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Breakpoint 2023: Finding Utility for NFTs

An in-depth look into the expanding utility and application of NFTs in Web3.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

Summary

The concept of non-fungible tokens (NFTs) has recently garnered much attention, particularly as their utility extends beyond digital art into broader applications. Shiti Rastogi Manghani from Find Satoshi Lab provides an insightful overview of NFTs' evolution and how they can be leveraged in various sectors. The discussion highlights the current phase of NFT development—where the technology is focused on ecosystem-specific use cases—and the impending shift towards more widespread, human-centric applications. As Web3 infrastructure matures, the potential for integrating NFTs into real-world use cases, such as ticketing and real estate, becomes increasingly feasible. Focusing on the growth of the Ethereum ecosystem and the vital role of developers, Manghani underscores the cyclical nature of technological and crypto market progress.

Key Points:

Defining NFTs and Their Unique Characteristics

NFTs, or non-fungible tokens, are distinguished by four main characteristics: transparency, indivisibility, transferability, and interoperability. These qualities provide the foundation for the innovative use cases NFTs can offer, which Manghani categorizes as either secular (limited to specific ecosystems or projects) or broad (applications for humanity at large). Currently, the focus is on secular uses, but there is significant potential for broader applications in phase two, which offers solutions for numerous human endeavors such as ticketing and real estate.

The Evolution of Web3 and the Necessity for Applications

In the transition from Web2 to Web3, Manghani emphasizes the interaction between applications and infrastructure as a repeating cycle: applications spawn infrastructure needs, which in turn, inspire new applications. She references the 'Myth of Infrastructure Cycle' from Union Square Ventures, arguing that while Web3 has seen the emergence of varied infrastructures like L1s and L2s, there is a pressing need for applications that can effectively utilize this infrastructure to avoid a barren tech landscape.

NFTs as a Catalyst for Adoption and Innovation

Exemplifying how NFTs foster adoption and application, Find Satoshi Lab's product suite demonstrates practical applications of NFTs in gaming, fitness, retail, and more. Manghani introduces 'Gas Hero,' a strategy game that uses NFTs in its gameplay, followed by their NFT platform 'More,' which supports creators and artists. The utility of NFTs in real-world scenarios is further exemplified by examples such as Rihanna's entry into NFT music and Coachella's NFT ticketing.

Facts + Figures

  • NFT trading volume saw a 50% increase in the last month.
  • Phase one of NFTs focuses on secular, ecosystem-specific applications.
  • Web2's growth was highly dependent on the interplay of app development and infrastructure, a cycle outlined in USV's 'Myth of Infrastructure Cycle' paper.
  • With substantial Web3 infrastructure like Layer 1 and Layer 2 blockchains, the focus now shifts to developing applications that attract users.
  • Find Satoshi Lab integrates NFTs into their projects, including the anticipated game 'Gas Hero,' the NFT platform 'More,' and the fitness app 'Step-In.'
  • Developer activity in the crypto space has seen an 84% increase across a four-year span.
  • Analogical examples like the development of airplanes requiring airports and electric bulbs leading to electric grids illustrate the necessity of corresponding infrastructure for emerging technology.
  • Real-world NFT applications are gradually emerging across various industries, indicating a potential shift to broad usage.
  • The Solana community has recently seen favorable market action after a period of overall market gloom.
  • The cyclical nature of market and technology cycles is presented as a normal and healthy aspect of growth and innovation.

Top quotes

  • "So the utility for NFTs. Is it in the room with us right now?"
  • "What makes NFTs NFTs? Four things, right? So transparency, indivisibility, transferability, interoperability."
  • "We believe gaming is going to be one of the major adoption reasons for people to come on Web3 rails."
  • "Speculation is not just a bug, but a feature here."
  • "Our digital sneakers got people moving way more than even physical sneakers."
  • "Crypto is just a blip on the horizon, just a drop in the ocean."
  • "Let's build, let's get prepped up, let's build utility, let's build sustainability for things that are going to last."
  • "Crypto's consumer moment is coming, are you guys ready?"

Questions Answered

What are NFTs and what makes them unique?

NFTs, or non-fungible tokens, are digital assets that stand out for their uniqueness, and cannot be exchanged on a one-to-one basis like fungible tokens (such as cryptocurrencies). They are unique because of their transparency, which allows ownership and transaction history to be easily verified; their indivisibility, meaning they cannot be divided into smaller parts; their transferability, which facilitates the buying, selling, and trading of these digital assets; and their interoperability, enabling them to function across different ecosystems and platforms.

Why are NFTs significant in the current market?

Currently, NFTs are gaining attention due to a significant increase in trading volume, which signals a growing market interest. This trend not only reflects the digital art market's expansion but also opens the doors to their use in various fields that benefit from the unique properties NFTs possess. Their ability to serve as secure, transparent, and unique digital ownership certificates makes them valuable for countless emerging applications in the digital economy.

How do NFTs function within Web3?

Within Web3, NFTs provide the kind of interoperability and user engagement that can drive the adoption of blockchain technology. As applications are developed to utilize the existing infrastructure, such as L1 and L2 solutions, NFTs serve as a bridge that connects users with these new platforms through engaging use cases like gaming, digital art, and collectibles.

What is the current state of NFT development and use?

The current state of NFT development is focused on niche, ecosystem-specific use cases (phase one). However, the talk highlighted impending advancements toward broader applications (phase two) that could streamline real-life processes such as voting, real estate transactions, IP authentication, and more, through the secure and transparent nature of NFTs.

How are real-world use cases for NFTs developing?

Real-world applications for NFTs are slowly emerging. Examples given include Rihanna's use of NFTs in the music industry, integrating NFTs into event ticketing as with Coachella, and experimenting with virtual fashion collaborations such as artifact and Nike. Even education is seeing innovation with NFTs, as some universities are beginning to record degrees on blockchain.