Hand reaching out NFT logo

Manifesting the true utility of NFTs

With another crash of digital currency prices, the value proposition of NFTs is easier to criticize. Many ways NFTs are deployed thus far add nothing new to what already exists, custom skins in video games, artwork, permissioned, exclusive access and so on. Markets for these exist today, prompting the ‘normie’ to question why they exist in the first place.

The addition of NFTs into video games are quite controversial, I’ve written about the subject here and here. NintendoLife has a great article on why the concept is so divisive. Many gamers view them as a cash grab for the same reasons they were opposed to DLC (Downloadable Content) initially. The market eventually accepted DLC, and now gamers begrudgingly tolerate it, along with rising game prices.

I believe the mainstream is more or less correct about the absurdity of NFTs as popularly implemented today. The primary use case is scamming, pump and dumps and justification for pricing goods and/or services higher than normal. Given that many NFT marketplaces have no KYC (Know Your Customer) checks, wash trading and artificial pumps are incentivized. I have the opinion that buyers do not actually want to hold these JPEG NFTs, they only want to sell them to a greater fool. Of course, only so long as there is no reason to hold them.

Gopniks recently airdropped a 3D Gun NFT to anyone who pre-ordered a 3D version of their original Gopnik. They also airdropped another 3D GPU NFT for those who funded various projects development. To qualify for these drops, one had to actively participate in using experimental features, or donate money. A fungible token (CIG) can be earned for holding Gopniks NFTs in your wallet, giving an incentive to HODL instead of dumping them for cash.

Gopniks is not the first project to do this, but I believe such perks will be necessary to attract buyers, especially in a risk-off economy of rising inflation. Community participation and holding assets are good solutions to the spam, botting and scamming problems that come with NFT markets.

Another interesting concept is “Under promise, Overdeliver.” Both aforementioned airdrops were complete surprises, causing FOMO. Community members feel rewarded, and outsiders suddenly become interested. Moreover, members feel closer to the project or company team for being recognized.

NFTs implemented in this way will strengthen the bond between creators and consumers. This will be evident in the music industry first in my opinion. VIP tickets, backstage passes, and elevated access are already ubiquitous. NFTs with an ability to validate timestamped ownership, how long an NFT was held and how much was spent can give more insight into how fans value the creator.

Ironically, introduction of NFTs can mitigate the issues true fans have with scalpers, as the new mechanics favor fans who actually want the benefits. Instead of exclusive access to an artist being sold to the highest bidder, they can be conditionally granted to only those who have attended the previous five concerts and paid a premium to do so! The passes can still be traded on the secondary market, but that is up to the fan or artist if they want to enable that.

This can be validated on the immutable ledger, manifesting the reason blockchain technology is needed. As the markets mature and projects are forced to evolve, true value will emerge that must leverage the technology to grant more rewards to its participants than just profits.

Watch: BSV Global Blockchain Convention presentation, NFTs: What can we do better?

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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