Experts believe that the 2021 NFT hype cycle has completely backfired and that NFTs will lead the next generation of consumer brand engagement in 2023, drawing new audiences into the meta universe.
While the non-token exchangeable token (NFT) market is in bearish territory, several key industry players believe that 2023 will provide an opportunity to build new infrastructure in preparation for the next cryptocurrency bull market.
NFT Facilitates Brands’ Transition to Meta-Universe
Forrester, a business growth consultancy, suggests that by 2023, non-exchangeable tokens (NFTs) will be a key touchpoint for brands in the meta-universe NFTs are unique digital tokens that constantly record the origin and ownership history of a physical or digital asset on the blockchain A NFT is a unique digital token that records the origin and ownership history of a physical or digital asset on the blockchain at all times.
While the vision of the meta-universe is not yet fully defined or constructed, venture capitalist Matthew Ball offers a definition of this meta-universe in his 2022 book Metavieworld. Users with individual presence and a continuum of data, including identity, history, rights, objects, messages, and payments.
As companies such as Samsung, Nickelodeon, Gucci, and Nike strive to revamp their brands and attract new revenue streams in 2022, corporate meta-universe ambitions could grow steadily in 2023.
Brands will continue to offer exclusive NFT benefits
At the NFT Conference. NYC 2022 in New York, Jeff McDonald, director of advertising agency Mekanism, said brands are offering exclusive benefits to web3 customers, guaranteeing financial incentives and bragging rights. Coffee chain Starbucks has launched an NFT-based brand loyalty program. Entertainment giant Nickelodeon is betting that Rugrats’ nostalgic profile picture will attract longtime fans to its platform NFT Recur Forever Inc.
Sports and leisure brand Nike is using a futuristic hybrid model that allows wearers of physical trainers to equip their avatars with the same gear. This model is likely to be popular by 2023, and Polygon’s second-tier solution is proving attractive for enterprise applications.
At the NFT conference, the NYC Wall Street Journal reported that many brands are planning for the future of web3.
NFT also provides marketers with a new channel to monetize and promote their products. Chip maker Pringles has released an NFT MP4 video as part of its CryptoCrisp collection in 2022. International fast food restaurant chain McDonald’s launched its NFT Collection in the U.S. to mark the December 2021 reintroduction of McRib products.
Art will explode with unprecedented autonomy
Venture capitalist and Patreon supporter Valentina Zakirova believes that by 2023 NFT art makers will have unprecedented autonomy. As a result, artists will be able to fully monetize their work without having to pay an intermediary.
Band Royalty, a tokenized music platform, will add artists to its NFT-based song catalog of approximately 3, 000 songs in 2023. Band Royalty rewards artists each time a song is played in a playlist.
The bear market in 2022 tested the resilience of tokenized art; Bipple, author of the groundbreaking NFT work Everyday 5000 Days, which sold for about $70 million in 2021, had to settle for another $252.000 at Christie’s auction in mid-2022, 000 had to settle for $252, 000. To combat declining interest, artists can also utilize the concept of fractional NFT art. Buyers can purchase NFTs, which are part of the ownership of the artwork, at a lower price.
Christie’s 2022 token art sales of $5.9 million were 96% lower than its 2021 token art sales of $150 million. Earlier this year, Christie’s launched a venture capital arm focused on web3 . So far, it has invested in layer zero, a blockchain interoperability startup.
Decentralized financial applications for NFTs are on the rise.
With broader business investments in 2023, non-interoperable tokens in the decentralized finance (DeFi) space could become popular.
Stephen Boykie Sidley and Simon Dingle, authors of DeFi’s Beyond Bitcoin’s Beyond Book: Decentralized Finance and the End of Banking, argue that users could one day offer NFT assets as liquidity in the liquidity pool of a decentralized exchange. They could borrow cryptocurrency against this NFT and invest it in other income-generating products.
Platforms such as NFTfi already offer loans against NFT collateral. The platform pays the loan in ETH and if the borrower defaults, the NFT is passed on to the lender.
Dr. Jane Thomason said NFTs are also used to tokenize licenses and academic documents; Thomason is chairman of Kasei Holdings, a U.K.-based digital asset company.
NFT-based valuation could also be a major innovation in 2023. Earlier this year, Charles Hoskinson emphasized the importance of decentralized economic identities. Such identities can help realize the economic potential of those excluded from traditional financial services.