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Do NFTs Still Have Value? If It has Utility, Then Yes It Does

The rise of blockchain and cryptocurrencies opened the door to newer innovations like non-fungible tokens or NFTs, and like Bitcoin and Ethereum that came before, they became immensely popular, attracting billions of dollars from investors. 

NFTs emerged with a revolutionary concept, giving rise to a more viable form of digital ownership. At their core, NFTs are digital tokens that live on blockchains. They can be purchased with crypto, and they record ownership of an underlying digital or physical asset, such as art, music, videos, digital collectibles, tickets, real estate, stocks and shares and so on. 

Unlike existing digital files, which can easily be copied and shared by anyone, NFTs are totally unique, giving rise to scarcity. NFTs record the ownership of assets on immutable blockchains, which means they can easily be verified by anyone. They provide a history of ownership, recording each transaction and transfer of ownership, plus details of the wallet addresses involved. The transparency and immutable nature of blockchain means that it’s impossible to fake NFTs. To authenticate ownership of an NFT, all you need to do is look at the data that’s posted on the blockchain. 

It was during the height of the COVID-19 pandemic in 2021 that NFTs really took off, at a time when digital culture was sitting on center stage. One of the factors behind the rise of NFTs was the idea that digital ownership could match the prestige of physical ownership. The result was numerous high-profile sales of digital artworks and famous NFT collections like the Bored Ape Yacht Club, with some transactions in the millions of dollars. These sky-high prices were fueled by the knowledge that investors weren’t just buying an image, but rather a status symbol and a piece of history. 

The NFT market rose rapidly, with total sales numbering in the billions of dollars, and the trend was not just limited to digital art. The tokens expanded into various other segments, such as gaming, music and even metaverse real estate. 

A spectacular fall

But just as quickly as the NFT market rose, it crashed like an airplane that was shot out of the sky. Following the frenzy of 2021, prices began to flatline and then erode. Confidence in NFTs, which were still an extremely speculative asset at that time, collapsed, resulting in the market crashing in the space of just a few months. NFTs that were once valued and sold for thousands of dollars, struggled to find buyers for less than $100. 

A number of factors fueled this decline. First and foremost, the novelty of NFTs had simply worn off, resulting in less hype and speculation. While early investors were drawn by the possibility of big returns, the prospect of that happening dried up as interest in the assets began to wane. At the same time, as NFT prices rose, hundreds of essentially worthless, junk NFTs flooded the market. 

At the time, the wider crypto industry also went into decline, for late 2021/early 2022 sparked the beginning of one of the most severe and ensuring “crypto winters” on record. Cryptocurrencies lost up to 90% of their value, and numerous top exchange platforms and DeFi protocols collapsed, generating fear among crypto users. Add to that, the ongoing prevalence of NFT scams and rug pulls that further eroded confidence in these assets. 

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Utility changing perceptions

The sharp decline in NFT prices meant that some members of the crypto community, and plenty of naysayers from outside it, started questioning if the technology even had a future. The so-called “death of NFTs” was proclaimed more than once. 

However, with the rebound of the broader crypto market this year, NFTs look increasingly likely to bounce back. Although we’re unlikely to return to the days of digital assets trading hands for millions of dollars, some tokens have a lot of appeal. 

NFTs still have a promising future, for their foundational technology offers a unique value proposition in many markets. Blockchain provides a level of security and authenticity that simply didn’t exist before, and this technological backbone grants NFTs utility that can be applied far beyond the realm of speculative digital art. 

Some of the earliest NFT collections still retain a lot of value. While the price of most collections has collapsed, CryptoPunks NFTs are still held in high regard. The project is widely seen as one of the industry’s first pioneers, and as such, the NFTs have a lot of historical significance. 

However, its the vast application of NFTs that really gives the market hope. Aside from digital art, NFT applications extend to property rights in both virtual and physical worlds, digital identities, monetization of digital content such as music and literature, real-world assets and the booming “GameFi” industry. 

Such applications indicate that the NFT world is shifting from one of speculative gambles to a focus on practical use cases, which is likely to provide a much more solid foundation for their future. 

GameFi gives NFTs new life

One of the most popular applications for NFTs today is the gaming industry. Blockchain games such as Axie Infinity introduced the concept of in-game asset ownership, where players can actually own the characters, weapons and accessories they use in games. These are all represented as NFTs, meaning players are free to sell them on the open market, creating value for such items. 

By purchasing a rare and expensive gaming NFT, a player can increase his or her chances of winning crypto rewards, which are paid out to those who complete various challenges and tasks or win player-vs-player battles. 

A quick look at NFT PriceFloor shows that GameFi NFTs are still extremely valuable. For instance, the Neo Tokyo Citizens game NFTs had a floor price of $15,600 as of October 2024, showing huge demand for those extremely rare assets. Meanwhile, the average floor price of an NFT for the metaverse world The Sandbox stood at $235, while the cost of access to the popular first-person shooter My Pet Hooligan NFT stood at $872. 

New games are attracting a lot of attention too. The fast-growing GameFi ecosystem provider Funtico recently debuted its Summoner NFT collection, which promised to give NFT holders a key status as OGs in its community, and it saw incredible demand, selling out in just 24 hours. 

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The Funtico Summoner NFTs offer some compelling value for gamers interested in the Funtico ecosystem, which has already launched a number of popular play-to-earn game. Only Summoner NFT holders can participate in the platform’s leaderboard ranking system, which promises significant crypto rewards to those who rank highest when the full Funtico platform goes live. They’ll also get to participate in the first-ever official Funtico tournament, which will launch with a guaranteed $100,000 USD prize pool at that time. 

Greater utility emerges

Other popular applications for NFTs include “real-world assets” or RWAs, which create possibilities for the fractional ownership of previously illiquid assets such as real estate. A luxury resort can be tokenized on a platform like Blocksquare and split into 10,000 NFTs, and each one can be individually owned, with the NFT providing the holder with a share of that resort’s revenue. It offers a much easier way to invest in real estate, and can potentially bring massive volumes of liquidity into the sector. 

RWAs can also represent other assets, including stocks and shares, which can be traded more efficiently and with lower costs by using the blockchain to cut out the middleman. Other ideas include bottles of fine wine, luxury artworks and more. 

NFTs also provide a way to buy and sell carbon credits. On marketplaces like KlimaDAO, NFTs represent a specific amount of the carbon dioxide emissions offset that can be traced back to its source. This ensures that companies can purchase authentic, verifiable carbon credits and prove these investments to investors and customers. It’s a way for them to show they take climate change action very seriously and are doing something about it. 

These examples are only scratching the surface of what NFTs can do, with other widely-cited use cases being industries like ticketing, private credit, vehicle registries and access to AI network resources. 

Practical NFTs to drive sustainable growth

As the NFT industry moves forward by embracing the principle of utility, it’s slowly but surely on the rebound. The NFT crash of 2022 might have been painful for the investors who lost out, but there’s an argument to be made that it was necessary for the technology to succeed. 

At the height of their popularity, a lot of spammy NFT projects emerged and many would end up failing. But the collapse of these worthless NFT collections has shown itself to be beneficial for the industry, essentially clearing out the weeds so it can move beyond speculative bets to more practical use cases. 

These days, the most valuable NFTs are the ones that provide genuine value to their users, whether they’re gamers, airplane passengers, DeFi users requiring a digital identity or companies looking to prove their environmentally-friendly credentials. As the future unfolds, we can expect to see more and more NFTs emerging with practical applications, resulting in greater stability and more sustainable growth in what remains a very promising market. 

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