What is an NFT?
If you’re already familiar with NFTs, skip this section to read more about how NFTs will interact with the metaverse.
If you type “NFT meaning” or “what is an NFT?” into a search engine, you’ll find several conflicting answers.
Although commonly identified as digital art or digital collectibles, NFTs are in fact cryptographic assets, created using the Ethereum blockchain.
Each NFT has unique identification codes and metadata. By using these identifiers, turning a digital file into an NFT is a way to create artificial scarcity in digital items that were previously infinitely replicable.
Creating rare digital assets, allowed us to assign value to them. Like with any other collectible, rarity and demand create value.
The digital artist, Beeple, recently sold his NFT collection of artwork at Christie’s for $69 million dollars.
What Does NFT Stand For?
An NFT stands for “non-fungible token.”
Cryptocurrency, like Bitcoin (BTC) or Ethereum (ETH), is a fungible token because it can be traded for the same thing. Non-fungible means that the asset is completely unique, and cannot be replaced.
These terms can apply to other collectibles, like trading cards or sneakers; a one-off customized pair of Air Jordans would be non-fungible, whereas one of 10,000 limited edition Air Jordans would be fungible.
How Do NFTs Work?
An NFT is defined as a “non-interchangeable unit of data” stored on the blockchain.
On the blockchain, each block of information contains a cryptographic hash. This hash includes a timestamp, transaction data, and information about the block before it. It’s a digital ledger that cannot be altered or edited in any way — and it’s this information that proves ownership of a digital asset, and creates value.
Almost any asset can be minted as an NFT, despite the common associations with digital art, photos, and other forms of traditional collectibles.
NFTs can be bought and sold just like physical collectibles, and physical collectibles can also be turned into NFTs. NFT marketplaces, like Opensea or Rarible, allow NFT owners to display, buy, or trade their NFTS.
NFTs and NFT art have become so popular that it’s easy to conflate one for the other. But NFTs are so much more than digital artworks. Here are some use cases for NFTs.
NFTs can digitally represent any asset, from artwork, music, tweets (Jack Dorsey famously minted his first tweet as an NFT), memes — and even real-world assets, like real estate. For instance, the founder of TechCrunch, Michael Arrington, recently sold his apartment as an NFT on the Propy blockchain platform.
NFTs can also represent items, like gaming avatar skins, domain names, event tickets, poetry, and books.
Through metadata and smart contracts, NFT creators can offer special experiences to token holders.
For example, Stoner Cats is an animated series that is exclusively available to those who hold a collectible Stoner Cats NFT. The Bored Ape Yacht Club NFT series, pictured above, hosts special exclusive events for club members, like real-world warehouse parties in Brooklyn.
Recently, entrepreneur and investor, Gary Vaynerchuk, announced plans to open the first NFT restaurant. If you want to eat or dine at the Flyfish Club, you’ll need to own the NFT for access.
The recent craze to own NFTs has created a wild market for investors — the popular Nyan Cat gif — the animated flying cat with a body of a pop tart — sold at auction for almost $600,000. Cryptopunks sold a pixelated avatar for $24 million dollars. CryptoKitties (think NFT Tamagotchis on the blockchain) became so popular at one point that they nearly crashed the Ethereum network.
The NFT market has created a surge of demand but as the landscape evens out there will be room for new NFTs, that will exist within a more affordable ecosystem.
For a deep dive on the metaverse, check out our article ‘What Is the Metaverse’ here.
The environment of the metaverse will be interoperable and scalable; using new technologies to fundamentally change how individuals and enterprise organizations interact with each other and themselves — and the backbone of a metaversal economy will be NFTs.
The metaverse is envisioned as a persistent virtual world, where anyone can have realistic and immersive experiences without attending a physical place or event.
The metaverse already exists today, mostly in video games like Roblox and Fortnite, but the metaverse is expanding, along with the ways it might be utilized. Concepts like blockchain technology and a decentralized internet (or Web 3) have all coalesced to provide a framework for a new type of metaverse — that many experts are heralding as the successor to the mobile internet.
The incoming metaverse will use technologies like augmented and virtual reality to provide the visual component of the metaverse while hosting the metaverse on the decentralized internet that will create new opportunities for socializing and transacting.
Metaverse NFTs Explained
NFTs and the metaverse are already closely linked because they have one major thing in common; the blockchain.
The decentralized metaverse and NFTs will both live on the blockchain and will carve a path for a new creator economy that isn’t beholden to a handful of big tech platforms.
We’ve already seen the rise of the creator economy through platforms like Instagram and YouTube, which allows individuals to monetize their content through sponsored posts or a cut of advertising revenue.
An artist no longer needs a brick-and-mortar gallery to sell their artwork, but they might need an Etsy account — and Etsy takes a 5% cut of anything sold. We didn’t remove the middleman of a physical gallery, it was just reimagined as an eCommerce platform.
NFTs remove the middleman altogether, which could create a future economy where creators have complete ownership of their digital assets, and buy, trade, or sell using cryptocurrency or tokens.
Metaverse NFTs and Interoperability
In addition to this, another building block of a decentralized metaverse is the concept of interoperability.
If you buy your avatar a new outfit on Fortnite, you can’t transfer it to your avatar in Call of Duty, because they are two separate entities that don’t allow exchanges between platforms, but a decentralized metaverse could break down those barriers.
In the future metaverse, you could purchase digital assets as NFTs, which would live in your digital wallet. You could visit the Nike metaverse and purchase a digital pair of sneakers as an NFT. These digital sneakers would now belong to you alone, and you could wear them walking into the Microsoft metaverse or riding Space Mountain in the Disney metaverse.
Metaverse NFTs and Real-World Applications
NFTs could have applications in both the metaverse and the real world. Anyone can go on LinkedIn, and add a new job title as CEO of Microsoft. In the future, you could transform a job title or a degree into an NFT, which would be authenticated on the blockchain — providing instant proof that you were the CEO of Microsoft, or graduated at the top of your class at school.
Imagine you’re a hiring manager, with a digital twin of your corporate headquarters in the metaverse. When candidates apply for the position, they might submit their resume in the form of an NFT — which you could instantly verify on the blockchain. This would immediately identify candidates who had the relevant skills and experience, and those that did not. You could cut the time and cost of hiring in half, and find the right candidate for the role without having to manually check references or school transcripts.
Touchcast and NFTs
Touchcast is developing MCity — an immersive virtual space in the metaverse, where businesses can build digital twins of their offices or retail storefronts, host virtual events, and showcase products. As part of this development, Touchcast will allow enterprise organizations the opportunity to turn their digital campus or showroom into an NFT — creating a one-of-a-kind digital experience for their team and customers to enjoy.
Be sure to subscribe to our podcast and find more metaverse content by visiting touchcast.com/metaverse.