NFTs have had a crazy rise in recent years, but has the shine worn off? Or are we only just beginning to scratch the surface of their potential? 

There’s no doubt that NFTs continue to be the subject of hot debate, especially as we move towards broader knowledge and adoption, and more use cases are explored. We may be looking back on the days of flipping digital assets for crypto gains, but there’s no doubt that NFTs have made a solid impact on many industries, from arts to gaming and investing. Is the future of NFTs sustainable? We explore what digital assets might look like in the next few years, and the factors critical to long-term success. 

Education, simplified tech and UX

Realistically, the value of digital assets can only be fully realised with mass acceptance and adoption. There’s still a way to go on the education front, particularly when it comes to navigating the perceived complexities of blockchain tech that sits behind NFTs. Until more user-friendly interfaces, simplified access and transaction processes are realised, then the bridge connecting the existing digital divide between natives and newbies remains unbuilt.

Says Josh from NFT4Noobs: “UI/UX is the biggest obstacle right now. It’s still incredibly difficult for the average person to simply buy a cryptocurrency – it’s arguably even harder to purchase NFTs. I strongly believe UI/UX will improve in a similar fashion to how when the internet was introduced. The UI/UX was initially terrible and needed improvements in order to achieve mass adoption.”

Focus on community engagement and governance

While we hear so much about NFTs changing the game for, well, the gaming industry, creators are also reaping the rewards that come with the community building aspect of NFTs. “NFTs can be used to create digital communities around artists, where token holders have a stake in the artist’s success,” explains Josh. “This can lead to enhanced community engagement, crowdfunding opportunities, and collaborative decision-making. Token holders can participate in voting on future projects, gaining a sense of ownership and connection with the artist’s work.”

This is not to say traditional brands are left out in the cold.  Users effectively want to invest in value, which is a core pillar of marketing and customer loyalty. Brands have an incredible opportunity to test the space now, build community engagement, and gain valuable audience insight that only comes from creating a space that encourages collaborative decision-making and an ability to directly converse with a brand in an intimate, virtual setting. As a reward for audience insight, brands are in a stronger position to maintain audience trust with incentives that enhance the customer experience, such as access to exclusive discounts, events, or priority customer support. 

Legalities around IP and copyright 

For creatives and brands, NFTs present opportunities to tokenise intellectual property. Says Josh: “Artists and creators can tokenise their intellectual property and sell or license it directly to interested parties. This allows for more flexible and efficient ways of monetising intellectual property assets.”

That said, it’s important that creatives and brands seek proper legal advice to ensure that they’re comprehensively covered in copyright, trademark and distribution policies in NFT sales agreements. “The most pressing challenge regarding IP and copyright of NFTs is there is not always clarity or consistency in the industry associated with the terms attaching to the NFT itself and what specific rights are and are not granted to the purchaser of NFTs,” explains John Bassilios, partner at Hall & Wilcox. 

“One way that this could be achieved is that the industry itself creates standard terms and conditions that attach to NFTs with respect to copyright that can be used by creators. There could be different standards based on the different rights that a creator may want to grant to purchasers of their NFT.”

The sustainability question

Blockchain tech has come a long way in a short space of time when it comes to sustainable operations, but NFT minting processes are still quite energy intensive, especially with proof-of-work consensus mechanisms. Many would argue that the future of NFTs does depend on whether we can transition completely to more sustainable proof-of-stake (PoS) mechanisms instead or even look at mining with renewable energy. 

Final thoughts

While NFT activity has slowed in recent months, it’s important to step back and acknowledge that digital assets – like any emerging tech – are evolutionary, and the market is still very much in its infancy. Making the tech more accessible is just one piece of the puzzle. Regulators will continue to work on frameworks to protect creativity of brands and creators. Brands and creators themselves will learn more about tapping into the increasingly virtual-focused behaviours of audiences to continue to build loyalty. Developers will continue to innovate for more sustainable solutions in the space. If all that can be achieved, then the future looks bright indeed.