An NFT, commonly referred to as a non-fungible token, stands as a distinctive variant of a blockchain token through its inherent design. In contrast to fungible tokens such as BTC, ETH, or SOL, every NFT holds a unique identity and lacks an equivalent counterpart.
Hence, NFTs offer the capacity to validate individuality or distinctiveness of an item—often linked to accompanying metadata, encompassing elements like images, video files, or documents. Depending on the issuer and associated metadata, NFTs ascertain ownership of either digital or physical assets. Ethereum-based NFTs are also denoted as ERC-721 tokens, although NFTs also manifest across alternative blockchains like Solana, Avalanche, Cardano, and Tezos, taking diverse configurations.
Applications of NFTs
While critics might contend that NFTs are extraneous, they present a range of utility to their holders. NFTs establish the concept of digital scarcity and serve as identifiable markers. In an increasingly digital milieu, certain digital assets might seem devalued due to their susceptibility to replication. Yet, NFTs determine the original digital asset—akin to an authenticated painting amidst copies in a room. Furthermore, NFTs enable proprietor self-custody, offering the owner the capacity to retain full control over their digital asset without reliance on a third-party intermediary or web server for custody choices. In the realm of crypto, the adage “not your keys, not your crypto” signifies that authentic “ownership” of digital assets is only secured by maintaining complete sovereignty over one’s private keys and housing digital assets within a self-custodied software or hardware wallet.
NFTs also have the potential to pave the way for enhanced asset transfer across platforms, known as interoperability. Matthew Ball, a former Amazon Studios executive and metaverse commentator, asserted in an interview with Decrypt that “Value undoubtedly exists” within NFTs. He went on to elaborate that NFTs, as a technological innovation, can expand harmoniously with an evolving metaverse, presenting the most credible solution for virtual goods. By their very design, NFTs redefine the very essence of “ownership” in the digital domain.
NFTs in Filmmaking
Both Hollywood and the independent film sector have embraced NFTs for a multitude of reasons. Major traditional studios and streaming platforms such as Paramount, Warner Bros., and Lionsgate perceive NFTs as a novel revenue stream for established intellectual properties (IP) and in the face of dwindling home entertainment sectors, as consumers shift from physical media to digital formats and streaming. Warner Bros. has reimagined its vision for home entertainment’s future through experimental “Lord of the Rings” NFTs that unlock exclusive features and a copy of the film, essentially replacing DVDs with NFTs. Netflix, on the other hand, pursued an alternate avenue with “Stranger Things” NFTs. The streaming platform chose to distribute digital NFT posters of the show’s characters as rewards for completing weekly online games. While Hollywood’s major players explore NFTs, some offer collectibles for sale, while others gamify the experience.
However, NFTs in film transcend commercial and promotional roles—some aspire to be revolutionary. Independent film producer Niels Juul, associated with Martin Scorsese’s works “Silence” and “The Irishman,” perceives NFTs as a means to fund film projects that might otherwise remain unrealized. Juul established NFT Studios and KinoDAO, allowing NFT purchasers to influence filmmaking decisions and gain exclusive token-gated access and rewards. “Hunger Games” Co-producer Bryan Unkeless shares a similar objective, aiming to employ NFTs to both finance and cultivate a fanbase around the multimedia project “Runner.” By beginning with lore and a “Runner” comic book, Unkeless intends to expand into other mediums like television and video games. NFTs provide the “Runner” team with creative autonomy while fostering a community and acquiring feedback directly from enthusiasts. Bryan Unkeless conveyed, “Many Web3 projects exhibit astounding visuals and impressive world-building, yet they might lack the overarching concept and framework necessary for diverse mediums. Our aspiration is to leverage our expertise from film, television, and gaming to devise effective strategies.”
NFTs in Music
Numerous musicians, including DJs Steve Aoki and 3LAU, hold that the conventional music industry model necessitates an overhaul. Artists often receive a minimal portion of total song royalties, compelling them to heavily rely on touring for sustenance. The pandemic’s advent rendered touring impractical, prompting artists to explore alternate revenue streams. Electronic music creators and artists, who primarily work in digital realms, have ventured into the NFT realm, aiming to establish more direct connections with fans while sidestepping major record labels. Aoki’s revelation during a Gala Music event in February 2022, wherein he claimed to have earned more from NFTs than a decade’s worth of music advances, reverberated across the internet. Aoki elaborated, “If I were to break down the past 10 years of my music career… six albums and all the advances combined, what I earned in one NFT drop last year exceeded that. Also, I felt more uninhibited with my music.” For those in the music sector, Aoki’s declaration held no surprise.
The challenge of artist royalties propelled electronic artist and DJ Justin “3LAU” Blau to initiate the Web3 music platform Royal. The platform empowers artists to possess their music and allocate portions of music rights to paying fans through NFT sales. Other musicians, such as Tycho and Illmind, envision NFTs as virtual “tickets” to exclusive communities. Tycho shared, “I don’t view [Web3] as the utopian vision it was initially touted as, but I do believe it presents another tool for artists. Any additional leverage can alter power dynamics in some manner.” Evidently, electronic artists are more prone to embrace NFTs compared to artists from other genres. Audius’ data indicates that electronic and hip-hop artists are most prominent on its platform. Electronic musician Dillon Francis elucidated, “Electronic music doesn’t rely on Billboard Top 10 hits; it thrives when our tracks are played at festivals or clubs, propagated through word-of-mouth and blogs. This is why the Web3 culture and community resonate with us.”
NFTs in Fashion
Amid the metaverse fervor of 2022, numerous luxury fashion brands introduced NFT collections encompassing visual art and digital wearables—often linked to real-world physical assets. Several high-fashion designers seem to leverage NFTs and Web3 to engage the younger cohort of digital natives. Tiffany’s released 250 limited-edition NFTs associated with Yuga Labs’ Crypto Punks. Holders of Punks were offered the chance to transform their pixelated avatars into tangible Tiffany’s necklaces for 30 ETH. Gucci secured land in The Sandbox and engaged in Roblox activities. The brand launched its own NFTs and announced intentions in May 2022 to accept Bitcoin and ApeCoin as payment in select stores. Likewise, Prada, Givenchy, Balmain, Dolce & Gabbana, and Balenciaga embraced NFTs as a digital channel for product revenue, although few openly discussed utilizing NFTs to authenticate physical merchandise. In the realm of streetwear and sportswear, Adidas, Nike, and Puma ventured into Web3. Nike acquired RTFKT and issued several sneaker-related NFTs, often linked to physical sneakers. Adidas partnered with Yuga Labs, unveiling digital wearables bearing the Adidas logo. Puma procured its .eth Ethereum Name Service (ENS) name and launched metaverse wearables under the Puma brand.
NFTs in Gaming
NFTs generated substantial debate within the traditional gaming sector. While companies like Ubisoft, Take-Two, Epic Games, and Square Enix embraced the concept of in-game assets and cosmetics as NFTs, others like Valve (of the Steam store) and indie developer Aggro Crab Games vehemently opposed them. Electronic Arts held a cautiously optimistic stance, without active pursuit or development of NFT-based games. Microsoft’s position on NFTs appeared nuanced—while it prohibited third-party NFTs in “Minecraft,” its blockchain lead hinted at crypto and Web3 integration in the company’s broader portfolio. Sony seemed to explore in-game NFTs, evidenced by NFT-related patents filed for its gaming division in 2021.
Supporters of NFTs in gaming argue that these assets empower gamers to monetize their time and establish a stronger sense of ownership over accomplishments and digital holdings. Detractors contend that gamers already engage in selling accounts across various platforms, deeming NFTs superfluous. Prior to the Ethereum Merge, criticism surrounding in-game NFTs led GSC Game World and Team17 to cancel NFT plans for forthcoming titles. While traditional game developers varied in their stances, a new genre of games emerged with NFTs at their core. Web3 games such as Axie Infinity, Splinterlands, Alien Worlds, and Big Time spotlight in-game assets as NFTs, central to their gameplay. Gaming companies also embraced Web3 to modernize and digitize their brands. Brick-and-mortar retailer GameStop established an NFT marketplace and partnered with ImmutableX, an Ethereum-compatible blockchain, to sell Web3 game NFTs through its platform.