A report by Bloomberg Intelligence says that by 2024, market opportunities around metaverse shall go up to $800 billion.
‘Metaverse’ and ‘NFT’ have created a new buzz in the technical domain.
As per experts, the possibilities of the interplay of Metaverse and NFTs (Non-Fungible Tokens) are limitless.
In this blog, we shall discuss more:
- The Connection between the two
- What Implications NFTs & Metaverse have for the Retail World
What is metaverse?
The term Metaverse seems straight out of a sci-fi movie/novel. Indeed, so it is. The term ‘metaverse’ was first coined by author Neal Stephenson in 1992, in his novel Snow Crash. He had used it to describe a virtual world.
Today, metaverse means the digital world, where an individual’s digital self can reside, as an avatar. The avatar can move about in the digital world and interact with other avatars. Metaverse shall allow users to work, meet, game, transact and socialize in the 3D world. A replica of the real world indeed. Sounds exciting, right?
It’s a concept quite similar to what we have been doing in video games like Fortnite and Roblox for quite some time now.
What are NFTs?
NFT or Non-Fungible Tokens are unique crypto assets whose authenticity and ownership are verified on blockchains. They can be bought, sold, and exchanged in the metaverse, often with cryptocurrency. It’s due to their uniqueness that the value of some NFTs can shoot up.
One such example was digital art created by digital artist Mike Winkelmann — also known as Beeple. It was sold at Christie’s auction house in 2021 for a record-breaking $69.3 million. The NFT platform OpenSea had exceeded $1 billion in sales in the first seven months of 2021.
One should know that although NFTs use the same blockchain technology as cryptocurrencies, they aren’t a type of currency. NFTs are item-specific. The item could be anything digital, such as a painting, video game content, music, or any such thing that can be associated with a token. It’s a positive change for digital assets and also digital artists have a huge scope to monetize their work.
Honestly, speaking, it’s likely that NFTs will become the optimal currency of the metaverse soon. Indeed, the applications and potential of NFT seem endless and that’s what makes it more attractive.
Types of NFTs
Anything digital can be an NFT and that leaves a lot of room for imagination. A popular example of an NFT is from Twitter, CEO Jack Dorsey, who had sold his first tweet as an NFT at more than $2.9 million. However, some of the most common types of NFT include:
- Trading Cards
- Memorable sports moments
- Domain names
- Game accessories
- GIFs/ memes
The Connection Between Metaverse and NFTs
The connecting dot between metaverse and NFTs is related to the digital assets and how they are given value. Using the metaverse, users can showcase a variety of digital forms of art and property, and NFTs, will allow putting a price on that content along with proof of ownership.
The Trend of the NFT Marketspace
Whether retailers have a future in NFTs largely depends on the brand and the target market. For example, millennials are the most likely generation to engage in NFT purchasing, with 42% of respondents saying that they collect NFTs. It’s followed by Generation Xers of whom 37% collect NFTs.
The irony is, despite Generation Z occupying a powerful part of the retail market; they are least likely to be involved in NFT collecting beaten only by the baby boomers. Only 4% of the Generation Zers said that they collect NFTs. The lower percentage is primarily because of limited purchasing power and lack of understanding. However, the catch here is in another survey 30% of respondents from Generation Z said they are likely to buy NFTs in the future. Hence, for those retailers who are involved in the NFT technology, Generation Z seems a promising market in the near future.
Source: Morning Consult
How Retailers are Experimenting with NFT?
During the Q3 of 2021, NFTs generated over $10.67 billion in trading volume, which is a 704% increase from the previous quarter, and a 38,060% increase year-over-year.
It is apparent from these numbers alone that the popularity of NFTs is on the rise.
The first instance of a fashion brand foraying into the world of NFTS was when fashion house The Fabricant had sold a digital dress worth £7,500 in 2019. Since then, many brands have embraced NFTs for brand awareness or to explore new avenues of profit.
17% of fashion brands have already worked with NFTs.
In 2021, when Adidas stepped into the world of digital art, their debut collection in metaverse comprised 30,000 NFTs and each of these promised the buyer physical accessories that would become available in the future. The NFTs had sold out within hours, and Adidas had made a profit worth $22 million in sales.
In the latter part of 2021, BoohooMAN became one of the major fast-fashion retailers to have branched out to NFT. They had planned to give their NFTs for free to eight lucky winners. Such an approach differed from that of Adidas because BoohooMAN used NFTs as a marketing tactic and not just a revenue stream.
Also, Gucci had auctioned its first NFT and issued its first-ever virtual sneakers. They were selling the 3D animated kicks for $12 a pair. Along with staging virtual brand activations on the Roblox platform and life simulation game The Sims, the brand had also created assets for Pokémon Go and Animal Crossing.
Interesting Read: The fast-food chain Taco Bell had released a digital collection in March 2021. They had tweeted that they were selling Taco-themes, GIFs and images in an NFT marketplace. It was soon found that the demand for digital tacos was pretty hot. The entire collection was sold out in just 30 minutes.
Are NFTs the Future of Retail?
McKinsey’s State of Fashion 2022 report has mentioned that NFTs are likely to become mainstream for retailers in 2022. With the rapid growth of the market and the plethora of profit and brand recognition opportunities that digital sale of assets offers, it’s clear that NFTs will become the staple in the futuristic retail world.
However, though the buzz around NFTs will continue to deepen since consumers are likely to spend more time interacting online, they will seek opportunities for co-creation and will also expect that brands should engage with assets in a format that is native to the spaces that they inhabit, instead of content that repeats across channels.
Hence, the best approach now is to wait and watch and not take the leap of faith right away. The time is now most ripe to experiment, to learn, and to be bold. Taking baby steps is the way forward. Instead of just landing on METAVERSE, let’s just glide in there!
Dapp Industry Report: Q3 2021 Overview (dappradar.com)
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