NFTs: State of the Arts

Cam Agnew

Creative Director

Last month, Catchy attended the biggest and longest-running Ethereum event in the world—ETHDenver. Among thousands of crypto-curious attendees was a backdrop of art installations, interactive media, and galleries. Psychedelic LED wall installations, spray-painted street murals, and interactive experiences are part of the rising categories of art that are an essential part of the Web3 culture.

The most popular artform at ETHDenver, and the topic on everyone’s mind, were Non-Fungible Tokens (NFTs). In the last few years, there has been an explosion of NFTs that have entered the mainstream, but for many these digital art pieces are still shrouded in mystery. What is an NFT? What does digital ownership mean? Are NFTs the future of art, or just a fad?

We spoke with NFT artists and Web3 experts in order to understand the current state of NFTs, how they are being used, and what this technology will look like in the near future.

NFTs Today

NFTs are breaking into pop culture in a huge way. Celebrities and major brands are embracing NFTs with widespread promotion, both in official capacities and by social association. Some more seriously than others, and some in a tongue-in-cheek way.

Although it may be an unavoidable topic online and on social media, NFTs are still very much in the early days. Out of 3 million crypto wallets worldwide that own NFTs, only about 400,000 (~13%) are actively buying, selling, and trading NFTs on the blockchain — a relatively small number.

The general consensus (pun intended) is that we are in the middle phase of early NFT adoption. Amidst the hype, it’s important to understand the primary use cases for how NFTs are currently being used in the world today:

Art Collection: These are NFTs in the purest form: Digital art that is bought, sold and traded on the blockchain.
Digital Identity: Because NFTs are unique to each owner, and the record of ownership is public information, they can be used as identification.
Gaming: Today, we see NFTs in games mostly in a play-to-earn reward system. This means that the better you play, the higher the odds of receiving NFTs as in-game rewards. However, there is some movement towards facilitating game ownership. Almost like owning a physical copy of a game, as in the old days.
Music: In parallel to art and games, the idea of use for music ownership is starting to appear. Snoop Dogg has recently announced that he plans to turn Death Row Records into the first NFT music label.
Metaverse & Virtual Land: The most abstract concept around digital ownership is the buying and selling of digital real estate in the metaverse. Picture owning a condo in virtual reality which you can rent, or use to host your own NFT gallery.
Social & Event Gating: Similar to digital identity, we are seeing proof of ownership of NFTs as tickets to entry to physical spaces and IRL events. At ETHDevner, in order to attend an exclusive after-party, attendees had to show proof of ownership of a DOGE NFT.

NFTs Tomorrow

Right now, the use cases for NFTs are still primarily in the realm of art and media. But what are some ways that NFTs could be used in more practical applications in the future? We asked several experts at ETHDenver, and here’s what we heard:

“Soulbound” NFTs: These are permanent, un-tradable NFTs which could be used to denote a status. Picture an organization which needed to track tiers of access to a database. Your “soulbound” NFT would act as an employee number, and would remain constant.
Loyalty Programs: Because NFTs are unique identifiers, brands and companies can create customer databases. This could be an enrollment incentive for digital rewards or loyalty programs.
Fractionalization: Not only can you own an entire NFT, but you can also own pieces of it. Imagine a digital Mona Lisa, which you could own a part of. Or a digital piece of property you purchase with a business partner.
Gaming Leaderboards: NFTs can be used to denote status. Within the gaming community, your status as a top player can be represented by your ownership of an NFT badge, which can be rewarded for gaming achievements.
NFT Index: There are literally hundreds of NFT chains and marketplaces, which can be hard to organize and track. Naturally, there is a need for a way to catalog and organize NFTs across multiple platforms, similar to how index funds are used in the stock market.
Retail: On the consumer side, brands like Louis Vuitton and Mattel are starting to use NFTs as a digital counterpart to a physical product. Imagine purchasing a new handbag or dress and receiving a digital version to outfit your virtual metaverse avatar.

Out-of-the-Box Marketing Solutions

Because of the growing popularity of NFTs, many larger companies are interested in getting their piece of the pie. We are starting to see Web3 projects that are specifically focused on getting brands into the NFT space by offering marketing approaches based on NFTs. There is an undeniable technical barrier to NFTs, so companies like Mojito are making it easy for brands and companies to get in on the action.

There is a lot of conjecture about whether NFTs will continue to evolve into practical day-to-day applications or be limited to the realm of art and media. In any case, we’re all watching to find out how some of the top Web3 minds are helping bring NFTs from the fringe to the mainstream.