If 2017-2018 were the years of the Initial Coin Offering, 2021 was definitely the time to be buying NFTs. But in 2022, the safe bets don’t seem like such a good place to put your money. You now see hilarious headlines such as “Man who paid $2.9m for NFT of Jack Dorsey’s first tweet set to lose almost $2.9m.”
A Brief History
So where did it all begin?
Back in 2014, digital artist Kevin McCoy minted the first recorded NFT “Quantum”. On November 28 2021, this art piece sold for over $1.4 million at auction.
The introduction of Ethereum blockchain in 2014 with its platform going live in 2015 heralded a new era of NFTs. Cryptopunks launched two years later and one of the 10,000 released saw its price eventually surge to $530 million which remains the highest sale value ever for an NFT.
In the following years leading up to 2021, projects such as Cryptokitties (famously clogging the Ethereum blockchain) and Axie Infinity started to develop. Suddenly there was an explosion in interest with the result of insanely high sale value for some NFTs as indicated above.
Other blockchains got in on the action and 2021 saw more NFTs released and minted than ever before. Celebrities and sports stars were plugging them, despite the fact they are essentially images not always even hosted on the blockchain: often it’s just a link to an image.
Where Does the Hype End?
Last year saw NFT crazes over digital rocks selling for six figures and of course the Bored Ape Yacht Club. But again, these are just images. You can download them for free.
As with any bubble – and with a lack of tangible value, which admittedly those behind Bored Apes are trying to rectify with access to a merchandise store, NFT airdrops and exclusive chat groups – there is room for bad actors to make a lot of money.
Enter the shill bids, a real possibility in such an unregulated space for people or their friends to make bogus bids on an NFT to create the idea in others that it is worth a significant amount of money.
When you own an image NFT with no utility you run the risk of exposing yourself to a substantial and sudden drop in value. Nothing is propping up the ecosystem of NFT 1.0 except for the belief by many that simple images on the blockchain will appreciate in price.
Web3 Needs NFT 2.0
As the market matures we are seeing more utility NFTs crop up. These can be used in metaverses, games and any other digital space where having a customizable avatar is useful.
NFT 2.0 marks the new era of non-fungible tokens and there is no doubt Meta will be looking seriously at this avenue. DeFi degens have been proven to buy just about anything when it comes to the NFT craze. Here we may see utility NFTs be delivered to the masses.
Play-to-earn games will be a solid way to implement NFTs as they can affect and influence how a player experiences the game. Beyond that, there’s the prospect of NFT land which can be used to create guild clubhouses, personal hideouts or meeting places for those around the world.
Customizations are limitless: you could buy an NFT artwork and display it in your house.
MohrWolfe Builds NFTs, By The Way
Here at MohrWolfe we have experience building NFTs with real utility. Our team have been in blockchain and crypto since the start, we’ve seen every rise and fall of new crazes and ridden them out. Through bull and bear markets, we know what’s up.
Internally we like to call the new wave of NFTs as 2.0 because we believe it marks a move away from the decidedly low-value nature of simple JPEGs. You can’t right click and save an NFT which can be customized and used in-game, for example.
We’re pleased to be at the forefront of the new revolution in NFTs. Corporations are getting in on the action imminently, and they are not likely to rely on mere images as a store of value. Metaverses will reign supreme in the NFT 2.0 landscape, as will video games which successfully implement them without making it seem like a money grab.