Non fungible tokens (NFTs) make digital creations unique. But what are NFTs? Are NFTs a buy now?
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Making digital copies is easy. Whether on a computer or on a mobile device, users can copy and paste, creating replicas with just a click of the mouse. These copies are also cheaper: When broken down, it is just simple classical economics where supply and demand determine the price. The more copies we make, the lower the price of each copy. The law applies as much to the real world as to the virtual world.
On the other hand, an original Renoir painting or a unique opera performance do not have copies and command a high price because they cannot be imitated. They are non-fungible.
So what happens when we want to make a digital object — digital art, digital awards, digital certificates — unique?
Non fungible tokens or NFTs are digital inventions that make digital creations unique. NFTs are digital certificates of authenticity. Due to the blockchain technology that underpins NFTs, ownership rights are tamper-resistant and immutably recorded on a block.
NFTs can be traded on exchanges. Trading volume and total sales for NFTs, however, have plunged with the crypto market. The JPG NFT index is down to 33.04 from its peak of 92.70 in April. So, are NFTs a good buy now?
Most NFTs today run on the Ethereum blockchain and have the programmable features of smart contracts. Since NFTs are tokens generated digitally, they can be used to secure ownership of both tangible and intangible items. Besides artwork, collectibles, and real estate, NFTs can also be generated for tweets and several other kinds of internet content.
Battleground for Top Media Players
NFTs are already a new venture for top streaming content players Walt Disney (DIS) and Netflix (NFLX). These leaders know that their premium content alone is not enough. They have had to reinvent themselves time and again to lure viewers and keep the lead.
Viewer growth is a closely watched number for these companies. Disney+, Disney’s streaming service. is on pace to hit 260 million subscribers by 2024.
On the other hand, Netflix saw subscription numbers fall for two sequential quarters earlier this year as it increased its standard package price. Subscribers have always been alert to the hefty price that top content commands and also wary of price hikes. They have been ready to opt out when plans get too pricey.
Netflix finally turned around and just grew its subscription base by 2.4 million in the third quarter ahead of its ad-based package that will come at a lower price. The leading streaming content provider is following an early move by Disney+ to launch a cheaper ad-based package later this year.
The major move to content on demand started with Alphabet‘s (GOOGL) YouTube and wound its way past Etsy‘s (ETSY) and eBay‘s (EBAY) print on demand, SoundCloud, Spotify (SPOT) and finally to streamed video content that Netflix, Hulu, Amazon Prime and Disney+ dominate.
NFTs In Metaverse: Next Big Thing For Streamed Content
On Netflix or Disney, NFTs would allow content creators to continue to own digital rights to the content being streamed. This could lead to authors offering their content independently without a curating intermediary. Viewers may also be able to sell their opinion of a program in a tweet and make it an NFT as well.
But equally importantly, NFTs may be a new way of getting viewers by letting them say how much they liked a show. For the third season of “Love, Death and Robots,” Netflix launched an NFT scavenger hunt on OpenSea. The NFTs sell for a fraction of one ETH so are not pricey.
But the relative price of each NFT sale will show how much viewers liked it compared with other Netflix shows. That kind of data can help the streaming giant gauge viewers’ likes and dislikes and curate their content more effectively.
Disney has also partnered with VeVe Digital Collectibles for its NFT collectibles. But it has also chosen crypto firm Polygon to explore a theme park metaverse for “next generation storytelling.”
It has other plans, including partnering with Lockerverse for telling stories through augmented reality that has its own NFTs and Flickplay, which discovers NFTs connected to real locations that users can experience and share through augmented reality.
NFT adoption will likely grow, though right now NFT sales volume is low. Top NFTs such as CryptoPunks and Xmon may still command a huge price. But NFTs as a whole are yet to regain the momentum they had in 2021 and earlier this year. However, as companies see new ways of using NFTs, the interest will likely go up, making them good buys.
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