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The need for reimagining digital art’s value proposition

The need for reimagining digital art’s value proposition

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With cryptocurrency prices fluctuating this year, nonfungible tokens (NFT) and other sub-ecosystem investors have also been caught in the grips of a bear market.

In addition to the trading value of Ether (ETH), NFTs were primarily created to represent property and ownership in the real and virtual worlds. As a result, the bear market has reignited discussions about how NFTs can step back and focus on serving use cases as the market recovers.

In a conversation with Cointelegraph, Tony Ling, founder of analytics platform NFTGo, shared insights into the NFT ecosystem, revealing the ecosystem’s expected trajectory.

Coinlengraph: NFT’s rise to mainstream popularity is often due to the variety of real-world use cases they can and have solved. What do you think about the bearish NFT market? Do you think the market will recover?

Tony Ling: Answering this question requires first explaining the value base of NFTs. Currently, the NFT market is mainly driven by four categories: art, PFP (profile pictures), country and membership. Currently, PFP is the most dominant. The value base of PFP NFT mainly consists of three parts: financial products, collectibles/luxury goods and memberships, of which financial products are currently dominant, while the NFT derivative model is still very much in its infancy. Therefore, with the general deflation of the crypto market bubble, NFTs, a low-liquidity derivative of tradable tokens (FTs), will inevitably fall accordingly. This is to be expected.

However, I believe that when the crypto market picks up in 2023-2024, the value of NFTs will have room to grow several times compared to the larger crypto market. Its value growth comes from at least two aspects:

First, with the development of NFT and metauniverse-related technology, the use scenarios of NFT are more abundant, and the consumption feature of NFT is increasing, and this consumption feature is not only solving real problems, but also creating new ones. scenarios that do not exist in the real world.

For example, all the assets in Otherdeed’s metaverse are NFTs, and these NFTs themselves create various economic interaction scenarios, implementing new consumption to help people better meet their needs and even evolve into new productivity tools and business forms.

Second, the development of various NFT derivatives, including NFT fragmentation, NFTFI, NFT mortgages and NFT fixed income products. These new financial products allow investors to participate in NFT-related investments in a more flexible format, attracting more capital, both institutional and individual investors, to this market.

CT: Despite losses and reduced hype, many projects are still considered profitable investments. What do you think is driving this trend? How important is it that NFTs serve use cases, or is it just for investors who want to make a quick buck?

TL: The driving force behind any trend is both the “story created by the speculator” and the “real value”. Especially in the early days of the industry, the bubble is more of a reaction to uncertainty, and I think it’s primarily builders like us who embrace the uncertainty that drives the trend. Of course, in addition to builders, large funds, including funds in the crypto space, mega funds and even funds previously focused on traditional areas, are also very important factors. Indeed, some of them want to make a quick buck, but from a capital efficiency perspective, I don’t think right now is a good time to make a quick buck in the crypto market.

CT: What trends are still relevant from the early days of NFT, regardless of price volatility? And what are the new trends that you think will grow in popularity in the coming future?

TL: First, more and more people are paying attention to NFTs, and there will certainly be an order of magnitude more in the future. Data from NFTGo shows that there are currently over 2.96 million wallets with NFTs on Ethereum, compared to just over 200,000 in August 2020. Despite the current cold market climate, NFTs are still traded at 20-30,000 addresses every day. Of course, this figure still has a lot of room for growth. Second, builders continue to build. You can see that many NFT-related companies have recently raised funding. Also, even though the market has been on the decline recently, successful new projects such as goblintown and Memeland are still emerging.

Recent: Boom and Bust: How Defi Protocols Handle Bear Markets?

While the various PFP projects of last NFT summer had their own unique characteristics, many still followed the paradigm set forth by the Bored Ape Yacht Club (BAYC). With the development of the NFT industry, a new megatrend has inevitably emerged. This new trend is thought to be the outbreak of the content ecology of metaverses. The definition of “content” here is broad, and Metaverse games can also be defined as “content”. As mentioned earlier, the improved consumer properties of NFTs are helping the industry to recover, and the consumer properties mean that NFTs generate non-investment income for their holders. One important way to do this is to build “content” on the Metaverse and let the builders own the content and generate revenue. Those who enjoy the content get intrinsic rewards and seem happy to pay for them.

CT: How do you feel about the current investor sentiment? How do you think it will affect the NFT market? What can NFT projects and companies do to improve engagement?

TL: The atmosphere in the NFT market is cold for two main reasons: First, the price of Ether is in a volatile period and a large number of investors are in the waiting phase; Second, PFP’s narrative and growth model is coming to an end, and the recent emergence of projects has yet to introduce a new model, making it difficult to bring new expectations to the market.

The crypto industry is cyclical in nature. I personally recommend that you continue to explore new directions in the industry while keeping enough capital to wait for the next cycle of the crypto industry and seize the opportunity.

CT: As you mentioned, the scope of the NFT market is only limited by the imagination of entrepreneurs. What are some of the use cases that NFTs can and should serve as they move into the mainstream?

TL: In this regard, I want to highlight three large subsets of use cases where NFTs are well-positioned to cause widespread disruption.

A new art form: Digitization enables richer forms of artistic expression, and the emergence of NFT and related eco-products solves the problem of ownership of digital art and helps artists better generate profit. As the digital world merges with the real world, the penetration of digital art into human society will become ever more widespread, becoming a huge new market for collectibles and luxury consumer goods.

Recent: Crypto for foreign trade: What we know about Iran’s new strategy

PFP, self-expression and new organizational forms: In my opinion, one of the main reasons for the popularity of PFP projects is that they better respond to a person’s need for self-expression. The ability to tell others “who I am” is an important human spiritual need, and PFP NFT projects and related ecologies create a good way to meet this need. The PFP NFT projects and their extended community have not only given users a medium for self-expression, but also made it easier for people to form communities with others who share similar expressions. Likewise, as a community evolves, these like-minded people can create new forms of organization, such as decentralized autonomous organizations (DAOs), to influence society beyond their own niche community.

A new “public blockchain-like” operator: Existing land projects such as Otherdeed, Sandbox, and Decentraland may evolve to become public blockchain-like in the future. New NFT projects, games and applications can all work in the ecosystems of these countries.

Source: https://cointelegraph.com/news/beyond-the-nft-hype-the-need-for-reimagining-digital-art-s-value-proposition

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