By Kameshwaran Elangovan
The past couple of years have witnessed a massive growth in the interest and valuation of NFTs… And the best part is that it is not confined to just one corner of the world! We have seen a lot of renowned NFT projects attract the attention of celebrities so much that they ended up purchasing NFTs that resembled them. These acts have also influenced the market and the price-appreciation of NFTs… not just the ones belonging to that particular project but the entire global landscape.
However, people have slowly come to realize that while the authenticity and the rarity of the NFT they have purchased remains indisputable, the question of whether or not the rarity and the authenticity translate into any assured tangible value still largely remains in a hazy territory. Therefore, in a lot of cases, NFTs that purely represent art (of course, with the attributes of rarity and authenticity) have ended up becoming a burden for collectors rather than a point of bliss.
While the graph of these NFT prices have shown steady skyrocketing until recently, the curve seems to flatten out at best and drop down drastically at worst. This brings into dispute the viability of NFTs as an investment.
The general spiraling down of the crypto/blockchain market and the drop in the prices of NFTs have all contributed to a pronounced difference in the expectations of people with respect to NFTs. People are now on the lookout for NFTs that offer some type of utility.
The dynamics of the market and the plummeting of NFTs without utility give reasons that are intense enough for this paradigm shift. Irrespective of the value of the NFTs and irrespective of the swing of the crypto market, the utility promised by the NFT does not change. This would mean that a person does not purchase the NFT thinking that it might considerably increase in its value but more for the utility it offers. While the purchaser of the NFT certainly stands to benefit immensely because of the utility, the market, if situations are favorable, might also increase the price of the NFT, adding an additional layer of advantage.
There are different types of utilities for NFTs one can think about. Some of the most obvious and the most prominent ones these days are NFTs being used as gaming assets. We all have seen how the gaming landscape has gone through a drastic transformation in the past couple of years, thanks to the introduction of NFTs and the distributed digital ledger technology called the blockchain. With the blockchain in place and with Web3 gaming being heralded, NFTs ensure that the gaming assets have a longevity that is not contingent upon the life of the game.
When NFT projects are springing up left, right, and center, utility NFTs have the power to distinguish your project. It simply, yet powerfully, implies that your project has sought to solve a problem rather than just use the manifestation of technology that is in vogue now.
This does not, in any way, undermine the value and the importance of art NFTs. It still cannot be denied that art NFTs help in defending the instances of counterfeits and copies in the highly lucrative world of collectible art. However, the “collectible“ value is determined by a multitude of factors, and it cannot be just confined to a single line of thinking and the rarity of that particular piece of art in that specific NFT collection. This is one of the key spaces where art NFTs falter.
in all of this, it is to be understood that utility NFTs are also creative/art NFTs in some way. It is just that the artistic value of the NFT is augmented by the utility it provides… Or looking at it from the other direction, the utility NFT also has an art element attached to it! An ideal NFT project should attempt to converge artistic importance and rarity in addition to the utility provided in terms of either gaming power or special access.
There are very good chances that a more refined renaissance of art NFTs may come back. However, utility NFTs will always continue to uphold their relevance, especially among the community of gamers who look at NFTs as an important asset, specifically when it comes to P2E gaming!
The author is co-founder and COO, Guardianlink