For many people, the word NFT means image files of digital artworks or collectibles that they can buy and flip for a huge profit. But there is more to this as the current trend surrounding digital art and collectibles reflect a heap of new possibilities with NFTs in the Metaverse beyond images and arts. NFTs are unique cryptographic tokens that exist on a blockchain and it is a huge portion of the metaverse. Both are related to real-world items like artwork and real estate. They are invariably linked to each other as NFTs allow the representation of individuals’ identities, property rights, and more across the metaverse. In other words, NFTs have a vital role to play as digital assets in the metaverse. Hence, let us take a deeper look at the role of NFTs within the metaverse and how they correlate with each other as well as their future and influences.
What Are Non-fungible Tokens (NFTs) And Metaverse?
NFTs or non-fungible tokens are a new category of digital assets that exists on the blockchain to record proof of ownership for the person holding it. They represent the tokenized version of physical world assets such as real estate or paintings. Each token on the blockchain represent certificates of ownership as it is completely unique, inseparable, and inflexible. This certificate of ownership is characterised by its own unique metadata that can never be replicated or replaced for another and is in turn generated by cryptographic processes. Because of its uniqueness, they are useless as a currency but greatly useful for other purposes, such as crypto art. NFT can be developed by anyone in many of the NFT marketplaces but to get a good price for it a person must have a good name and reputation either through a huge fan base or a powerful social media presence. NFTs can be of different types such as collectibles, trading cards, artwork, event tickets, music, gaming, memes, virtual fashion, real-world assets, and domain names.
The Metaverse is a three-dimensional virtual world moving on the blockchain, where people can play games, work, collaborate, or participate in live events. Using technologies such as VR and AR that function as visual component providers you can virtually do everything in this digital space just as you would in the physical world without the limitations of the real world. Using a virtual reality headset you enter a parallel universe that mimics our physical world and you can interact with other users, do work, play games and basically perform most of the activities that you do in everyday life. It greatly reduces our need to travel and usage of physical resources as you can use an avatar instead. In the virtual world that you can customise your avatar and use it play games, do activities you like or travel a hundred places. The Metaverse envisions new pathways to open up to endless immersive experiences whether we have social interactions, professional meetings, relax, and shop.
Emerging technologies such as blockchain, virtual and augmented realities, 5G, artificial intelligence, and the internet of things provide the backbone of the Metaverse giving it a decentralised nature with ample business opportunities and variable social interactions. Characterised by a versatile, scalable, and interoperable digital environment the Metaverse integrates inventive technologies with models of interchange between contributors from individual and enterprise opinions.
Role of NFT in the Metaverse
Let us explore the role that NFT plays in Metaverse’s 3D Virtual world and how they integrate.
1. Transparent and Fair Economy: The fact that the blockchain-based metaverse is decentralised is what makes it a fair and a transparent digital ecosystem. It makes the sale of any digital asset ownable, sellable, and transferable within the metaverse without any control or permission from a centralised authority or entities. This is where NFT’s function in the metaverse will grow more significant as it will aid in rendering actual ownership of digital goods leading to seamless transactions in the metaverse. Availability of NFTs will be based on the rule of supply and demand and this will not allow any channels to increase its price artificially. There will be scope for new crypto-economic models like play-to-earn games where there will be more opportunities for players to enjoy an impartial and equitable game play experience through ownership and control of assets.
2. Virtual Real Estate: NFT plays a crucial role for the metaverse in terms of virtual land ownership. The metaverse constitutes digital pieces of real estate known as virtual lands. Here NFTs can be made use of to buy and sell lands in the metaverse. Digital structures can be rented out for online shops or events and owners can earn income passively. The Sandbox and Decentraland metaverses are virtual platforms where you can buy or sell lands/plots as NFTs.
3. Trading: Trade and exchange activities of digital products such as images, videos, tweets, game assets, photography, and music are all done with the use of NFTs in the Metaverse.
4. Transfer of Ownership: NFTs greatly aid in business operations such as transfer of ownership. Companies can now launch their products in the Metaverse and can easily transfer ownership of products to their customers in return for NFTs.
5. NFT Avatars: You are very well aware that an avatar is a digital representation of yourself with which you can enter the metaverse. Although it isn’t a necessary requirement that your avatar is unique but in case you wish to do so, you will be able to own it. In fact in the near future, the top profile picture (PFP) NFT projects like CloneX NFTS are working on converting the profile pictures of NFT art owners into their 3D avatars.
6. Community and Social Experiences: NFT plays a pivotal role in enhancing users’ social and community experiences in the metaverse. NFT avatars help users envisage what their fellow community members look like. In fact, NFTs can be perceived as an extension of users’ real-life identities and reflect their preferences or choices in real life. Using NFT avatars one can get virtual membership to several real-world and metaverse experiences such as startup launches. Project communities with mutual goals can form a community by buying some form of NFT assets. This strengthens the relationship and ties between community members.
7. Marketing: Realising the great potential of NFTs in the Metaverse, businesses have optimised their marketing efforts by advertising or selling digital products even before the physical ones are available for sale. This strengthens brand presence and reaches a wider target audience especially the younger generation.
