is still attracting creators, brands, and collectors.
In this post, we discuss some of the key reasons why you should keep paying attention to NFTs in 2022.
1. Web 3.0 Is Poised to Explode
After much shuffling at the base level, many NFT platforms have identified user-friendlier blockchains and layer 2 protocols to ensure no one is being priced due to high transaction fees. As a result, 2022 is set for more artists to embrace the potential of blockchain to sell digital art.
Everyone witnessed the rise of Web 2.0 that ushered a new era of user-generated content a couple of decades back. In 2022 (and the years to come), we expect Web 3.0 to herald a new revolutionary world for intellectual property creators to connect with their consumers and monetize offerings directly.
This means it’s time for creators to leverage the growth of blockchain to reclaim at least part of the power that huge digital platforms like Facebook, YouTube, and Apple created on their backs. Ultimately, users will rely on Web 3.0 to trade, sell, and buy NFTs. In a true sense, Web 3.0 eliminates the need for intermediaries, handing the power back to creators to make the most out of their NFT assets.
2. Rewards and Royalties
In 2022, we will see a range of new business models based on NFTs. These new business models could become the primary source of the NFTs’ future worth. For creators, this implies that if their work grows in value, they may attach terms and conditions to their NFT to guarantee that they earn a percentage of the revenue for every sale.
For instance, football clubs employ similar contractual provisions when selling players. The club where players spend their youth would often earn a share from every transfer made in the future. Similarly, the original NFT creator will earn a royalty share every time the token changes hands.
Musicians can also leverage NFTs to provide value in real life by passing on the special benefits to their fans owning their NFTs.
Approximately 50% to 80% of sports memorabilia is suspected to be fake. Counterfeiting may be prevented by turning these products into NFTs with transaction histories that can be traced back to the original originator.
3. Bringing NFTs to Real Life
Recent development in the NFT space indicates that NFTs are extending their presence into the real world. While it does open a new income stream for digital artists, they also provide a range of benefits for the live entertainment business in terms of ticketing. This is true since it reduces counterfeiting and scalping, enhancing the ticketing experiences for both organizers and attendees.
Digital ledgers make it easier for people to buy and sell tickets since they are tamper-proof. Let’s consider an example of Bored Ape Yacht Club (BAYC), which just had online chat room and a graffiti board hosted on Discord. Now, it has expanded into a collection of social events and even a real-life social gathering for all members of the BAYC and Mutant Ape Yacht Club (MAYC).
In 2022, we may see many event organizers minting NFT tickets into a selected blockchain, programming them to create a sale or resale price, and conducting the sale as an auction with fans bidding for tickets.
4. NFTs to Affect IPR
Intellectual Property Rights (IPR) involves licensing of patents and trademarks. And one of the possible uses of NFT in 2022 will be in IPR.
NFT owners can include businesses boasting logos and trademarks in the market, book authors can leverage it for royalties, movie actors can offer iconic images as NFTs. In the same way, IPR covers composers, gamers, or other tangible art creators.
These owners are inclined to monetize their assets in the market by minting NFT. But, without IPR, it can create a serious possibility of violating the owner’s rights. Remember, **NFTs do not come with built-in intellectual property protection. **
Ownership of an NFT is only a display on the shelf. There is a difference between ownership of the NFT itself and ownership of the underlying intellectual property or NFT assets.
Anyone can create several digital assets and distribute them using NFT blockchains since they are decentralized and autonomous. For instance, one can replicate the digital asset by downloading it to share it by taking a screenshot.
One person downloaded all NFTs from Ethereum & Solana (over 18TB of images) and put it out for free download. But it is commonly overlooked that NFTs are designed to demonstrate the originality and ownership of work without regard to how many copies someone possesses.
Let’s assume that an NFT seller also has the IPR of their assets. In that case, one can transfer IPR to the subsequent buyer. Remember that it is possible to grant an intellectual property in writing that holds such transfer of ownership legally.
Also, the Madrid Protocol allows for the international transfer of trademark ownership, which expands to selling NFT to anyone, anywhere. Unless expressly stated differently in writing, either in the smart contract or other legal bindings, transfer of ownership doesn’t occur automatically upon the sale of an NFT. And this is the reason why original creators can also opt to earn from reselling the same NFT.
5. NFT gamification
There are a lot of open-world gaming platforms growing in popularity. We are witnessing a massive shift in NFT usage as users leverage NFTs in play-to-earn metaverses. Next year, we will be seeing more immersive forms of virtual gaming environments as industry expects to reach $400bn by 2025.
Consider Axie Infinity, for example, a prominent blockchain-based game metaverse that began just four years ago, and as of December 2021, its market capitalization stands at $20.1 million. Moreover, Decentraland is another 3D virtual reality platform powered by the Ethereum blockchain. It logged an all-time sales volume of $140 million, with over 10,000 traders purchasing or selling Decentraland NFTs.
The play-to-earn gaming paradigm might become much more widespread in 2022 when NFT development is expected to grow even more.
These are not merely the trends but key aspects that you should keep an eye on in the coming years. NFTs can redefine many industries but it is just the beginning of a bigger revolution.
We are increasingly relying on the digital world, and NFTs are all set to bridge the gap between the real and virtual world.
Also, new NFT projects will come with many big brands dropping their own NFTs. Successful artists and celebrities will also try to mint this space as people adopt this growing trend of NFTs in games, the virtual world, collectible items, and more.