Welcome to the fifth installment of PYMNTS’ series on non-fungible tokens, or NFTs, the newest craze in crypto.
In these 12 articles, we are looking at every part of the non-fungible token craze sweeping the worlds of art, video games, social media, fashion and sports.
When it’s finished, you’ll have a solid grasp of the basics of NFTs — what they are, how they work, what they are going to be used for, what their drawbacks are, what you need to be aware — and wary — of, and why people are paying so much money for them.
There is nowhere NFTs are likely to have a bigger social impact than in the metaverse, the virtual reality world where you can hang out with friends, buy stuff, go to live concerts, buy stuff, play games, buy stuff and watch advertisements that make you want to… well, you know.
These 3D lands are pitched as a whole world you can reach without leaving your couch and the “Next Big Thing” in a digital landscape far broader than the blockchain and crypto world to which NFTs belong — Mark Zuckerberg ensured that when he gave Facebook a new name, Meta, that highlighted his ambition to rebuild his social network as a virtual world.
If you’ve ever played a massively multiplayer online (MMO) game like World of Warcraft, you have a basic idea of the concept. You can do whatever you want but the world you live in is crowdsourced.
If you’re skeptical about the concept, consider this: Roblox, a newly public metaverse developer created in 2006 is now visited by more than 42 million players a day. And while those numbers got a huge pump for the pandemic, it was still 31 million daily users at the beginning of 2021. And the company revealed that 55% of its users are under 13 in its S-1 filing with the SEC — hook ‘em young. Three big, recent projects include voice chat, public event spaces and layered clothing. Why sell a coat when you can sell shirt under a tie and a suit jacket?
Morgan Stanley noted that one in five Roblox gamers update their avatars daily.
So, back to NFTs, the cryptocurrency tokens that make up virtually everything, from buildings to games to the clothes on your avatar’s back in blockchain-based versions of the metaverse like Decentraland and The Sandbox.
Gucci, Balenciaga, and Dolce & Gabbana are just a few of the fashion brands that have begun planting an NFT flag in the Metaverse. They won’t be the last, Morgan Stanley opined recently.
In a November client note, the investment bank predicted that the sale of digital fashion and other luxury brands will grow from its current “negligible” to $50 billion by 2030, Reuters said.
“The Metaverse will likely take many years to develop; however, NFTs and social gaming (e.g., online games and concerts attended by people's avatars) present two nearer-term opportunities for luxury brands," it said. Soft goods like fashion and shoes will probably have an easier time than hard categories like jewelry and watches.
There are two basic points to a metaverse. First, it is a place where you can go and do things, meet people and generally socialize. But second, it is a place where you can reinvent yourself as a stronger, prettier, more stylish version of yourself.
But it’s not just Gucci selling you an NFT of a rare physical world bag that was resold for more than the real thing. Musicians are holding concerts — Rapper Travis Scott made a reported $20 million — including merchandise sales — in a groundbreaking streamed concert in Fortnite, an MMO game working on becoming a metaverse.
Louis Vuitton created Louis The Game for the 200th birthday of its founder, where players explored the fashion house’s legacy, and viewed 30 NFTs, including 10 by NFT Artist Mike “Beeple” Winkelmann of $69 million collage fame.
Eighty performers ranging from Nina Nesbitt and Deadmau5 to Paris Hilton took part in Decentraland’s October Metaverse Festival, which also featured NFT merchandise stands, as well as a psychedelic sculpture garden, VIP areas and a fun fair with sideshow games — “Step right up and win a virtual stuffed tiger NFT!”
More to the point, anyone can sell (almost) anything in a decentralized, blockchain-based metaverse, and the NFTs you buy with Decentraland’s MANA cryptocurrency token — that acts as both an in-world currency and a governance token for the DeFi-style, decentralized autonomous organization (DAO) that runs it — don’t have to be limited to virtual goods.
NFTs can hold deeds to “real” real estate, stocks, really any kind of data. Just because you buy a hypothetical NFT Big Mac in Decentraland doesn’t mean you couldn’t use it to pick it up at the drive-through.