Summary List Placement
A closet of virtual dresses, a gallery of crypto art, a wallet of digitized documents — the future may be filled with non-fungible tokens.
Non-fungible tokens, or NFTs, are inescapable lately, from Elon Musk’s foray into music to NBA’s virtual trading cards. NFTs are unique digital assets stored using blockchain technology that cannot be destroyed or duplicated. Recently, there have been several high profile sales of NFT art, with some pieces selling for millions.
However, the potential for NFTs go far beyond just art. To learn more about the future of NFTs, we talked to eight Gen Z VCs. They told us the industries they believe will be revolutionized by NFTs next:
Contrary Capital’s Saneel Sreeni: Gaming
Saneel Sreeni, an investor at Contrary Capital, believes NFTs will fundamentally change the gaming world.
“One of the biggest issues with the gaming economy is that when players own assets in games, they can be taken away anytime by the game developers,” he said.
People spend hundreds of dollars on things like Fortnite skins, yet those assets are usually stored in a database owned by the company. If the company shuts down, users risk losing virtual assets they’ve paid for.
By creating in-game assets (like weapons or skins) as NFTs, the user guarantees their assets aren’t subject to the game makers’ decisions.
Sreeni says players can also use NFTs to ensure they are the only owners of that asset, creating opportunity for secondary markets. This way, he says, users can “more easily give it away or send it to someone or put it up for auction.”
F-Prime Capital’s Nisha Rangarajan: Gaming
Nisha Rangarajan, an analyst at F-Prime Capital, says NFT gaming assets could create a more cohesive experience across platforms.
“For example, a skin purchased in Fortnite could be used in Roblox and then sold to another user who uses it in Minecraft,” she said.
Rangarajan added that NFTs could act like rewards for the earliest users of a game.
“An NFT based asset could auto-upgrade after a year of holding it, thus rewarding those who bought into the game’s success in the early days,” she said.
Games like Neon District and Decentraland already use NFT technology, but Rangarajan says to look out for mainstream game developers getting in on the action.
Basecamp Fund’s Keiran Simunovic: Fashion
“NFTs are the key to bringing fashion digital,” Keiran Simunovic, an investor at Basecamp Fund, said.
Imagine buying virtual pants, shirts, dresses — and then simply editing them over a photo and posting to Instagram. That’s the goal of startups like XR Couture, The Dematerialised, and Dress-X. These companies sell digital clothes as NFTs, which ensure the clothes cannot be duplicated and allows brands to create scarcity.
Major apparel companies have already thrown their hat in the ring: Nike filed a patent in 2019 for CryptoKicks, digital sneakers you can wear and “breed” together to create new shoes.
Simunovic says NFT fashion items will be just as important — if not more important — than what you own in real life.
“The clout you carry online is very soon going to outweigh the clout you carry in physical form,” he said.
Lerer Hippeau’s Meagan Loyst: Creator economy
“We’re living in the era of the creator,” Meagan Loyst, an investor at Lerer Hippeau, said.
“This next iteration is NFTs, enabling anyone with an audience to monetize in a new form, through artwork,” she says.
Since NFTs are often sold auction-style, creators can potentially sell their content for thousands of dollars. Loyst gave the example of Li Jin, a prominent VC with over 50,000 Twitter followers who recently sold an NFT art piece for about $25,000.
Antler’s Ollie Forsyth: Creator economy
Ollie Forsyth agreed with Loyst: NFTs are a “game changer” for creators.
“Creators are now able to cultivate a closer relationship with their super fans by allowing them to buy into their respective creativity,” Forsyth, a global community manager at Antler, said.
Expect big changes sooner rather than later.
“In the last few weeks, they have surged in popularity,” he said. “It’s hard to keep up with the rapid pace of activity, even being in venture.”
Decibel’s Alex Chung: Music
It’s only a matter of time before NFTs rock the music world, according to Alex Chung.
“There’s been a tremendous amount of discussion with NFTs for musicians and how they will enable musicians to take more charge of their work rather than splitting their earnings with a record label,” Chung, an MBA intern at Decibel Partners, said.
3LAU was the first artist to sell crypto-albums earlier this month, making a whopping $11.6 million. The auction-style bidding for NFTs theoretically means the price better captures the value his music has. So, instead of earning a fraction of a cent per stream, he made millions.
Other musicians followed suit, with Kings of Leon releasing their new album as an NFT and Grimes selling digital art for $6 million.
Panoramic Ventures’ Paraj Mathur: Document verification
Imagine having an NFT passport, NFT diploma, NFT driver’s license, NFT medical records — the list goes on.
NFT documents may be the future.
“Documents that are unique to the holder and require constant verification will soon be minted as NFTs and have frictionless automatic authentication,” Paraj Mathur, a seed investor at Panoramic Ventures, said.
Since NFTs use blockchain technology as their record-keeping backbone, you can clearly discover who owns which NFTs at any moment. If important documents were minted as NFTs, then you could potentially verify the documents easily yourself without a middleman.
Mathur acknowledges there are flashier uses for NFTs — digital passports aren’t nearly as fun as “breeding” virtual sneakers — but he believes NFT document verification has massive potential.
Lux Capital’s Rahul Rana: Patents and intellectual property
Rahul Rana says that NFTs can possibly help with patents and intellectual property (IP).
“Potentially, NFTs can give more power to the scientists, researchers, businesspeople when it comes to licensing and selling IP,” he said. “It gives them more control of the pricing or terms of the sale.”
Instead of relying on lawyers and universities to help patent their technology, Rana says inventors can possibly skip the middlemen by directly minting their own NFTs.
But he’s quick to qualify that lawyers and patent experts are still incredibly helpful, so scientists and others may still need them when protecting their IP.