NFT: Unlocking Crypto for the Masses

The world is waking up to NFTs as an asset class. Jack Dorsey’s first tweet, Grimes’ artworks, or a clip of Lebron dunking — A-List celebrities, artists, and businesses have started to dip their toes in this new technology.

What are NFTs?

For the uninitiated, Non-Fungible Tokens (NFTs) are digital assets with blockchain-managed ownership. Amongst many things, blockchain technology is now unlocking supercharged utilities for digital goods and we at Woodstock are more than excited to be a part of this growth journey.

History of NFTs

NFTs technology demonstrated a proof of concept and achieved a super growth phase back in 2017 with the popular game CryptoKitties. The game which featured ‘breedable’ unique non fungible virtual kittens achieved its peak of 17,500 DAU before the crypto market crash. As the dust settled down, the technology didn’t and silently great projects like OpenSea and Terra Virtua were being built that would soon lead the sector into mass adoption.

Christie’s first-ever digital-only art piece sold at an eye popping price tag of $69M

Why are NFTs exciting?

NFTs have the following attributes which supercharges their utility:

  • Standardization: By representing NFTs on blockchains, developers can build common, reusable, inheritable code. These include basic functions such as ownership, transfer, and simple access control.
  • Verified ownership: Blockchain provides immutable ownership records
  • Control over secondary transactions: Royalties on the resale of art, music, books, etc.Event hosts can ban secondary ticket sale for exclusive events
  • Fraud protection: Fake items eliminated as the origin is instantly verifiable. An important feature for tickets, gaming items, and art

Use Cases

Some exciting use cases of NFTs include Gaming, Digital Art, collectibles, and digital content. We see promising applications like the fan caves, community games, trading cards and collectibles like the limited edition NFTs launched on the 50th anniversary of Mohammad Ali’s ‘Fight of the Century’.

However, the true use cases of this simple yet ground breaking technology is wide with endless possibilities. For instance, Persistence.one tokenizes unique physical assets on the blockchain. Unlocking the potential of NFTs as collateral, the flagship app — Comdex facilitates business financing to increase the speed and efficiency of real-world international trade. Recently a Banksy artwork was put up in flames and sold in an immutable scarce digital form, minted by the NFT protocol SuperFarm.

Market Numbers

NFTs have just started gaining mainstream attention as the volumes just made an aesthetic J-curve. The space is still nascent and is at the spot where DeFi was in 2019.

Source: NonFungible.com

At Woodstock, we started actively looking for projects that have the potential of being category leaders with early Investments in TerraVirtua, Mintbase and Persistence. In 2021 we expanded the portfolio to SuperFarm and Ethernity Chain.

NFTs are on the road to mass adoption and we at Woodstock Fund are positioning ourselves to ride the wave with active investments in the space.

We have covered our NFT thesis in the Woodstock Blog post.

Author: Kratik Lodha

Infographics: Deepa Vishwanathan

Disclaimer
The views, information, and opinions expressed are solely those of the authors in their personal capacity and do not reflect the official position or views of Woodstock. The authors have taken the utmost effort to ensure the research is up-to-date and accurate. However, no warranties or representations, express or implied, are made as to the timeliness, completeness, or accuracy of the information. Readers are advised to obtain independent professional advice before making any investment decisions or investing. Woodstock does not endorse the views expressed by the authors. Under no circumstances shall Woodstock, its affiliates, partners, directors, employees, or advisors be liable for any loss suffered by a reader on account of the views, information, and opinions expressed herein.

References

  1. Banksy burnt and minted
  2. Christie’s auction
  3. Jack Dorsey’s tweet

Woodstock is a multi-asset investment fund focused on investments in emerging technologies. Website: woodstockfund.com

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