Non-fungible tokens (NFTs) have exploded in popularity recently, with sales topping $25 billion in 2021 alone. Much of this growth is linked to the rise of the metaverse, a network of virtual worlds focused on social connection. As the metaverse continues to expand, NFTs are poised to play a central role. Here is an overview of how NFTs will shape the future of NFTs in metaverse.
NFTs Create Digital Ownership
A key feature of NFTs is that they enable verifiable digital ownership. An NFT acts like a digital certificate of authenticity and ownership for any unique asset like artwork, collectibles, real estate, avatars, or items in video games. This proves invaluable in the metaverse, where much of the content and assets will be digital.
For example, someone may purchase a unique digital statue to display in their virtual home in the metaverse. The NFT verifies their ownership of that statue. No one else can display the same statue unless they also own the associated NFT. This creates digital scarcity, value, and status symbols comparable to real-world luxury goods.
Virtual Fashion and Accessories
As virtual worlds evolve, users will demand ways to customize and distinguish their online avatars. NFTs make this possible by powering virtual fashion and accessories.
Clothing brands like Nike and Gucci have already released limited edition “digital wearables” as NFTs. Individual designers are also creating and selling unique digital clothing and items. As avatars become more photorealistic, demand for virtual fashion will likely grow. NFTs enable users to digitally “wear” exclusive items that showcase their style and status.
Providing Identity and Reputation
NFT profile pictures, known as PFPs, have also emerged as popular digital status symbols. By setting a PFP NFT as their social media avatar, users can showcase affiliation to an exclusive group or community.
PFP collections like Bored Ape Yacht Club already provide access to member benefits. As the metaverse expands, PFPs and NFTs could evolve into full reputation systems. Ownership of certain NFTs may unlock powers, abilities, and trust in virtual worlds. NFTs can encode reputation vouching for someone’s credibility across the metaverse.
Virtual Events and Experiences
The metaverse promises new forms of entertainment, collaboration, and socializing. NFTs will support thriving virtual economies around these experiences.
For example, someone may purchase an NFT ticket to gain access to an exclusive virtual concert or meetup. Or a content creator may issue limited edition NFTs allowing holders access to a private virtual forum. As virtual events become more commonplace, NFTs will enable organizers to manage access while rewarding holders with verifiable ownership status.
Web3 and the Creator Economy
The metaverse extends the growing creator economy by giving digital artists, musicians, influencers, and gamers new ways to connect with fans. These creators can leverage NFTs to offer exclusive perks and content to their biggest supporters.
For example, an NFT could grant access to a private discord server where holders can chat directly with a popular Twitch streamer. Or it could contain the IP rights and royalties to a piece of digital art. By tapping into Web3 technology, NFTs enable new opportunities for creators to monetize their work and deepen bonds with digital-native supporters.
Gamified Experiences and Play-to-Earn
Gaming drives much of the activity in the metaverse, and NFTs play an integral role. Digital collectibles in the form of NFTs are changing how players interact with games.
NFTs enable true digital ownership of in-game assets. This gives players control over items they obtain or create within gaming ecosystems. Some games even incorporate “play-to-earn” models where players can earn income by acquiring rare NFT items of real value.
As gaming bridges deeper into the metaverse, expect to see continued innovation in NFT functionality and integration. NFTs that provide utility within games – like boosting abilities or unlocking content – are already gaining popularity and sparking new gamified experiences.
Unlocking Web3 Services
Beyond digital content, NFTs can provide access to Web3 services. For example, an NFT could double as a membership card granting access to exclusive DAOs (decentralized autonomous organizations) and other groups.
Holding certain NFTs may also grant governance power and voting rights over platforms and protocols. As the metaverse bridges growing numbers of users into Web3 systems, NFTs will serve as an identity and access layer enabling new models of community coordination.
Challenges for Widespread Adoption
While the opportunities are vast, challenges remain for widespread NFT adoption in the metaverse:
- Volatility – Due to speculation, NFT prices and demand can be highly volatile. This may limit their use for mission critical functions until the market matures.
- Interoperability – Seamless NFT use across different virtual worlds and platforms requires further coordination and standards.
- Accessibility – The current high transaction costs on NFT marketplaces like OpenSea limit accessibility for many users.
- Fraud – Digital assets lead to increased risk of fraud, fakes, and scams that could sour user trust.
However, as solutions emerge to address these concerns, NFTs show immense promise in shaping the economic and social fabric of the metaverse. Their ability to create verifiable digital ownership and new models of access will be transformational.
The Future Looks Bright
NFTs are still in their infancy, but the value they provide in digitally replicating scarcity and ownership is undeniable. As virtual worlds become increasingly important spaces for work, play, and socializing, NFTs will be at the forefront.
The metaverse offers the potential for economic opportunities at a global scale never before possible. NFTs are poised to power new creator economies, gaming experiences, digital goods markets, and gateways to exclusive communities.
While some speculative hype exists today, this innovation is just getting started. The foundations are being built for NFTs to provide identity, status, access, community benefits, entertainment, and much more in the open and immersive environments of the metaverse. The future of NFTs in metaverse looks bright for NFTs to enable the ownership, incentives, and security that will drive adoption of persistent virtual worlds.