It was billed as the “Mona Lisa” of the emerging world of digital art and it came with a price tag to match that label – with the Iranian-born crypto entrepreneur Sina Estavi paying a stunning $2.9 million to acquire an NFT of the first tweet by Twitter co-founder Jack Dorsey.
That was in March 2021 when NFTs were on fire, bursting into mainstream consciousness. That year we saw sale after sale of the digital assets that attracted millions of dollars. For instance, a collection of images by Beeple, a visual artist, sold for an incredible $69 million. Meanwhile, the NFTs required to play the hit “play-to-earn” video game Axie Infinity were selling for thousands of dollars each. Coca-Cola raised more than $575,000 selling customizable digital items to be worn in the metaverse, and plenty of other companies got in on the action too.
But one year on and it seems the NFT bubble has burst. Back in April, it was reported that Jack Dorsey’s original tweet had lost almost all of its value, with auction bids maxing out at just $14,000. The explosive growth of NFTs has seemingly hit a brick wall. A recent report by the blockchain data firm Chainalysis said that while collectors have spent $37 billion on NFTs so far this year, on track to beat the $40 billion spent throughout 2020, the market had “leveled off”, with transactions falling sharply since February.
Moreover, the floor price of some of the best known NFT collections has crashed too. For example, the iconic Bored Ape Yacht Club NFTs have seen their Ethereum prices fall by 11% this year, and lost even more value in real terms as a result of the declining value of ETH. In June, the cheapest BAYC NFT on sale on OpenSea was listed at $107,000, well down from the $429,000 price tag of the cheapest BAYC token in April.
It’s not only BAYC. Other high-end collections have seen similar price drops, with the Moonbirds collection down 16% and Doodles having lost 21% of their value. Meebits NFTs, meanwhile, are down by 27%.
Non-fungible tokens, to give NFTs their correct name, are so-called because, unlike cryptocurrencies such as Bitcoin, each one is completely unique. Each NFT in a collection is different in some way, with its own traits that have different levels of rarity. They rely on the blockchain, the decentralized ledger than powers crypto, to keep a record of ownership, which allows them to be traded and modified. What this means is they have more potential applications than simply serving as currency – they can be used to transform everything from art, games, music and trading cards into a unique, digital asset.
The stunning rise in popularity and value of NFTs last year resulted in rapid saturation of the market. As we entered 2022, it seemed as if new and increasingly pointless collections were being launched every single day. The result is that a lot of NFT projects have come to be seen as cash grabs. Take Jake Paul’s Stick Dix collection. The younger brother of Logan Paul came up with the project last November, a collection of hand-drawn stick figures ‘boasting’ enlarged penises. The project promised to invest $300,000 into influencer marketing, touting the possibility of its own clothing chain.
Unfortunately for early investors, the Stick Dix NFTs didn’t have much staying power, with its floor price currently down more than 90% from its all-time high in November 2021 at just 0.01 (around $15) at the time of writing.
Against this backdrop of declining interest in NFTs, the market appears to be turning its attention to more innovative and feature-rich projects. There’s a growing interest in NFTs that are designed to provide utility, and in doing so serve as an effective tool that aims to accomplish a much larger goal.
Digital Autographs With Real-World Benefits
One such project that has gained lots of attention recently is Tom Brady’s NFT platform Autograph, which earlier this year managed to raise $170 million from high profile Silicon Valley investors Andreessen Horowitz and Kleiner Perkins. With Autograph, the former NFL superstar has created a platform that aims to assist celebrities and entertainers in forging their own, personal presence in the NFT market.
Autographs are one of the most compelling use cases for NFTs. Autographs are collectibles because when you own one you become much more than just a fan. Autographs are a direct connection to a specific celebrity or sports star, and could potentially be worth a significant amount of money at some point in future. This is the idea behind Autograph, which is attempting to bring signed collectibles into the digital age. Rather than scribbling their name onto a piece of paper, a shirt or a photo, athletes like Brady, Tiger Woods, Simone Biles, Tony Hawk and Wayne Gretzky are instead creating limited-edition NFTs their fans can buy, hold or sell on the secondary market.
Since launching last year, Autograph has already surpassed more than 100,000 NFT sales, with prices starting at just $12, to more than $1,500 for the most exclusive tokens. The project hosts a secondary market where some of its NFTs have since been advertised for millions of dollars. Notably, one Brady NFT was listed for $4 million in December.
Autograph’s success can be put down to the psychology behind collecting. It’s human nature, with people collecting things they believe might later have value for hundreds of years, be it postage stamps, coins or baseball cards. NFTs promise to become the digital version of that craze thanks to their immutable nature, which means they can’t be replicated or forged. Instead, the blockchain is used to track and verify ownership. In the physical world of collecting, rarity is a unique trait that equates directly to value, and every single NFT in a collection is unique.
In addition, Autograph adds a community aspect, as anyone who purchases one of its NFTs gets to join a collective of like-minded people. So when someone purchases an NFT that’s truly unique, everyone else will know about it, similar to how everyone knows if someone buys a unique car in the real world. Autograph fosters its community by giving NFT owners access to its own Discord chat room, where buyers can contact the celebrities directly. Both Brady and Woods have made appearances in the Discord room, making themselves available to fans, who also get the opportunity to win exclusive prizes – such as to play a round of golf with Woods himself.
Metaverse Fashion Morphs Into Reality
Utility is the name of the game for Nike-owned RTFKT too. The company is an NFT-powerhouse that creates next-generation virtual sneakers and other fashion items for the metaverse. It has created some of the most in-demand digital accessories around, and is known for pushing the limits of what’s possible to ensure every one of its NFTs provides a different experience.
Nike said at the time it acquired RTFKT that it’s plan is to invest in the brand to grow its innovative community and extend its own digital footprint. RTFKT is notably building in NFT Worlds, a decentralized play-to-earn platform that allows people to create their own metaverse experiences.
RTFKT shot to fame when it sold more than $3.1 million worth of virtual NFT sneakers in February 2021. One of its most notable NFT collects is CloneX, which has become one of the most iconic producers of NFT wearables in the metaverse. RTFKT has also partnered with the artist Takashi Murakami.
RTFKT has notably made several forays into the world of physical goods too. Its FEWOCiOUS sneaker collection for instance gave NFT holders the rights to claim a pair of Nike-made physical sneakers too. Whoever held each NFT would be eligible for the real-world sneakers exactly six weeks after they were first airdropped, creating a huge amount of excitement. In December 2021, one FEWOCiOUS NFT sold for an impressive 17.4 ETH, worth around $78,000 at the time.
RTFKT has expanded beyond sneakers too. In May it announced a collaboration with Nike on an official virtual and physical apparel collection. On Twitter, it showcased a collaborative Nike hoodie as a clone wearable. “This is not your usual physical hoodie, this hoodie is designed for special functions,” said RTFKT co-founder Benoit Pegotta tweeted at the time. A second tweet explained that the clone wearable would be a “fusion of the RTFKT x Nike world”, before the company later confirmed that the hoodie would be available as both a clone wearable and a “forgeable physical” at a later date.
The Evolution Of Fan Engagement
Given the success of Autograph and RTFKT, there’s a lot of buzz around Fanzee Labs’ attempt to use NFTs for fan engagement. The company has developed a platform that sports teams can use to create advanced gamification features for their fans, within their own digital ecosystems.
Fanzee will help teams to create NFT collections with unique competitive elements. The idea is that fans can compete with one another to increase their fan level and climb a leaderboard to win prizes and tokens. For instance, one challenge might be to collect three video moments of their team’s favorite goals in the season to earn 1,000XP. Those points would help them to move up the leaderboard.
Fanzee also introduces the concept of Matchday challenges, such as quizzes based on the events during the team’s previous fixture, a PvP Bet Challenge where fans can bet on important match events, and an end of match quiz where they can test how well they followed the latest match. For Fanzee’s quizzes, it will combine these with engaging mechanics such as XP points, digital items, tokens and exclusive access to secret challenges.
What are Challenges?
We have designed detailed gameplay mechanics for fans to interact with the digital assets of the clubs. They are based on real-world sporting events happening throughout the club’s season and take the fan on an immersive journey with the team that they love. pic.twitter.com/mN4N94X1Qk
— Fanzee Labs (@fanzeelabs) July 8, 2022
Another important aspect of Fanzee’s platform will be its secondary marketplace, where fans can trade the digital assets they have collected with others, cashing out directly into their bank account. Moreover, it understands that not everyone wants to deal with things like owning and interacting with cryptocurrency wallets, so to that end it offers a way for clubs to automate the digital asset ownership aspects to make the entire experience seamless for all fans.
While Fanzee acknowledges that its fan experience gamification sounds quite complicated, the idea is based on a very simple premise in that fans have very few chances to interact meaningfully with their clubs outside of the in-person experience on game days. That’s because there is currently no engaging solution that currently exists to create that kind of interaction. With its NFT platform, Fanzee aims to change that, giving fans a way to interact with their clubs every day of the week.
Clubs can even offer real-world benefits to Fanzee users who do this, for example by awarding smart contract-based NFT tickets to fans who complete challenges or demonstrate their loyalty and commitment to the club. The tokenized tickets may even come with added match day benefits such as priority seating and opportunity for fans to meet their favorite players.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.