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Boom or Bust? What the Future of NFTs holds?

Many years ago, the future of NFTs was just a concept that a GIF or a JPEG file would be considered an art collectible was just unthinkable. Unlike today, they are known as NFTs, crypto investment assets with a market that surpassed a whopping 49 billion dollars in 2021. These digital tokens and NFTs are bought and sold on specific marketplaces where many tech investors have seen huge profits.

This idea of a digital marketplace where artists could share their work and sell them off directly without the involvement of auction houses or museums seemed impossible just a few years ago. It has drastically evolved over the past 5-6 years, allowing artists, big companies, and organizations to share their work on the NFT marketplace easily.

How did NFTs come into existence?

The concept of NFTs started to evolve on the surface when Meni Rosenfield introduced the idea of colored coins on paper in 2012. The basic idea was to teach a class of methods for representing and managing real-world assets on the blockchain to provide complete ownership of those assets. The idea wasn’t compatible with the Bitcoin blockchain but later came on to become the foundation of NFTs.

Kevin McCoy, a digital artist, minted the first NFT in 2014. Its name was “Quantum” and it was released on the namecoin blockchain. The Quantum was a digital pixelated octagon image that resembled an octopus in different changing colors. After this, several other NFTs were minted on several blockchains and soon after, Ethereum became the hub for releasing all new NFTs making the future of NFTs quite clear.

How NFTs turned out to be a Colossal Success?

In 2021, it became the year of the NFTs with a massive surge in the demand and supply of NFTs. This happened when famous auction houses like Christie’s and Sotheby’s started selling the NFT art pieces and took their auctions online. Christie’s NFT sale of Beeple’s “Everyday: The First 5000 Days” was sold for a whopping $69 million. Such a massive sale like this one validated the NFT marketplace’s growth and gained new customers’ trust.

After artworks, NFTs entered the music industry and succeeded there. Kings of Leon was the first music band to have had their album released through NFTs. Moving on, merchandise, concert tickets and even song tracks started getting sold as NFTs. The affiliation between the audience and the artist directly was one of the primary reasons behind the success of NFTs in the music industry. The main reason is the no longer involvement of third parties or intermediaries for their interactions.

NFTs today aren’t just limited to art, games, or music but they are also trending for every possible real-world asset. To utilize NFTs to their full potential, companies like LCX have introduced the concept of tokenization of diamonds. Almost all diamonds are unique, making them perfect to be tokenized into NFTs. These Tiamonds were enabled by LCX’s framework and are based on the Ethereum blockchain. Tiamonds provide complete transparency, value and security for your investments.

What’s the future of NFTs?

Despite some ups and downs in the past regarding the success of NFTs, it has survived and has become a huge hit. Considering all the aspects of what NFTs are today, we can confidently say they are here to stay. They have had an enormous impact, specifically in the art world. With many people moving towards the Metaverse, it will also definitely aid in the surge of NFTs.

NFTs are still a new technology, and their further growth largely depends on people’s realization of their impact in different fields. The more people realize its capacity and potential, the more they expand. It might still look blurry to some people about the future of NFTs, but with the recognition they have today, something big will happen for NFTs.

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New Ethereum Token Standard ERC-4907?

As technology continuously evolves, a new concept is introduced every day. An exciting concept in the world of NFTs is rentable NFTs. According to ERC-4907, an NFT owner may provide permission to a third party to use their NFT for a certain amount of time. The user will lose access to the NFT after that period is over.

P2E video games are still a relatively recent trend in both gaming and cryptocurrency. Despite this, the sector has tremendous development potential since it successfully combines two things that everyone wants: money and fun.

Entry into the P2E market has been increasingly simpler with the continued growth of NFT rental services. They allow gamers to rent an NFT without conditions and pay lenders a percentage of their profits. In turn, owners of non-fungibles have the opportunity to earn additional passive income.

What are NFT Rentals?

NFT Rentals operates similarly to other rentals in the real world. Let’s say you desire a premium automobile for a few days. The most economical option is to hire a car for the necessary number of days and return it without fail to the owner when your rental period is up rather than purchasing a new vehicle. Like renting a car for a few days, the goal is to return the NFT to its rightful owner when your rental term is up.

The Importance of NFT Renting

There are several advantages to renting to NFTs, and they can have a wide range of utilities.

Both owners and tenants gain from NFT rentals. The renter offers a chance to interact with the NFT community or utilize an NFT’s service that they otherwise wouldn’t be able to afford, even temporarily. The owner can monetize their NFT and get passive revenue from a static asset that would otherwise gather virtual dust in their digital wallets. These advantages of NFTs renting in the gaming industry are unquestionably beneficial to casual and high-net-worth players.

NFT rentals have enormous potential. You may rent digital artwork, metaverse territory, and many gaming materials. With the widespread adoption of blockchain games, guilds, and metaverse in the upcoming years, the NFT rental industry will prosper. As a result, users, guilds, and projects will hold vast quantities of idle NFTs. To lower the cost of participation and encourage continued usage among current users through rental income, it is essential to maintain a thriving rental market.

Current NFT Rental Methods

NFTs may now be rented out in one of two ways:

  • Collateralized Renting
  • Collateral-free Renting

In both cases, the owner will provide the user access to the NFT in exchange for a security deposit or other agreement to return the NFT to the owner when the rental time is over. Once rented out, the original owner loses control of the NFT, which raises several dangers. Additionally, the owner must manually retrieve their item when the rental period is up, which is a complex and expensive operation, especially when renting many assets concurrently.

The separation of the roles of owner and renter with an expiration date made possible by the introduction of ERC-4907 implies that the privileges of the leaseholder expire automatically without the need for any further on-chain actions.

NFT Rental Dual Role Standard ERC-4907

By differentiating who is the owner and who is the user of the NFT, ERC-4907 introduces a new position and makes it feasible to “rent” the NFT. The renter can use the NFT up to the end of the loan period, at which point it immediately reverts to its owner.

The ERC-4907 standard, which adds the dual roles of “owner” and “user” at its application layer, expands ERC-721. Through an automatic “expires” feature that enforces the user’s time-limited role, ERC-4907 optimizes NFT rentals. This ground-breaking feature makes NFTs rentable by default and prevents yet another on-chain transaction by removing the need for owners to withdraw user rights actively.

It is simple to implement ERC-4907 by adding a small amount of code. The ecosystem for NFTs may develop and innovate more quickly if this paradigm becomes the norm.

The Protocol Offers:

Simple implementation: Backwards compatibility and easy to implement.

Functions for the NFT: It is much simpler to control what lenders and borrowers can and cannot do with the NFT when there are separate “owner” and “user” roles.

On-chain time management (expires): After the rental period has expired, the “user” of NFT is immediately revoked.

Simple Third-Party Integration: The NFT owner may rent the NFT to some users and simultaneously utilize the NFT in a mortgage platform. The “user” role of the NFT is used in renting, whereas the “owner” role is used in mortgages.

Increasing access to NFT: Renters can use the NFT but cannot transfer it or alter its user-ship, which is automatically revoked upon expiration; hence renting an ERC-4907 NFT does not need OC or any collateral at all. This increases the options for people to rent NFTs and use them.

Increasing market liquidity: As The Metaverse and Web3 grow, more and more individuals will choose to rent NFTs to enjoy their advantages, including those who cannot afford to buy in-game items or virtual property or who do not choose to do so. Over time, this will significantly enhance NFT market liquidity.

Conclusion

We discussed the NFT Rental Standard ERC-4907, its operation, and the rationale for the renting system. An essential standard known as ERC-4907 does away with the requirement for collateral when lending and borrowing NFTs. NFT owners, buyers, markets, and artists will access safer and more profitable opportunities if it becomes accepted as the norm for NFT production and programming.

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How Are NFTs Impacting The Art World?

Non-fungible tokens, or NFTs, have recently piqued the interest of international artists and collectors, generating new economic activity. But much of the discussion neglects to include how NFTs change the conventional art market. The consequences of purchasing and selling fascinate collectors, galleries, museums, auction houses, and artists.

A brand-new class of crypto assets, NFTs are distinct from Bitcoin, which is fungible or interchangeable. An NFT is often an exceptional digital depiction of a good, such as a work of art, in the context of art and collectibles. It is saved on a “blockchain,” a digital database that frequently acts as a decentralized public ledger and resembles a certificate of authenticity. Artwork, music, collectibles, and other digital assets, whether tangible or digital, can serve as the foundation for NFTs. So, where do NFTs fit into the current environment of the art market? NFTs may be viewed as a fad by some, but they have intriguing ramifications for both the development of digital art in the present and the future.

NFTs Profit for Artists

Artists and their artwork follow a well-worn road, starting with galleries, which put the art with museums and collectors, then the secondary market focused on auction houses. Museums, collectors, and artists buy and sell art in galleries and auction houses. NFTs and associated marketplaces allow artists to sell directly to buyers.

NFTs affect artwork price and how galleries and artists are compensated. As new art is made and sold, the gallerist decides the price. A secondary market may develop for a seasoned artist’s work over time, increasing liquidity. When an artwork sells on the secondary market, the revenues go to the owner. The artist doesn’t benefit from price rises after the original sale. NFT contracts may contain royalty terms, so artists get a portion of any upside. Big NFT exchanges like OpenSea obey these rules, but private deals are murkier. Given that NFTs are freely launched and tradeable, a collapse of primary and secondary markets may imply buyers have more influence on market pricing.

This democratization of the art market means more buyers and sellers from within and beyond the conventional art world are trading across different platforms, so it’s more crucial than ever to be attentive and educated.

Accessibility and Cost

Blockchain technology and NFTs are altering how people view art and art ownership. NFTs frequently refer to some type of artwork, whether it be digital or tangible. Ownership of an NFT, however, does not entail ownership of the actual work of art. Non-fungible tokens are occasionally sold alongside the actual artwork and occasionally not.

With his collection of 10,000 NFTs, “The Currency,” by British artist Damien Hirst, Hirst explored the issue of ownership by having each NFT represent a different tangible piece of art. NFTs are sent to buyers, who choose between actual artwork and digital non-fungible tokens. One is destroyed, the other. Additionally, museums are considering how to employ non-fungible tokens. To raise money to restore the same masterworks, some institutions have produced NFTs of the masterpieces in their collections. As museums see NFTs as distinct forms of art, new issues about their acquisition, storage, and curation arise.

NFTs might create a new category of art purchasers. Blockchain enhances these possibilities by making fractionalized art ownership more popular and simpler to acquire and sell, even if owning art through art funds is not a new concept. Through a higher minimum commitment, traditional art funds provide each investor with proportionate participation in a collection of works of art. Blockchain makes it easier to acquire partial ownership of one or more art pieces, allowing for free secondary market trading for less money.

Communities and Collectibles

Non-fungible tokens affect more than just great art. Minting NFTs works for collectibles like baseball cards. NBA Top Shots is an early NFT in this category that lets users gather highlight videos of their favorite athlete’s dunks or jump shots.

This group of NFTs has an intriguing trait in that they might potentially benefit from a sizable fanbase or collector base that supports one another’s tastes. New artistic communities are being created by offering artists new, more direct means to communicate with their fans through non-fungible tokens. The firm Yuga Labs’ 2021 release of a collection of NFTs featuring cartoon apes called The Bored Ape Yacht Club caused a stir in the art and business realms, generating millions of dollars and attracting the attention of famous people. Members of the “Club” get access to exclusive chat rooms, receive “airdropped” deals (new NFTs sent straight to their wallets), and the ape images even serve as a virtual coat of arms for social media accounts. Historically, art communities have been established through galleries; however, NFTs also support the development of online and virtual communities.

NFTs and Art World: Conclusion

NFTs are upending the art market by altering how art is traded. Through websites like OpenSea and Foundation, digital art creators may sell directly to collectors, bypassing brokers and galleries. Understandably, auction houses would like to participate in this significant upheaval. In October, Sotheby’s, selling NFTs valued at $100 million in 2021, debuted Sotheby’s Metaverse, a specialized, exclusive NFT market. In the future, this will develop to encompass a complete range of market characteristics, such as leading offers, dynamic auctions, open editions, and the ability to mint generative artworks.