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NFTs are adding complexity and diversity to the blockchain ecosystem, and this new wave of utility is attracting a much wider audience.
The blockchain-cryptocurrency sector is a little more than a decade old and still fighting an uphill battle for widespread acceptance. Those who have closely followed the industry’s rise know its potential to solve the biggest problems plaguing legacy financial systems, but before crypto can go truly mainstream, it must first reckon with some of its own inherent shortcomings.
For starters, crypto-based transactions are considerably slower than conventional payments, with the exception of some cross-border use cases. Faster transactions are possible, but not without a hefty price tag out of reach for many users. This sluggish speed often means long waits for transactions to settle, resulting in network congestion. As we witnessed with CryptoKitties in 2017, scalability is a serious concern for existing blockchains and protocols running on them.
Beyond these technical limitations, myths and misunderstandings abound in the blockchain-cryptocurrency domain, which presents significant obstacles to onboarding. Those skeptical about cryptocurrencies often perceive it as “magic internet money” with little or no value in the real world, or worse, a means for criminals to transact shady business outside of the watchful eye of financial regulators. This is despite the fact that just 0.34% of crypto-based transactions involve criminal activity globally.
Cryptocurrency is also frequently criticized for its gluttonous energy consumption, with the average Bitcoin transaction consuming twice as much energy as a typical U.S. home uses in an entire month. Mass-scale Bitcoin mining operations around the world consume enormous amounts of fossil fuels to power their server farms, contributing to greenhouse gas emissions in our atmosphere. Some companies have begun to partner with energy plants to use excess energy that might otherwise be wasted.
Bitcoin and Ethereum are trying to resolve these issues through innovations like the Lightning Network and Ethereum 2.0. Emerging blockchain platforms are also introducing radical and promising enhancements, but as a whole, mass adoption in the mainstream is still a distant reality.
In spite of these and other obstacles, the burgeoning community of crypto enthusiasts have put tremendous effort into spreading awareness and education—which is steadily coming to fruition. Moreover, as innovators build user-friendly solutions to improve the first-time experience of amateurs, we are gradually moving towards broader adoption. Let’s take a look at some of the major catalysts of this change.
NFT Collectibles
One of the most successful and innovative discoveries to emerge from the blockchain sector in recent memory is non-fungible tokens (NFTs). Although NFTs have multiple applications, the oldest and perhaps the most popular is their role as collectibles. NFTs caught the fancy of crypto enthusiasts beginning in 2017 with CryptoPunks, and have since become cultural artifacts, unfolding one of the most important chapters in blockchain’s history.
NFT-based collectibles are not mere JPEG images sitting idle in their owner’s crypto wallet. People are buying these assets to flaunt them on social media as a sort of virtual status symbol. Realizing the enthusiasm, Twitter has been working to offer users the ability to authenticate their ownership of NFTs and show them off in your profile. NFTs also have the potential to be much more than mere collectibles—fractionalization is possible, for instance, and so are DeFi derivatives.
Torum is one company focused on growing the NFT and Crypto Community and has recently taken investment from KuCoin Labs. Torum’s NFT marketplace is powered by their token XTM, which helps meet the NFT-centric needs of crypto communities. They will be connecting users in a SocialFi (Social Finance) ecosystem where cryptocurrency users and projects can collaborate and, according to their twitter, already have close to 200,000 users.
Another market player lowering the barrier to entry to NFTs among new and existing crypto users is Chronicle, a marketplace creating authenticated digital collectibles for the world’s biggest brands, including for stars of stage, screen, and television. Chronicle makes it easy for users to buy, sell, trade, and gift officially licensed NFT collectibles, even without technical knowledge, with a user-friendly platform that accepts a multitude of payment options including credit and debit cards.
Play-to-Earn (P2E) Games
Blockchain-powered gaming is rapidly becoming a sensation, with the combined market cap of top gaming tokens having peaked at over $52 billion. Traditional gamers are already familiar with the idea of in-game assets, such as weapons, vehicles, or loot boxes, around which entire in-game economies with corresponding real world value have begun to spring up.
By leveraging NFTs and other blockchain-based innovations, decentralized protocols are taking in-game assets (and gaming) to a whole new level. Unlike traditional gaming, where assets are confined to individual games’ worlds, tokenized in-game assets have real monetary value transcending the games’ virtual boundaries, and persist even if the game ceases to exist. This development has given rise to a totally new, user-centric gaming paradigm: Play-to-Earn or P2E.
In our pandemic-ravaged economy, people had to get creative to make ends meet, and P2E games shot to fame in this climate. The prospect of earning real money by playing games is indeed exhilarating, however the focus on the economics of these virtual realms usually comes at the expense of compromised gameplay and visuals. The sector is evolving, though, and quite rapidly, with participatory and people-centric titles like what we are seeing from Iron Sail, Whydah’s GameFi hub that has received $25 million funding from major blockchain ventures.
Running on KardiaChain, Iron Sail’s Mytheria is an NFT trading card game set to release in the coming months that adds a whole new layer to the Play-to-Earn model: Create-to-Earn. This allows artists to submit artwork to the game community and even create games to generate revenue from their work. Thetan Arena is another game from Iron Sail that, in a span of 2 weeks since launch, accumulated a total of more than 5 million users across all platforms. They reported a number of daily active users has reached a peak of 2 million.
User-Oriented Services & Privacy Prioritization
Disrupting user-oriented services like Data Management Platforms (DMP) and Creator Economies is another prominent outcome of leveraging blockchain technology. Blockchain-based solutions can improve these services, providing better security, privacy, and transparency, especially concerning personal and sensitive data. This benefits not only enterprises and content creators, but above all, the end-users themselves. We have already moved beyond ordinary cryptographic encryptions in this regard, thanks to companies like ARPA.
ARPA CEO Felix Xu, who owns more than 3,000 NFTs, attended Art Basel 2021 in Miami to network with NFT artists. Xu said that ARPA’s Randcast technology uses cryptographic methods to provide a secure, fast, and affordable way for projects to generate onchain verifiable random numbers. Verifiable randomness can improve the transparency of minting NFTs, blockchain gaming, generative art, and more.
The Tip Of The Iceberg?
Despite its nascency, the crypto sector has already attained a market cap of $2.57 trillion though it has seen a sell-off around the new year. As blockchain innovations continue to evolve, crypto companies will devise new ways to onboard new users to their platforms. With more investments coming into the crypto industry all the time, companies will eventually adopt people-friendly technologies for mass adoption. By any measure this is an exciting time, and we’re still at the very beginning of the blockchain and cryptocurrency story. As that story unfolds, we may be about to witness an exponential and world-moving technology boom, with echoes of the early days of the internet.
Image: Pixabay
