Are NFTs dead?

Are NFTs dead? The answer is a resounding no. NFTs (non-fungible tokens) are still very much alive. They may no longer be headline news, but they have become an integral feature of many blockchain-based activities, such as blockchain gaming. NFT hype peaked in 2021, as unique digital artworks sold for millions of dollars. While the speculative frenzy has died down, the technology itself continues to evolve. So, rather than fading away, NFTs have transitioned from a volatile craze to a more sustainable, utility-driven asset. 

In this post, we dig a bit further into NFT history, their rise and fall, and their utility in some of today’s blockchain-based applications. 

What are NFTs, and how do they work?

At their core, NFTs are unique digital assets stored on a blockchain, which makes them verifiable, scarce, and impossible to replicate. Unlike cryptocurrencies, such as Bitcoin or Ethereum, which are interchangeable (fungible), NFTs (non-fungible tokens) represent ownership of truly one-of-a-kind items. An NFT could be digital artwork, music, in-game assets, or even real-world items, such as real estate. 

Each NFT is minted on a blockchain, ensuring proof of authenticity and ownership that can be easily transferred or sold. Just as with cryptocurrencies, each transaction or movement is forever recorded on this digital, immutable ledger. This ability to establish digital scarcity and provenance is what makes NFTs so valuable, even as their applications continue to evolve.

NFTs as digital art and collectibles

NFTs have had a huge impact on the digital art and collectibles market. These one-of-a-kind works have given people a way to prove who owns them, and prove the authenticity of digital creations. But there are also significant benefits for the artists themselves, who are able to make money from their digital creations directly from the buyer, without having to go through traditional intermediaries such as galleries and auction houses.

The NFT boom reached its peak in 2021, with big-name sales like Beeple's "Everydays: The First 5000 Days", which fetched a jaw-dropping $69 million at Christie's auction house. But, as with anything, the market has had its ups and downs. Today, some reports suggest that around 96% of NFT collections are now considered "dead" due to lack of trading activity. Despite this, NFTs are still offering artists some really exciting new ways to connect with audiences and make money from their work. 

NFTs as real estate tokens

NFTs are also making waves in the real estate sector through the process of tokenization, which transforms the ownership rights of a property into a digital token on the blockchain. This allows properties to be bought, sold and traded much more efficiently, and has even led to fractional ownership, whereby high-value properties can be broken down into smaller, more affordable shares and marketed for investment. 

Fractional ownership lowers the entry barriers for many investors who would otherwise be unable to put capital into property. Representing real estate assets as NFTs also means transactions can be executed much more swiftly, efficiently and with greater transparency than traditional operations, reducing or eliminating the need for intermediaries and lowering costs. 

NFTs as in-game assets

Another of the primary applications of NFTs today is in blockchain gaming. There are many kinds of blockchain games, including role-playing games (RPGs), simulation games, collectible card games, strategy games, and battle royale games. Within a single game’s ecosystem, in-game items such as skins, weapons, and characters can also be classed as NFTs, allowing players to purchase, sell and trade unique digital assets across different platforms and creating real ownership and value that extends beyond the game itself. Some blockchain-based games like Axie Infinity and Gods Unchained have already demonstrated how NFTs can power player-driven economies, where items hold real-world value.

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