Developing NFT Strategies for Your Digital Assets
The age of NFTs is still in its infancy, and as such, there are few global standards for their use. Early critics of NFTs thought this tech to be dead and obsolete before it even took off. However, projects such as CryptoKitties and Decentraland have shown there’s a great deal of potential for NFTs in the digital asset space.
The early days after the first NFTs launched were very rocky, with scalability issues and a lack of clear standards to govern NFTs.
In December 2017, the CryptoKitties project showcased the endless potential for these unique tokens as digital assets with its first big game on the Ethereum blockchain. It also highlighted the need for an open standard to govern how NFTs are made and managed on a blockchain.
As more NFT projects continue emerging, their use of standardization is becoming more necessary. In February 2021, the Decentraland team released a white paper on how NFTs can be used to create virtual worlds. The white paper provides a solid foundation for how NFTs can represent digital assets in virtual reality.
Projects are profusely coming up with lucrative applications for NFTS, they are also publishing compelling white papers. Ultimately, adoption is becoming more likely as people increasingly learn and appreciate the utilities of NFTs.
NFTs attract impressive prices, causing critics to argue that these digital assets could be overvalued. However, it could imply that the market is maturing and that people are starting to see the value in these unique tokens.
What are NFTs?
NFTs are unique tokens that typically represent a specific digital asset. In practice, they can represent things such as artwork, cryptocurrencies, crypto-collectibles, and other types of virtual assets. NFTs are usually comparable to limited-edition art pieces due to their strict uniqueness across the blockchain.
Similar technologies have been implemented in the past. However, NFTs have seen a recent resurgence due to the advent of blockchain technology. This new technology empowered the development of decentralized applications (dApps) that use NFTs as digital assets.
Why are NFTs valuable?
NFTs are valuable because they represent scarce digital assets. In other words, there are a finite number of NFTs that exist on the blockchain. It makes them more valuable than traditional digital assets such as cryptocurrencies and tokens.
Another reason why NFTs are valuable is that they can be used to represent digital assets in virtual reality. For example, the Decentraland team has published a white paper on how NFTs can represent digital assets in virtual reality.
NFTs could also revamp the art world due to their collectible nature. For example, you can own a unique piece of artwork that is not easy to counterfeit or reproduce. Thus, people are willing to pay large sums for these crypto-collectibles.
The Rise of NFTs
NFTs became an internet craze in 2017 when CryptoKitties launched on Ethereum. A simple cat gif NFT sold for over $100,000 in December of 2017.
Soon, developers came up with decentralized exchanges, and investors flooded the market to buy ERC-721 kitties. It caused the CryptoKitties website to crash due to traffic, and for NFT transactions on Ethereum to skyrocket.
In 2020, the NBA caused the popularity of NFTS to surge even more when they announced the incorporation of NFTs into its NBA 2K series (a popular video game.) This move caused several teams to consider using NFTs,
The NBA announced that it would be teaming up with Decentraland to create digital NFTs of their players. This announcement sent shockwaves globally, as many other teams began considering whether to follow suit or not. Due to the rise in popularity of NFTs, more dApps were also being launched every day.
As a result of the fad, many projects emerged to create their unique tokens. However, few standards are governing how these tokens are made and managed. It can also cause hindrances to the overall development of the NFT market.
In February 2021, the Decentraland team released a white paper on how NFTs can be used to create virtual worlds. This white paper provides a solid foundation for how NFTs can represent digital assets in virtual reality.
The white paper has been well-received by the community and could pave the way for broader NFTs adoption. Please note that the Decentraland team is not the only one developing such a standard, several other projects are working on similar initiatives.
The real estate industry is also starting to recognize the potential of NFTs. For example, in 2021, Kodak announced it would launch its platform for CryptoKitties on Ethereum. The news sent shockwaves through the crypto community once again, which was just recovering from the highs of December 2017.
Home owners are also beginning to see the potential of NFTs. For example, in 2021, a house was put up for sale in Japan that could only be bought with NFTs.
The Real Power of NFTs
Though it is still in its early stages, the potential of NFTs is clear. Their blockchain they use makes them secure and transparent, enabling various applications. Additionally, their unique nature makes them enticing for collectors and investors. As the market for NFTs grows, we can expect to see more innovative uses for them.
Are NFTs expensive because the producers are brilliant at marketing? It’s more than just marketing, but marketing has everything to do with it.
The most expensive products in the world are not built out of need. Producers build goods for opulence, status, and bragging rights. NFTs have all these things wrapped up in one neat little package.
In other words, the real power of NFTs is their blockchain use, which makes them secure and transparent. The most valuable feature about NFTs is how they preserve your uniqueness. However, if you own an ERC-721 token, it is similar to owning a one-of-a-kind work of art.
For example, why did people buy Coca-Cola collectible NFTs for over $575,000? The auction was for Charity, and the buyers got evidence of their excellent social-corporate responsibility. It’s a status symbol, and it was expensive because people who bought these types of NFTs are doing so to show their friends that they are able to afford it.
That said, not all NFTs are created equal. Some digital items will be more valuable than others depending on the demand. Thus, some CryptoKitties bought for $100,000 are now selling for over $200,000.
How Companies Are Building Digital Asset and NFT Strategies
The digital items that people want can be converted into NFTs, depending on the uniqueness of the product itself. Specialty products like CryptoKitties are more valuable than your average digital item because they’re hard to duplicate.
Companies are building digital assets and NFT strategies for a few reasons:
- It’s an effective way to create unique products.
- It’s a great way to engage with customers and keep them coming back for more.
- Companies are starting to see the potential of NFTs as a way to raise money.
Companies that want to stay ahead of their competitors will likely invest significantly in NFTs and distributed ledgers. The companies that don’t will settle for less.
Tips for NFT Success
If you want success with NFTs, here are a few tips to keep in mind:
1. Make sure that the product you’re creating is unique and interesting.
2. Focus on creating a good user experience.
3. Promote your product through social media and other channels.
4. Make sure that your product is easy to use.
5. Be prepared to invest significant resources into NFT development.
6. Stay ahead of the competition.
7. Listen to feedback from users and adjust your product accordingly.
8. Make sure that your product is secure and trustworthy.
Low marginal cost:
Quite simply, the low marginal cost of NFTs is one of their most significant benefits. You can perform more transactions with fewer resources using NFTs than you would with traditional assets.
Secure:
The blockchain makes it possible for people to use and invest in digital assets without worrying about the security of those assets. The blockchain is a secure and transparent system that is trustless, thus trustworthy.
Transparent:
The blockchain also makes it possible to track the use of your digital assets. This transparency ensures that there is no corruption or manipulation of the system.
Recurring revenue:
NFTs can be used to generate recurring revenue for companies. People will often need to buy new NFTs to keep up with the latest trends.
Are there any risks?
Yes, there are risks associated with investing in NFTs. However, you can manage these risks by researching and understanding the technology behind NFTs.
Moving Forward
FOMO reigns supreme in this consideration. If you missed out on owning a share of the internet, it would increase your chances to invest in the NFT space.
The real power of NFTs lies in their blockchain use, which makes them secure and transparent. The most valuable feature about NFTs is how you can use them to create unique products.
If you’re looking to invest in digital assets, NFTs are a suitable option to consider.
