The NFT world is as exciting as it is complicated. Even after understanding the concept of how an NFT actually works, the amount of applications seem almost endless. So I decided to put together a list of segments NFT’s are most commonly used in.
The most common applications for NFT’s are:
Art
Collectibles
Gaming
Metaverses
Sport
Utilities
While many segments are controlled by 1-3 leading publishers the diversity of projects does not lack behind in any way. It's rather more the opposite - while researching for this article I found some amazing projects and services I never knew even existed. What segments will stand out? Which projects will increase their value, which will decline? Only time will tell. Currently the market is shared between segments as follows (state 2020):
Art
Art is arguably the most popular application of NFT’s. Its popularity makes it one of the most important driving forces for the whole NFT market. However with a market share of 24% its total value is just behind the metaverses segment. The popularity in the art segment is understandable if you look at the adoption of it in the public mainstream. The highest NFT ever sold was an artwork by “Beeple” aka. Mike Winkelmann. His piece called “Everyday's – The First 5000 Days” sold for a record breaking $ 69 million.
The piece is a collage of chronological placed digital artworks Winkelmann created over the course of 5000 days. The selling price places it on rank 6 of the most expensive art ever sold by a living artist. The fact that the art is not only digital but also an NFT gained the whole community a huge gain in popularity.
Giving artists the opportunity to sell their work on a decentralized marketplace offers many chances for collecting, trading and living of art. With NFT’s the artist can secure the rarity and uniqueness of each piece. In my opinion the future outlook for this segment is the most interesting to follow and I'm excited to see where it will develop in the next few years.
Collectibles
Collectibles are the first NFT’s ever created on the Ethereum blockchain. The distinctive factor to other segments is that collectibles are all unique. They make up for around 11% of the total market value at this point in time.
CryptoPunks
One of the projects in this segment is called “CryptoPunks”. Created in 2017 as the first NFT’s in history it includes a collection of 10,000 unique pixel art characters. The images are 24x24 pixels and include many punk-like characters but also some special types like zombies, apes or an alien. Today the project is holding the highest share within the collectible segment. The funny thing about this is originally all the characters could be claimed for free. Now many of them are worth millions of dollars. Sounds crazy for a bunch of pixels, right? Imagine you would have claimed a pixel image for free that is now worth a fortune. Sounds like a pretty good investment to me. If you are interested in trading CryptoPunks check out their guide “How to get a Punk?” https://www.larvalabs.com/cryptopunks#getapunk
Another famous project within the collectibles segment is called “CryptoKitties”. On their website you can not only collect kitties but it's also possible to breed them. Every action you take costs you a small ETH transaction fee. By breeding your kittens you can discover new traits and unlock new kittens.
Gaming
In the gaming sector NFT’s can secure the uniqueness and ensure tradability for in game items. By using a decentralized blockchain the developers make sure that the control over an item is no longer depended on the game servers. Items can even outlive a game and still be bought and sold over the blockchain. This makes it a popular application and the gaming segment makes up for around 23% of the total NFT market value.
Axie Infinity
The gaming segment also holds the biggest NFT project called “Axie Infinity”. Axie Infinity is a game similar to Pokemon. The items in focus are little monsters you can trade, breed and send into battle. Science this year players can also earn the AXE token which can for example be used to trade in game items. The principle of trading in game items with real money is called “pay-to-earn”. While traditional games try to ban monetary trading of in game assets, “pay-to-earn” games make use of it - and using a decentralized market like the blockchain they seem to have success doing so. The game is still relatively new and many more features will be released, but already the idea of securing part of the game over the blockchain and thus giving more control to the player base is a pretty revolutionary step for the gaming industry.
Other popular projects include MegaCryptoPolis, a city builder app and Gods Unchained, a trading card game. On their website I found a citation which summarizes the value NFT’s bring to the gaming segment pretty well:
“If you can’t sell your items, you don’t own them.”
Metaverse
As the name suggests metaverses are essentially virtual worlds, decentralized on the blockchain. In the early days of NFT, many of these metaverses mainly gained popularity for the speculative aspect of their assets. Even today big parts of the games are still of high speculative value. This is probably the reason the metaverse segment makes up for the biggest market value with 25% of the whole market. With countless assets in the virtual worlds, trades are up high.
Decentraland
Decentraland is currently the biggest metaverse and the first fully decentralized virtual world. In the open world game players can create artworks and challenges as well as trade for wearables, land and in game estate. Through the use of the "Decentralized Autonomous Organization" short DAO the developers give full control over the world to its community. Players can decide on policies, auctions, content moderation and much more.
Many of the metaverses work in the same way, with some differences in the details. Other popular metaverses include Somnium Space, which can be played in VR and The Sandbox.
Sport
While NFT’s and sport don’t seem like they have anything in common at first, the sport industry found some creative ways to use the blockchain to their advantage, making up for 13% of the total market value today. The most popular applications being trading card games and selling video clips. The whole concept brings back memories of buying and trading Panini stickers when I was a child. Now bringing this feeling into the digital era and being able to trade on a global level - someone in their IT departments deserves a raise for this.
Sorare
Sorare is a platform that lets you trade football cards. Partnering with 142 official football clubs they were able to put together the biggest football trading card game based on the NFT technology. You can even let your cards “play” in one of their hosted tournaments. To participate you need to own at least 5 collectible player cards. Prizes will be handed out depending on how your player performed in real life.
NBA Top shot
One of the most exciting projects launched on the blockchain using NFT technologies is in my opinion NBA Top shot. This website hosts weekly pack drops that contain video clips recorded from NBA games. The starter pack cost $ 9 while season one clips already resell for $ 45+
Utilities
The last segment NFT’s are used in is utility software. While the segment itself is rather small with only 4% market share, it makes up for it with great diversity in projects. The uniqueness of these projects is created by offering services that create value in their origin and are mostly not resold on secondary markets as it is very popular in the other segments like art, gaming, sport etc. Many of those projects focus on finance services, such as providing a place to give out loans for NFT’s. However it's worth taking a deeper look into the utility segment - there are many interesting projects getting launched.
What segments will stand out and which ones will decline in value only time can tell. But seeing the diversity of projects and applications people find to make use of the NFT technology is truly amazing. If you want to accompany me on this journey, consider subscribing to my newsletter, to get notified whenever I release a new article.