Introduction

Cryptocurrencies are a broader category of digital assets. Their origins come from incentivizing honest actors to maintain a publicly distributed and verifiable ledger. Bitcoin is the genesis asset that marked the start of the concept. While it is heavily decentralized and meets the criteria of sound money, there are no misgivings that the Bitcoin network has earned the title of Blockchain and all the libertarian features assigned to it.

Bitcoin is a collateral asset that enables tokenization and derivative value creation. Akin to the days of sound money where physical cash was redeemable in gold.

However, there are limits to a base collateral asset that can be utilized. Gold wasn’t entirely practical to barter with, which facilitated a derivative we all know as physical cash that once upon a time was redeemable for gold.

The advent of Ethereum sought to address some of the practical limitations of Bitcoin. While Bitcoin stores value, alternative networks hosting decentralized applications capture value and enable it to be utilized more efficiently.

How value capture has evolved is numerous. The mechanics of digitizing traditional financial principles are still very much in their infancy, but one thing to come out of the quest to capture value is NFTs.

Much can be said about NFTs, not just on a technical level by assuming new token standards (ERC-721 and ERC-1155) but by how these tokens play by a different set of rules within an Ethereum Virtual Machine runtime environment.

Storing metadata on-chain with the NFT as proof of ownership is an innovative function. Still, it brought on a wave of speculation, not entirely different from the meme coins and overnight forked projects that have come before and persist to this day.

However, speculative behaviours in acquiring NFTs are fast becoming the exception and not the rule.

Like the “ICO bubble” of 2017/18, the market is maturing, and there is a desire for practical use cases for NFTs. “Fool me once, shame on you; fool me twice, shame on me”.

Gaming NFTs are the most notable instance of utility in NFTs. Hard-coding behaviours in a virtual gaming environment have brought on new concepts like ‘Metaverses’ and ‘Play-2-Earns’, with the promise of breaking down the ‘walled garden’ in the Web2 gaming world.

However, developing an NFT utility for a virtual world is challenging, and the walled garden has withstood the assault of lofty promises from web3 developers. Reminiscent of the ICO bubble, promises had been made without the market understanding the difficulty of such an innovative undertaking.

To breathe life into NFTs, there must be a way that enables developers to put the yolk back inside the egg once broken.