🥛I spent 200 hours researching NFTs. Here's my conclusion....
- Writer Milk Man
- September 27, 2022
- •4 Min Read
Shhh... you hear that?
That's right. Silence. The hype frenzy around NFTs has quieted down.
Last year, every week there was a new NFT news story.
Beeple sells for $69M ! OpenSea is worth billions! Punks! Apes! Gary V! NBA Top Shot!
But the tables have turned. OpenSea trading volumes are down 80-90%+ from the peak.
Many charts are in a downturn right now. NFTs. Stocks. Crypto. Kevin Spacey fans.
So, is this the end of NFTs? Were the skeptics right? Were they just hype...or are there real use cases for NFTs?
Let's find out. In this month's DEEP DIVE
Today's edition is sponsored by thirdweb. They provide tools for companies and developers to build web3 apps. Big brands like Coinbase & Shopify all use them.
So we asked thirdweb to tell us what their customers are doing with NFTs. Are there any real use cases?
Here are 4 of the best use cases that we think back up the hype for NFTs:
USE CASE #1: REWARD FOR SUPER FANS
Have you ever heard of the concept of “1,000 true fans"?
It’s a term created by Kevin Kelly (creator of Wired Magazine)
Kevin's idea is simple. 1000 true fans says that any creator (eg. a musician, or blogger) can "make it" if they find 1,000 true fans who are willing to pay $100/year.
1,000 fans x $100 = $100,000 per year.
It doesn’t make you rich, but making six figures doing what you love is the dream for millions of creators, musicians, artists, etc..
A true fan is someone who will line up in the cold just to get a picture with you. They buy your crappy t-shirt merch. They know your inside jokes.
NFTs are 'true fan' technology. It gives them:
- A status symbol - Proof I was here early & I’m one of the top 1,000 fans
- A membership card - You can offer exclusive perks/access to your NFT holders. It's like a digital back-stage pass to your top fans.
- A way to “invest in your success” - The same way people buy "rookie cards" for athletes. Buying someone's NFT early on is an investment. If you buy Taylor Swift's NFT, and then she becomes a superstar, your exclusive 1 out of 1000 NFT is going to be worth a LOT more than you paid for it.
Today, creators try to use platforms like Patreon & Instagram to reach and reward their true fans. But NFTs are better.
You can't re-sell your patreon monthly membership when the creator takes off. You can't tell who your top 1000 fans are from your instagram followers.
Here's a real-world example: The VeeFriends NFT collection.
Gary Vee’s NFT project serves as a membership card, which gives you access to his annual in-person conference.
It’s also a status symbol amongst his fans and can be resold as Gary’s fan base grows because the only way to join the club is to buy an NFT.
He apparently made $51M the first week selling them, and another $10M+ in royalties on secondary sales. Atta boy Gary!
USE CASE #2: DIGITAL COLLECTIBLES
What is small, unique, and gets nerdy guy's all hot and bothered?
No, not Mila Kunis.
That's right. The collectibles market is a $400B+ market full of cards, stamps, coins, watches, and more. And it's projected to grow to $630B by 2031.
NFTs are a new type of collectible. A digital one.
We have digital mail (email), digital conversations (text messages), and digital offices (zoom/slack).
Do you really think we won’t have digital art?
Before NFTs, you couldn't 'collect' a digital art. There was no way to prove you bought it, and it's yours. Anybody could copy/paste a picture.
But with NFTs, a digital artist can create art, and sell it to collectors who own it using an NFT as the certificate of ownership & authenticity.
And it's already been happening in the real world today:
- Anonymous digital artist Pak has sold more than $300M in NFTs
- 19 year old Victor Langlois, aka Fewocious, has sold over $25m in NFTs
- Famous Japanese artist, Murakumi, created Murakami.Flowers which has sold over ~$25m
And thirdweb is teaming up with artists and brands all over the world to drop their own collectibles.
Last week, they helped the Chicago Bulls - one of the most iconic basketball teams of all time. Home to the 2nd best player of all time: Michael Jordan.
The Bulls have had the same logo since the 60s and wanted to spice things up. So they teamed up with 23 web3 artists to recreate the logo with their own styles. Each would be turned into an NFT that would be auctioned off to fans.
It was a big hit! The Chicago Bulls had a successful drop. The fans got their first taste of Web3.
USE CASE #3: MEMBERSHIP AS AN ASSET
I’ve always been fascinated by people who pay $20,000 to get into a country club, SoHo house, or private members club.
So I did it. I bought a $5,000 a year membership.
To be honest, it was cool.
I got access to an exclusive space. I met other interesting people. And everyone was open to meeting other members (not awkward to approach)
But after a year, I moved, and my membership card was useless. The fees I paid went down the drain. Because after all, they are fees.
But if this was an NFT membership, I could have sold it when I moved.
That's a cool idea. NFTs turn "memberships" into tradeable assets. NFTs lets you “invest” in a social group, rather than just paying fees for access.
And big brands are turning to thirdweb for help to do exactly that. Check out what they did with Fnatic.
Fnatic is one of the biggest esports teams out there. And they wanted to develop tiered membership NFTs that would unlock access to exclusive events, products, and one-of-a-kind drops.
What I like is that thirdweb made it easy for normal people (muggles) to be able to use this new magic. You didn't need a wallet, just your email. You didn't need to pay with crypto, you could use your credit card. And they used the gasless transactions feature to make sure there were no extra fees.
USE CASE #4: VIDEO GAME ASSETS
There are billions of dollars spent on in-game items. In 2020 alone, there was $54b spent on digital clothes and virtual goods.
To be clear, those skins don’t actually do anything in the game. (just like Nike's don’t make you run faster, and Louis Vuitton doesn't make you more french)
These are just status symbols. (aka ways to show off)
But those items are owned by the game. They can kick you out of your account, and you can't take those items into other games.
In the future, games will issue items as NFTs. Those are things you OWN. You can sell them. You can bring them into new games. You can rent them out to other players.
Gaming giants like Ubisoft and Epic have already dipped their toes into NFTs.
And it seems like a new web3 gaming company is popping up every day - they have raised ~$7b this year alone.
Alright - I'm 3 glasses of milk, and 4 use cases into this, but I've got to stop before my editor unplugs my computer.
As you can see - NFTs are here to stay. They are a new file format. Like email, or mp3, or pdf. They are an incredible way to let you own a digital thing.
Sorry for the NFT haters. I think they are here to stay. And the use cases we showed today are just the ones we see now. Five years from now, I think we will see many more.
And if you want to drop NFTs to your customers or fans - thirdweb is happy to help you think through what to do & how to do it.
Seriously, hit reply to this email if you want a direct intro the thirdweb team and we'll make it happen!
For now, that's all. If you have a vote for what you want us to deep dive into next (DeFi? Stablecoins? Web3 gaming?) - just let us know.
Until then, stay thirsty.
Walmart is launching two new metaverses in Roblox - Walmart Land and Walmart's Universe of Play. Users will be able to buy Walmart products (fashion, style, beauty & entertainment) in a new interactive way.
Mastercard is launching a new debit card that can be fully customizable with an NFT you own. Milk Road x CryptoPunks debit card coming soon? 👀
Australia announced a plan to pilot a CBDC (central bank digital currency). The pilot will end by mid-2023.
MEME OF THE DAY
That's a wrap for today. Stay thirsty & see ya tomorrow!
If you want more, be sure to follow our Twitter (@MilkRoadDaily)
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
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