9 NFT Trends to Expect This Year & Beyond

Crypto and NFTs are increasing in popularity even as their volatility makes news on a regular basis. There’s a lot of excitement about NFTs in particular because of their many uses across multiple industries.

Addition Financial members are always interested in new ways to invest their money, and we’ve been thinking a lot about NFTs and the technology behind them. In particular, we think it’s interesting to look ahead and see what could happen with NFTs.

With that in mind, here are 9 NFT trends to expect in 2022 and beyond.

#1: The Rise of Solana

The NFT trend we’re putting first on our list is one that addresses an ongoing concern with NFTs and blockchain: the technology’s negative impact on the environment. You may have heard that it takes an enormous amount of energy to mint a single coin or NFT. It can take as much energy to mint an NFT as it would take to power an average home for a day and a half.

The Solana blockchain claims to have an answer to that. By leaving behind the proof of work (POW) protocol that has been used on the Bitcoin and Ethereum blockchains, Solana is able to process transactions at a rate of 30,000 per minute, costing far less money and using substantially less energy than the alternatives.

With so much scrutiny of energy use, we anticipate that Solana will gather momentum. New blockchain users are likely to be drawn to it because of its lower prices and it may be that other blockchains will adopt Solana’s combination of proof-of-history and proof-of-stake algorithms to reduce their energy usage.

#2: AI-Powered NFTs

It should come as no surprise that artificial intelligence and NFTs are on a collision course, giving rise to the iNFT. An iNFT is a traditional NFT paired with a Generative Pre-trained Transformer, or GPT-3

Another way of saying it is that an iNFT is a smart token that has an interactive structure. People who own iNFTs can have conversations with them in the same way they could with a chatbot or virtual assistant. iNFTs can even undergo mood changes while in NFT wallets and they have the potential to reach human intelligence.

#3: Fractionalized Art Ownership

Fractionalization is not entirely new in the NFT ecosystem. Back in 2018, a company called Maecenas sold tokens that represented a part-ownership in Andy Warhol’s 1980 work, 14 Small Electric Chairs. Prior to that, most people could never dream of owning a famous painting unless they were lucky enough to buy it before the artist achieved their fame.

Now, the fractionalization train is gaining speed. Two companies, Sygnum and Artemundi, collaborated to mint 4,000 NFTs backed by Pablo Picasso’s Fillette au béret. That happened in 2021. 

What makes fractionalization intriguing is that the ownership of an NFT doesn’t just give the buyer a percentage of the artwork that’s been tokenized. It gives them a specific piece of it. It’s a new way of auctioning art that opens up ownership to people who would not otherwise be able to afford it.

#4: Big Brands Will Mint More NFTs

It should come as no surprise that corporations are paying attention to NFTs and their popularity. NFTs represent another way to sell their brands – and thus, another way to add to their profits. Plus, they allow big brands to connect with their customers in the virtual world.

The first brands to take the plunge were largely fashion brands such as Louis Vuitton and Gucci. However, it may surprise you to learn that food brands have also been early adopters of NFT technology. Pringles even minted a collection of NFT “chips” with virtual flavor. We can’t say we fully understand that idea, but it’s undeniably an interesting one!

We anticipate that more brands will follow suit. As NFT tokens moves into the mainstream, it’s easy to imagine automobile makers and home decor brands grabbing their piece of the NFT pie.

#5: Musicians Will Turn Away from Record Labels to NFTs

If you pay any attention to the world of music, you know that a lot of musicians have publicly expressed frustration with record labels. Taylor Swift is rerecording her entire catalog after a dispute with Big Machine Records led to her master recordings being sold to an investment firm. She has been an advocate for artists owning their music.

NFT music offers an opportunity to do just that and many artists have embraced the technology. Kings of Leon released their studio album, When You See Yourself, as an NFT in March of 2021. As a result, they earned more than $2 million. They also retained full ownership of their music.

While releasing songs and albums might be the most obvious use of NFTs for musicians, many are also selling NFTs of virtual swag and merchandise. If this trend continues, which we believe it will, it has the potential to revolutionize the music industry, turning every artist into an independent artist and making record labels obsolete.

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#6: NFTs as Loan Collateral

As lenders, we’re particularly interested in this next trend. Borrowers can use many things in the physical world as collateral, including real estate and other valuables. Now, the possibility exists of people who own NFTs using them as collateral for loans.

Decentralized Finance (DeFi) platforms have already emerged that have the capability to allow borrowers to use NFTs and NFT collections as collateral. One such example is Arcade, which is already accepting NFTs as collateral. 

NFT-backed lending uses smart contracts to lock the NFT in an escrow account. It remains there until the loan has been repaid at which point ownership of the NFT reverts to the original owner. If the loan is not repaid, the lender takes ownership of the NFT and may sell it to recoup its losses.

While acceptance of NFTs as collateral is confined to online lending for now, it may move into offline banking as well. However, you shouldn’t expect to borrow against an NFT without proven value. It’s unlikely that anybody will give you a loan using your online avatar as collateral, but a fraction of a million-dollar painting (as noted above) might suffice.

#7: Playable NFTs

The world of gaming has been quick to adopt NFT technology. It’s not surprising, given that gamers enjoy immersing themselves in the virtual world of the game they’re playing. We expect NFT gaming to expand in the coming years.

While NFTs are already used to sell in-game items. It’s probable that NFTs will become increasingly common, with gamers able to buy characters, skins, weapons and other in-game merchandise such as in Axie Infinity. 

What may be next is a gamer’s ability to carry the NFTs they own from one game to another. NFTs could even be used for less-immersive versions of online gaming, including online board games.

#8: NFT-Powered Film and Television

We’ve already talked about NFT artwork and music NFTs, and now it’s time to talk about how NFTs have the power to change things in Hollywood. Making a movie or television show is an expensive endeavor and it can be difficult to raise enough money to do it without the backing of a major studio.

NFTs are now being used to fund pilot episodes and movies. Anybody who purchases an NFT gets an ownership stake in the final project along with special rewards akin to those given out for Kickstarter campaigns.

Two examples include GenZeroes, a live-action NFT television series, and Stoner Cats, a web comedy produced by actress Mila Kunis. We expect to see more NFT-based funding of entertainment as the technology becomes more popular.

#9: Web 3.0 and the Metaverse

Perhaps the most mind-bending trend of all is the rise of Web 3.0, a decentralized version of the internet, and the Metaverse. Many experts believe that the next version of the worldwide web will be powered by blockchain technology and focus on virtual experiences rather than the transmission of static information.

In the Metaverse, people will be represented by NFT avatars and use tokens to make purchases. Many of the NFT trends we’ve mentioned will come into play. For example, people can purchase NFTs from fashion brands to use on their avatars. They may be able to buy virtual cars and real estate. 

One of the biggest benefits of moving to a decentralized internet is that it would, in theory, be a safer way to navigate cyberspace. Blockchain technology is designed to be difficult to hack, since new data can be added to a blockchain only by consensus. People would use crypto wallets to store their currency and NFTs, and digital wallets could also be used to protect personal information.

Of course, this change to Web 3.0 and the Metaverse won’t happen overnight. It will take time for people to embrace a virtual world, but we do anticipate that the process will soon start in earnest and will accelerate with the passage of time.

Conclusion

NFT technology is poised to revolutionize almost every area of our lives, from finance and data storage to digital art and music – and beyond. The 9 trends we’ve included here are only the tip of the iceberg, and we anticipate that NFT usage will soon enter the mainstream.

Do you need help managing your investments – including NFTs and NFT stocks? Addition Financial is here to help! Read about our MEMBERS Financial Services Program and schedule an appointment here.

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