NFTs are evolving to encompass a wide range of use cases. Thinking of ERC721s as a foundational component for industry verticals within ecosystems can help builders, protocols, and investors understand the value of the upcoming NFT Economy.
A powerful aspect of blockchain technology is its ability to connect separate economies thanks to a shared technological layer. Due to common architecture, these technical primitives become building blocks for a wide range of digital economies, compounding innovation as industries interact and merge with one another. Music, Gaming, Real World Assets, and Digital Art are all examples of individual economies that will live on-chain as unique but composable environments thanks to NFTs and other similar token standards.
As we move into 2023, it's essential to broaden our perspective on the full scope of what NFTs are and how they will drive adoption across key emerging industries on-chain.
Many in the crypto industry need to update their idea of what NFTs are and what they are capable of. Those from previous eras have a narrow idea of the full potential of these non-fungible tokens and will miss out on innovation occurring at the application layer.
How To Think About The NFT Economy
An area of production, distribution, trade, and consumption of goods and services. In general, it is defined as a social domain that emphasizes the practices, discourses, and material expressions associated with producing, using, and managing scarce resources.
Leveraging this definition, we can say that NFTs promote a social domain that allows for the distribution and trade of scarce resources. They are a financial primitive that allows many different industries to live on-chain while connecting them all with a common language.
Taken one step further, any industry that builds with NFTs can be seen as its own economy, or sub-economy, within the larger blockchain movement. Verticals such as gaming, music, and digital art will all have their own economic agents building custom infrastructure and domain-specific applications that allow them to take full advantage of open public networks. You could even make the case that individual collections, like PFPs, have the opportunity to turn into their own economies due to the network effects of a large community aligned with powerful incentives to build within an ecosystem.
By segmenting industry verticals as individual economies that can communicate with one another through a common standard, it will be easier to spot and understand the vast amount of opportunity available in the coming years. More importantly, we hope that framing these emerging markets as economies allows for a more serious conversation about these digital assets' economic and societal value.
Here are some of the emerging NFT Economies we are excited about at Mintify:
One of the key benefits of putting games on the blockchain is the built-in interoperability between game assets, users, and gaming marketplaces. By leveraging NFTs and smart contracts, developers can create a common language and set of rules, enabling assets to trade and move across multiple games and platforms.
This opens up a wide range of new and exciting possibilities for game developers and players, creating opportunities for cross-game collaborations as players and builders discover new ways to interact with one another.
Gaming NFTs should be considered their own sub-economy within the broader NFT Economy. They will offer the ability for developers to monetize their work, users to capture value, and investors to participate in the success of decentralized gaming ecosystems.
One of the most exciting aspects of music on the blockchain is creating a new, fair, transparent industry for artists and fans to engage in value creation together.
Music NFTs will be bought, sold, and traded on the open market, giving artists a new way to monetize their work and connect with a global network of fans incentivized to build music solutions alongside the artist.
We might even see a world where 'sound markets' appear where there is a direct correlation between ownership, value generation, and activities that emerge across different metaverse environments. This would turn music into a form of liquidity, something of value that can be collected and leveraged by other music applications.
The ability to trade assets freely between virtual environments without a centralized party is a game-changing development for digital economies. Users will be able to interact with and use their assets across multiple metaverses, shifting the power dynamic between participants and platform creators.
This new world of interconnected metaverses will be a vibrant one. Participants can buy, sell, and create their own assets on the open market, giving people economic agency online. Entire marketplaces will emerge to cater to the various assets and activities that appear from the interplay of connected and interoperable digital economies across many different blockchains.
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Real World Assets
Trading real-world assets on the blockchain is something we've been hearing for a while now; however, it is closer to becoming a reality than ever before. Tokenizing tangible assets and connecting them with foundational DeFi and NFT infrastructure offers an entirely new method to generate value both on-chain and off-chain. With the impending release of Zero Knowledge Proofs, large organizations may feel more comfortable sharing private data on public networks. They may be incentivized and comfortable with deploying parts of their portfolio onto public infrastructure where they can take advantage of these powerful economic tools.
What's more, the interoperable nature of distributed networks will offer a wide range of functionality at the intersection of real-world and native digital assets. It's challenging to comprehend what may appear once gaming assets can sit side by side with real estate or music assets with public digital infrastructure. Because they will all share the same fundamental building blocks, people will inevitably find creative ways to merge the digital and the physical and trade them on decentralized networks.
The Art NFT world is its own phenomenon, developing as a separate market distinct from the traditional art world and commonly understood NFT markets like PFPs. Digital Art on-chain has become an environment with its philosophy, user base, and infrastructure requirements.
As the lines blur between traditional art and NFT art, we will begin to see more art buyers and sellers drawn into these new economies due to their ability to create scarcity in digital environments. Artists, Art Collectors, and industry veterans may need to adapt to a new environment where cultural artifacts are created and traded within decentralized ecosystems.
Bringing it All Together
Many in the industry are slow to accept the idea that NFTs are valuable, let alone represent their own economies. They write off the power of this new technology as merely a place for speculators to flip monkey pictures. This is due to the industry being so young while needing more powerful and sophisticated tools for serious analysis.
Just as cryptocurrencies grew in acceptance with the development of better infrastructure, NFTs will mature into a robust economy where people and organizations collaborate and create real value on-chain and off-chain.
A little more about us:
Mintify is designed and built for users to make informed trading decisions. The platform caters to a new type of trader looking for powerful tooling to discover, trade, and manage NFTs.
The Mintify Team