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In this article, we look at the evolution of NFTs from social media profile pictures to utilitarian digital assets.
With the Web3 revolution well underway, last year was, by all accounts, the year that NFTs hit the mainstream with Collins Dictionary naming it their 2021 Word of the Year. In 2022, that trend continues as more celebrities, and big-name brands enter the NFT space either through investment, brand partnership or minting their own offerings.
Increased talk around the potential of the Metaverse has only furthered the NFT investment frenzy, which has seen the price of some digital artwork soar as people rush to secure their own early adopter advantage.
However, the Metaverse remains in its infancy. This means one of the primary uses for NFTs remains their deployment as social media profile pictures (PFPs). This has been brewing for some time now, as we will explain.
Let's break down exactly what an NFT is. CryptoPunks started the revolution in 2017. Hosted on the Ethereum blockchain, it was the first NFT PFP project, generating 10,000 unique avatars for use as profile pictures. A mixture of novelty and rarity gave these NFT PFPs huge prominence.
Compared to physical art, a run of 10,000 seems a large number of prints. However, when seen in the light of Twitter’s 300 million strong user base in 2017, it’s easy to see why these innovative avatar pictures became so immediately desirable.
The CryptoPunk avatars became a status symbol and a beacon for their owners to demonstrate involvement in or adoption of the Web3 revolution. Powered by blockchain technology, owners of an NFT PFP were proud to show they were among the first movers in the continued decentralisation of the internet.
As with most successful projects, it didn’t take long for other companies to join in looking to capitalise on the popularity of NFT PFPs. Now there are a host of options to choose from for anyone looking to show off a unique avatar profile picture on various social media platforms.
Although it’s easy to see why people like to have a unique, one-off digital piece of art to represent them in the digital space, improvements have been made in the scalability and speed of blockchain technology. Therefore, there is now the potential for more utility for NFTs than just PFPs.
NFTs have huge potential and are one of the most promising elements of blockchain technology. To understand why this is the case, we should break down exactly what an NFT is and how they became PFPs.
NFT is an initialism for non-fungible token. Non-fungible means an asset not interchangeable with another of the same type. Individuals can now own a digitised asset, with their ownership of it verified by blockchain technology.
It turns out that having a unique piece of digital artwork that you could prove your ownership of was a popular idea. People wanted to show it off, which is how we’ve reached the NFT PFP trend today.
PFP NFTs do serve several purposes. First, they engage a wider audience with a strong brand identity and can help with demonstrating the possibility blockchain offers for proof of ownership in the digital world.
However, PFP NFTs aren’t the only way we can explore this new digital standard of ownership and authenticity.
As blockchain technology has developed, some of the issues surrounding scalability and gas fees have been addressed, which has led us to explore more real-world applications for NFTs.
Utility NFTs have the same characteristics as a PFP NFT does. However, they also use the blockchain’s distributed ledger technology for other applications, giving the holder additional utility, hence the name. The additional utility that these new NFTs can provide varies, as there is a range of industries in which they can be applied.
Since NFTs represent a digital asset that is not interchangeable with another of the same type, they can be used in any area where authenticity and traceability are required. Data can be stored as an NFT, which means that blockchain NFTs are already being used in both medical applications and in supply chain logistics.
There is also increasing use of NFTs for online games. They provide their owner with a unique, in-game asset. While other players may have similar NFT items, their unique, non-fungible nature means each has an individual identity attached to the owner.
NFTs also have a potential utility in real estate, where the history of a property and proof-of-ownership are vital to the success of a transaction. In this sense, and the use cases above, the blockchain’s immutable ledger technology has more tangible applications than simply artwork.
Web3 also has the power to revolutionise event ticketing, as NFTs can also act as tickets. This opens a world of possibilities for fans, artists and event creators with the potential for airdropped perks and smart contracts to control the secondary marketplace. Blockchain’s ledger technology also eliminates the possibility of fraudulent tickets, making event ticketing an extremely viable application of NFTs.
As we can see, utility NFTs have the same benefits as PFP NFTs. They can indeed take the same form as digital artwork. Still, they also include a host of other applications and benefits to the NFT owner and the wider community.
Although there are certainly some PFP NFT projects which can be lucrative investments, both utility and PFP NFTs have the potential to increase in value. Therefore, it is clear that the tangible benefits and additional possibilities generated by utility NFTs significantly outweigh the more one-dimensional benefits of PFP NFTs.
As NFT adoption grows and our understanding of the technology increases, we expect to see more exciting use cases for utility NFTs in 2022.
Our SeatlabNFT platform aims to disrupt the event ticketing industry with our NFT tickets, which fall into the utility NFT category. We’re including the opportunity for airdropped perks, a tiered reward system for token holders and a secondary marketplace where users can trade their tickets and collectables within our ecosystem. Alongside that, smart contracts and blockchain technology offer the opportunity to eliminate ticket fraud and to reduce scalping significantly.
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