With all the buzz surrounding Metaverse and NFTs, it is important to understand how NFTs form building blocks of the Metaverse. To understand what NFTs mean to the metaverse, we must understand what NFTs are first.
What are NFTs?
NFTs or non-fungible tokens. Each token has its own properties and cannot be traded or exchanged with one another, unlike cryptocurrencies. They are cryptographic assets based on blockchain. Since each NFT is unique, it cannot be forged, manipulated or copied, like any other asset class. Digital collectibles like art, music, etc. are NFTs and the owner of the NFT has a cryptographically secure certificate of ownership of the NFT.
Are NFTs limited to art collectibles?
The short answer is no. With the emergence of metaverse technologies, NFTs have more use cases than originally imagined. We know that metaverse is a digital environment or a virtual world built on blockchain, with VR and AR as mediums to access this world. Metaverse, as a concept, has grown to be a scalable and versatile idea, with opportunities in every industry. And since the concept of metaverse has grown so much, it is only natural that NFTs’ use cases also grow for the metaverse.
The first example of how NFTs are used in metaverse is digital avatars. Since avatars form the baseline of how individuals exist in the metaverse, its importance and therefore, the relevance of NFTs increases. With NFTs, avatars can be individualized and owned.
How NFTs serve as building blocks of the Metaverse
With the introduction of land ownership in metaverse, NFTs act like deeds to consolidate this ownership of virtual property. For luxury brands, NFTs could serve as collectibles to their premium range of goods. NFTs’ importance in the gaming metaverse is also a great example. Items like guns, character skins and other weapons in the form of NFTs is the future of the gaming industry. With NFTs, players will be able to resell their in-game items, a concept that is not prevalent in the gaming industry today. Art galleries in the virtual world are also an important use case of NFTs, along with premium art collectibles.
Role of Blockchain
Blockchain technology is the fundamental pillar for NFTs and metaverse. This technology ensures that these assets are auditable. Blockchain makes the ownership of NFTs valid, secure and NFT trade transactions are blockchain-enabled. Blockchain also ensures interoperability of NFT assets across different virtual spaces.
Introduction of the Virtual Marketplace
With NFTs, the virtual marketplace is bound to flourish. Sellers can provide previews to the assets and transactions will be easy on blockchain. Brands like Nike have already experimented with this, with its virtual Nikeland for NFT products.
Real Estate and Investment
Over the last two years, digital land ownership has spiked. Decentraland has already begun implementation of the sale of real estate in the virtual world. Plots of virtual land can be sold as NFTs. The real estate industry in the metaverse will run primarily on NFTs, with NFTs acting as agreements and deeds, consolidating ownership and transfer of property.
NFTs have also enabled financial services like loans. Loans have been collaterized based on the value of NFTs. Ownership of other items in the metaverse is also through NFTs. Cars, accessories, boats and or something even as small as a pen will be possible through NFTs.
Brands can use NFTs as marketing tools at the time of product launches to provide special privileges, discounts or premium trials. NFTs can be the connection of the physical world to the virtual world, enabling users to participate in different brand events in the virtual world, for real-world products.
Creator economy in metaverse
With NFTs, the creator economy in metaverse has more room to grow. Blockchain and metaverse will enable creators to monetize their talent with the use of NFTs to provide authenticity to ownership. Creators play a valuable role in the growth of metaverse. Plagiarism of art is a pressing problem in the real world, with an increase in creators being able to showcase their talent on social media and engaging with large audiences. With NFTs, their art can be protected and their engagement with audiences becomes more credible in metaverse.
The possibilities of uses of NFTs in metaverse are abundant and growing. With NFTs, the metaverse is set to reshape several industries and promote a fair and transparent economy. NFTs provide a connection between the real and virtual worlds and will be an integral part of the future of web3.