So you’ve finally popped your NFT cherry.
Whether you’ve made the decision to buy a listed item on a marketplace like OpenSea, or you’ve signed up for an airdrop or won one from a contest (like we recently did with our Dragontars for the upcoming mini-game), or you minted one all by yourself, you’re an NFT owner.
You’ve probably shown them off at some point and spent countless hours just admiring your growing collection of various monkeys, cats, robots, or paintings, sitting there as ERC-721 tokens in your wallet.
Well done! We at Cradles love NFTs too, and we can’t say enough about the amazing impact they will have on blockchain gaming once we roll out our next-generation modular NFTs built with EIP3664 technology.
Have you ever given any thought as to how valuable the NFTs you own really are? And with scores of new NFT projects launching every day, can you afford to invest willy-nilly, thinking that all of them, some fine day, are going to be very valuable?
Because they’re not. Not all of them. Certainly not when they’re just run-of-the-mill NFTs that don’t take much more than a bit of coding to launch.
So it’s really important for you to understand a bit more about the NFT scene today, and pick out the truly special ones, so you don’t end up with a NFT bag holding in a year or two…
Is this news to you? Don’t worry, you’re not the only one, as even crypto-savvy developers found out!
When an NFT owner realized his NFTs images could be stolen by anyone
Last month, in November, a fascinating Twitter interchange between a supposed NFT owner (handle @tropoFarmer) highlighted the shortcomings of NFT art, and how misunderstood this nifty but limited token was in the NFT industry.
You can see screenshots of conversations between the developer and other users on an entire thread here:
To sum it up, a user posted the entire image file of the developer’s profile picture (which was supposed to be of an NFT itself) on Twitter, leading to accusations from the developer that his art was stolen. Further exchanges finally led the developer to understand that this was simply the way all image files are transmitted over the internet via HTTP, a technology developed over 20 years ago.
So the hard but little-understood fact about NFTs is that, owning the token that signifies your ownership of a particular piece of art, actually doesn’t prevent anyone else from owning a copy of that art.
A harder truth to swallow is that when you buy an NFT, you are really only receiving a receipt that states you own a digital version of a numbered print — but doesn’t actually prove ownership of the content itself.
Of course, there are ways for the original creator or artist to prove themselves as the originator of the image (think of timestamps on blocks, for example), and then to sign over any NFTs to the buyer. But it doesn’t prevent others from stealing or using the content in the NFT as all the content data is transmitted transparently over internet protocols.
Not all that glitters is NFT gold
Now, of course, this doesn’t mean that NFT art is worthless. The traditional art scene has definitely taken to NFTs, and the fact that countless artists of all flavours have suddenly found a way to get seen or heard by the outside world is proof enough that tokenized art forms are a great way to gain visibility.
The democratization of art, through NFTs accessible by anyone with an internet connection, has made access to the art scene even wider, opening up avenues for many more people who otherwise wouldn’t have been able to break through a notoriously tight knit industry jealously guarded by premier arthouses, exclusive dealers, and elitist galleries.
But the NFT investor should also be aware that a large portion of the buying market is led by speculative demand — people who aren’t art collectors but speculators looking to flip NFTs for higher prices than they paid.
NFT gold: artistic significance or utility
Once the hype fueling the demand right now dies down, the only NFTs that will still be considered as having value will be of two kinds. Those that have historical and artistic significance, and those that have utility.
The former will cover art — in all its various forms — that will always have its appreciators. People will buy and collect art that they deem has important artistic value, which helps to explain the rising value of first-generation NFTs like CryptoPunks and Bored Apes. NFT projects that focus on new media and actual creative production will also see success, as buyers will appreciate actual artist efforts behind the work.
This leaves the copycats unable to prove value who will likely struggle to sustain long-term interest and demand — think of those NFT projects where algorithms have been used to put together random combinations of fixed characteristics to produce unique images. They neither stand out for originality nor for artistic impact.
The latter, NFTs with utility, is a lesson taken out of the crypto textbook: for a coin or token to stand the test of time, utility must be achieved. No amount of simple tokenomics, coin supply, rarity index, or market cap can ever replace the usefulness of utility.
It’s a simple process of value: if the token has a long-term and persistent use case(s), there will be a persistent and rising demand for it.
Therein lies the focus of the new generation of NFTs that we are developing for Cradles. NFTs that aren’t just capable of representing ownership of digital items, but evolving NFTs that specify and power the core mechanics of a new type of game metaverse never attempted before: entropy-increasing virtual worlds.
One day, we believe this will be the standard design for future metaverse games. We’d really like for you to be a part of it.
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