January 31, 2022
It feels like just yesterday NFTs were making a renewed debut into the mainstream, (although, in actual fact, the technology started way back in 2014!) and a lot has happened since the beginning of 2021.
So, we’re here to summarise the exciting events of the past year, taking you on a journey through time as we explore the ups and downs that NFTs have enabled us to experience. While we're at it, we're also going to do a little predicting to reveal some trends we’ve spotted for the year to come. Fair warning, time travel takes time, so buckle up and grab a cuppa…
2021 saw a huge boom when it came to NFTs – and for good reason. The avenues of utility that these tokens bring to the table (particularly at a time when Web 3.0 is on the rise) are growing more and more, month by month.
So far, we’ve watched NFTs morph and adapt between use cases – from digital art, to gaming, to real estate. Some of the year’s most notable acquisitions of digital art NFTs were recorded by Forkast to include the $17 million sale of Pak’s “The Fungible” and the $3 million sale of Andy Warhol’s “Machine Made.” But NFTs can also be used to tokenize both tangible and intangible assets. Capitalising on the hype, Beeple sold his first physical artwork and accompanying NFT for $29 million in November 2021. Titled, “Human One” this consisted of a seven-foot-tall box with LED screens on each side, depicting an animation of an astronaut walking across shifting surrealist environments.
Taking our art-collector hats off for a moment, and slipping into our retail-savvy shoes, 2021 also gave us the digitisation of real-world items, such as trainers. With blockchain-based solutions becoming the focus of both luxury and high street business’ marketing strategies, brands such as Nike jumped on the NFT band-wagon. In early 2021, we marvelled at the innovation of Nike's CryptoKicks, a patented blockchain-based sneaker for the ultra-trendy. But, just last month, Nike announced their feet-first plunge into the metaverse with the acquisition of virtual shoe company, RTFKT. Described as “next generation collectibles that merge culture and gaming”, Nike’s new NFTs will allow customers to really flex their style in a virtual world with “one of a kind virtual products and experiences.”
Meanwhile, in the gaming world, Axie Infinity was one of the most popular games of 2021, and in August, its NFT market topped the $1 billion trading volume. Going beyond gaming assets, Axie Infinity tokenized its characters, meaning that users who want to start playing must first buy three Axie NFTs. We asked our resident gaming fanatic, Jessica Clark, to weigh in on how she believes NFTs will impact the online community:
“Character creation and customisation can be a highlight of a game! I'm looking forward to being able to buy custom skins and armour sets as NFTs, knowing that whilst on a platform with potentially millions of other players that my character design is unique. I like the idea of being able to input and develop a design rather than choose from a set of default options. Finally, no more female warriors battling in bikinis, low cut tops or heels!"
Bikinis beware: the revolution has begun.
And it’s not just game NFTs that are capturing the flock’s attention. You may have noticed that our Fintech expert, Anna Przewoznik, recently published an in-depth report on the Fintech Trends of 2022, which, amongst many other fascinating topics, highlighted whispers that NFTs are starting to emerge in the DeFi (a.k.a. decentralised finance) space.
The film industry is no exception to this list of advancements and achievements. Director Quentin Tarantino’s auction of seven uncut scenes from Pulp Fiction as NFTs hit the media by storm – the first of its kind, this collection took film fans to the next level of worship.
From screens to scenes, NFTs have poked the sleeping bear that is real estate – a typically slow-to-catch-on area – and experts have started to realise the potential to pitch plots in the metaverse. We’ve moved swiftly from game-only use cases to property building opportunities. If you’re a student, your GDL Land Law module just got seriously cool.
But, it’s not all about making money. Many organisations are channelling their inner non-profit to create streams of trustworthy and reliable fundraising, where donators can be reassured that their money is going to the recipient that needs it, rather than a black hole of ‘do-gooder waste’. What part do NFTs play, you ask? In this scenario, the NFT is used to raise awareness (whether represented visually as art or otherwise) and once bought, the proceeds are recorded immutably (forever) on the blockchain. Each time a fundraising video is viewed or clicked, for example, royalties are paid directly to the charity in question – and we saw Charmin and Taco Bell truly lead the way in this regard. You might be thinking, how does this actually work? Briefly, the smart contracts that form the basis of the code behind these NFTs use algorithms that can automate the process of sending the money raised directly to the charity in need. In addition, charity payments made with cryptocurrency offer lower transaction fees and near-instant settlements. Pretty cool, right?
Finally, we can’t overlook the overwhelming effect NFTs have had on our own watering hole – the legal industry. Whilst regulation and law have not yet been officially announced in the UK, law firms (like us!) have been inundated with questions about these evolving technologies. What are the use cases for NFTs? Can we build a marketplace? How can we become NFT knowledge gods like you guys?! All we can say is, watch this space, as we’re confident that things are about to get shaken up in the UK.
This and more, coming from a still-growing seed of technology accelerating at lightning pace. Billions of fiat and cryptocurrencies are being exchanged so that everyone – from the Kardashians to your neighbour’s cat, Brian – can get their hands on a piece of the action. That’s right, NFTs create utility for users, such as new subscription models and online social perks, not just an opportunity for the rich to pump and dump (sorry Kim). And, on top of all that excitement, ‘NFT’ was even crowned “word of the year” by Collins Dictionary. Word.
Ok, so now you’re all caught up on some exciting events of the past year in the world of NFTs. As promised, we will now predict the future. Let’s take this into hyperspeed…
For starters, we’ll be singing the praises of blockchain innovation, as decentralised music streaming platforms, such as Audius, start to democratise the music industry. Artists will be offered 90% of sales revenue, with the other 10% being transposed (music geeks unite!) to decentralised node operators securing the network. Most recently, Audius have partnered with Tik Tok, the world renowned mini clip platform, to solve a worldwide problem – “the small cut of music income that goes to artists”. You’ll probably be familiar with how easy it is to create and upload content on Tik Tok – the benefit for artists is that the app has, “a faster speed of streaming than any other social media service”. Tough to beat!
From music to your ears to eye-opening projects – in 2022, the real estate sphere will transform and you’ll be able to enter the metaverse and not only walk around but own the land you tread in. Currently, it’s quite difficult to mint an NFT for a whole property, but they’re a great way to share ownership. The NFT acts a bit like a digital deed, recorded in a digital ledger. The next step will be, as you may have guessed, to improve the technology and allow metaverse entrants to buy and sell properties and ‘acres’ of land in the digital realms they walk in. Games such as The Sandbox are already exploring ways of applying play-to-earn, land-based NFT games, where ‘LANDS are “owned by players to create and monetize experiences. There will only ever be 166,464 LANDS available, which can be used to host games, build multiplayer experiences, create housing, or offer social experiences to the community.”
And it’s not just land that can be farmed in these games, as new metaverse platform Mobox demonstrates how to get involved in yield farming with MOBOS NFTs. If it’s finance that drives your interest, then you’ll be pleased to know that, as hinted at above, significant interest in NFTs has also arisen in the decentralised finance (DeFi) lane. In fact, just last month, Coinbase announced that they are partnering with Mastercard in a bid to make the NFT purchase process smoother on their marketplace. This is a huge step for folk who haven’t or cannot, for whatever reason, purchase cryptocurrency but are still keen to engage with the crypto world by buying NFTs. Through Coinbase’s new and improved NFT marketplace, you will be able to grab an NFT in exchange for regular old fiat currency (that is, the money we’re used to, like the British Pound or the US Dollar) using a Mastercard. The aim is to classify NFTs as “digital goods”, making the tech more accessible and inclusive to customers.
Meanwhile, in the decentralised app (dApp) galaxy… “Game-related traffic to DappRadar has already increased 14% from the numbers observed in October 2021.” Skirmantas Januškas, CEO and co-founder of DappRadar, told Forkast.News. One of the most popular play-to-earn games recorded in 2021, Splinterlands, has truly solidified the connection between blockchain and NFT games, and dApps as, “the number of active wallets interacting with dApps [have increased to] more than 2 million, of which more than half come through gaming”.
Hopefully we won’t experience another Covid-19 lockdown, but should you find yourself free of an evening and wanting to hang out with friends in a funky new virtual space, check out these other games: Mines of Dalarnia – where action and adventure seekers get their thrills - Illuvium – think Pokemon Go on espresso – or level up to outer space NFTs with Alien Worlds and Undra Verse.
Perhaps you prefer to engage with communities in other ways. Are you a member of a club? Perhaps ClubHouse, or Club Penguin? Then this is the paragraph you came here for. For metaverse-based social clubs, NFTs function similarly to a digital identity, offering holders access to exclusive perks, content, and events. Employing NFTs as the identity layer of metaverse projects will likely become more popular, due to the uniqueness and censorship resistance of each token. These social perks can be enjoyed by a wider audience of NFT fanatics.
“We will also begin to see more adoption of NFTs in the brand and marketing sectors… [NFTs are] a way to establish deeper experiential connections with consumers, and pave the way for customer engagement and revenue absorption.” – Alex Salnikov, Co-Founder of Rarible told CoinYuppie.
Salnikov hits the nail on the head with his prediction, as fashion and retail companies are taking NFTs to the next level to create a target market that can really relate to, and comfortably engage with their products of the future. Kicking off the drama this year were French handbag connoisseurs, Hermes, with the MetaBirkin NFT collection. Or so we believed, for the digital renderings of these well-known designs (dating back to the 80s!) have caused quite the fiasco. Hermes are suing the creator of these NFTs, Mason Rothschild, for appropriating the designer brand and infringing the Birkin trade mark without permission.
Meanwhile in Italy, popular powerhouse and equally high-end fashion architects, Gucci, are partnering with Superplastic to launch the SuperGucci NFT, a ground-breaking collaboration bringing the unstoppable digital force to the trend-followers and runway enthusiasts. Coming soon to an Insta-ready device near you.
We mentioned Covid (and we do so sparingly) because the pandemic has opened up a world of opportunities (and sped along brewing ideas) for the retail space. Gucci is just one example of a brand that is embracing e-commerce, transforming the retail experience into more than just a transactional event with the introduction of Vault. This, on the 100th anniversary of the label, will be a place where customers can immerse themselves in the history of Gucci, browse the archives and linger post-purchase in, "a time machine, an archive, a library, a laboratory, and a meeting place." It seems we’re not the only ones applying the tardis methodology here…
In other news, NFT marketplaces are now being created to allow for the exchange of intellectual property in technology and science to assist in fundraising for labs. RMDS, a data and artificial intelligence (AI) platform based in California, U.S., is leading the way and has set new “goals in moving into NFT sales …to connect scientists with investors, as well as to link science and technology IP with related collectors, investors and science enthusiasts.” By March 2022, they intend to provide new fundraising channels through the world’s first NFT marketplace for science and technology IP, which will also contribute toward the acceleration of technology transfer. Groovy.
For the social media fans out there, we heard on the blockchain grapevine that three (amongst many others) of the top-used apps, Tik Tok, YouTube and Twitter, have been mingling in the NFT world in their own ways. But, how, you ask?
In her annual letter to creators, YouTube CEO, Susan Wojcicki, wrote of YouTube’s top priorities for 2022:
“We’re also looking further ahead to the future and have been following everything happening in Web3 as a source of inspiration to continue innovating on YouTube. The past year in the world of crypto, nonfungible tokens (NFTs), and even decentralized autonomous organizations (DAOs) has highlighted a previously unimaginable opportunity to grow the connection between creators and their fans.”
A little birdy told us that Twitter has enabled users to upload an NFT profile picture, “After a temporary connection to your crypto wallet that allows you to set up an NFT as your profile picture, your digital asset displays in a special hexagon shape that identifies you as the owner of that NFT.” This will hopefully help to solve issues with identity and NFT theft that has caused much of a stir on the platform. Most recently, footy star John Terry has been caught out in a tweet about taking advantage of Chelsea’s intellectual property with his baby bored apes. You won’t be yawning when you read about this monkeying around.
Meanwhile, Instagram are taking selfies to the next level as CEO Adam Mosseri hinted that, whilst there was nothing yet to officially announce, the team are “actively exploring” the potential to use cases for NFTs. The aim is to make the tech more accessible to a wider audience and hopefully assist “creators” while playing with the possibilities that this trendy new avenue has to offer.
You may have seen our debut NFT offering last year – when our innovative lawyers (Will Foulkes and Gareth Malna), resident legal engineer (Jay Smith) and content creator (Will Andrews) designed and minted three non-fungible tokens – the TriNFTy trio! These world-firsts enabled the buyer access to one hour of legal advice with Will or Gareth, or tea-time with our CEO, Alice Stephenson, (and a funky avatar art piece to go with it!)
Our NFTs were minted on the Polygon blockchain using OpenSea, the largest NFT marketplace at the time of writing, to advertise and sell our creations. We’re all too aware of the environmental impact of using proof of work consensus mechanisms, so our NFTs were bought with MATIC, a version of wrapped ETH (cryptocurrency) that uses a proof of stake verification process.
But, before you get lost down a black hole Googling these crazy terms, we’ll bring you back to the present. What is the Blockchain department at Stephenson Law doing now?
Well, we’re advising lots of clients on NFT strategy for the coming year – we’re going to be seeing lots of advances made with the likes of metaverses and marketplaces being created left, right and centre. According to Will Foulkes, who founded the blockchain practice last year, “2021 saw an explosion in requests for our assistance from businesses who were keen to understand the technology (and the associated risks) so that they can get on with making the most of it. To help them we created our industry leading training series, the Blockchain Academy, and consultancy offering through our sister-brand, Macaw Consulting. So far, we’ve helped the likes of WeTransfer and Viacom on commercializing the use of NFTs and blockchain, with great success. Damian Bradfield, founder of WeTransfer, has gone so far as to say that Will was, “razor sharp, witty and pretty savvy when it comes to the chain”!
And now, returning to our mesmerising crystal ball, we’re predicting a new wave of interest in decentralized autonomous organisations (“DAOs”), an alternative type of corporate governance structure. The use cases for Web 3.0, are constantly expanding, and as previously forecasted, the law and regulation being crafted around crypto is taking leaps and bounds.
With our team working with the Law Commission on their DAO and smart contract projects, we are able to intervene right at the formative stage of law creation which means we always have the most up to date information available.
You may now exit our tardis of awesomeness. If you have any questions (we’d be surprised if you didn’t!) on the content of this article, or want to reach out for help with anything else, please contact us.
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