How much could a cluster of pixels possibly be worth? More pointedly, why is it worth anything at all? The explosion of NFTs and their accompanying marketplaces have left many baffled, incredulous, and deeply skeptical. But while non-fungibles may be fetching eye-popping, eyebrow-raising valuations, there is a logic to how — and when — they create value. By creating a system of verifiable digital ownership, NFTs fundamentally changed the market for digital assets, creating the possibility for new types of transactions. 

Getting Familiar with NFTs

If your first week back at work was anything like mine, the tone for 2022 has most definitely been set. My exposure in the last 7 days to the world of software development has been enormously exciting. It has been a constant whirlwind of new lingo that has left my Google search bar inundated with new definitions to get familiar with. One of these Google searches entailed the future of NFTs and their relevance in our world today. For those of you wondering if I am referring to a new basketball or football term, let me shed some light on what it means to own, trade, and create Non-Fungible Tokens.

Due to the creation of blockchain and the evolution of cryptocurrency, we are able to start re-assessing the way the economy dictates the monetary value of commodities and assets. We can also begin to truly leverage/understand the power of crowd “hype” validation. 

During the pandemic, we were exposed to the rapid rate of change of popular opinion (spread predominantly through tech platforms I might add).  We were also exposed to what the possibility of digital decentralisation could bring to the economy.

It’s easy to see why NFTs inspire both excitement and deep skepticism. They’re a completely novel asset class, and we don’t see new asset classes appear that often. But what drives the value of an asset that’s really just a digital token people can pass around? In order to tackle this question, one needs to understand what NFT’s actually are, and what type of market opportunities they enable. 

What are NFTs? 

As the name “non-fungible” suggests, a single NFT is a unique, one-of-a-kind digital token or coin. They are stored on public-facing digital platforms called blockchain. Due to the fact that they are able to be traced from creation, extremely difficult to counterfeit, and easy to transfer, they provide the opportunity to create markets with a variety of different goods. 

The Power of NFTs

In some form, NFTs are a way for people to showcase what they believe in, and what they see value in. In a small way, this “token” becomes an extension of self. According to Luno, South Africa placed 12th for the highest adoption globally. NFTs provide a marketplace for artists to truly retain their creative signature (whether it be music or pixel) and provide accessibility to a larger number of people. The future of NFTs really lies in the earning potential for people of all income-earning brackets.

The combination of a crypto and NFT marketplace affords the modern investor a diversified portfolio while benefitting deserving creators and disempowering the average broker. There are currently 1.4 billion unbanked people in the world whose opportunities for asset management are significantly changed with the access to NFTs. According to our CFO, Willem Fourie, “whilst the possibilities of NFTs are limitless, they must be associated with some sort of tangible value in order to appeal to the majority of the population”.

It is hopeful to know that the pioneers of blockchain and cryptocurrency developed the technology with the intention to decentralise, democratise and uplift global citizens. The future of NFTs lies in the awareness of its owners/investors and creators alike, and the intention to create innovative markets that can be accessed by all.

About SovTech

SovTech is a Custom Software Development and Blockchain Development Company. We have extensive blockchain expertise and one of the biggest pool of blockchain developers in Africa and The UK. Innovate on blockchain technology with SovTech’s Blockchain Lab. 

Contact SovTech today for a free quotation on software or blockchain services today! 

Written by Devon Hayes