Why NFTs Are the Keys to the Inevitable Metaverse

In Search of a Killer App to Accelerate NFT Adoption

Non fungible tokens (NFTs) are absolutely a bubble. People have poured hundreds of millions of dollars into NFTs. Most of those “investments” will plummet to zero. Be very afraid.

At the same time, NFTs are going to change the world. They will spur vast new economic growth, including within virtual “metaverses,” and become the new norm for ownership.

These two assertions are not contradictory.

A mainstream metaverse (à la the OASIS in Ready Player One) has been anticipated for many years. However, we still seem to be waiting for some “killer app” for broad adoption that will propel it into a billion homes. The Internet had email. Social media had Facebook. The many competing metaverses that exist today seem to be fishing for that one viral edge that propels them to dominance. Could NFTs be that edge?

What Are NFTs?

An answer requires some background. Think of non-fungible tokens (NFTs) as digital deeds of asset ownership, or tickets to a show. Fungible means effectively identical and interchangeable, like dollar bills or eight-foot 2×4 cedar boards. It doesn’t matter which of the dollars or 2x4s you have, they work the same.

Non-fungibility indicates that an NFT is, at least in some ways, unique, and thus conveys scarcity of the associated asset. As a digital token, an NFT encodes and cryptographically secures information related to the asset, potentially including data around identity, ownership, asset history, resale royalties, and much more.

Owners can “mint” NFTs on platforms such as

Mintable
and

OpenSea, which also serve as NFT marketplaces. The tokens are written onto a blockchain, usually Ethereum, although smaller NFT-friendly

blockchain technologies
abound. The blockchain provides a secure, globally distributed ledger for these tokens so that transactions can be traced through the user’s blockchain address rather than by name, maintaining privacy if the owner wishes. Note that such anonymity or pseudonymity is often valued in metaverses.

Ethereum-based NFTs use Ethereum’s

ERC-721
open standard. These tokens are truly unique; there will ever only be one of the assets associated with each. In contrast,

ERC-20
tokens are fungible, albeit often with a limited supply. (Think of concert tickets, although ERC-20 tokens could also be for redeemable vouchers, a governance share, or social community-building, like music artist RAC’s

$RAC token.) In both cases, scarcity is a key value driver, but this is especially true for NFTs.

Games like Overwatch and World of Warcraft have grown massive economies based on in-game transactions for skins, dances, weapons, etc., but purchases remain locked within the applications. Now, games and other platforms are starting to make such purchases into NFTs. A public blockchain confers security, authenticity, and the promise of mobility across other applications using the same blockchain—provided the developer allows this.

The story of computing is often one of how new technologies help to break down barriers between people, resources, and data silos. NFTs will deliver a new wave of data portability and bridging between complementary applications.

Against this backdrop, let’s turn to some of today’s leading examples of what people can already do with NFTs, keeping in mind that the technology is just

nine years old. This is only the beginning.

NFTs as visual art

“NFTs liberate art. Traditional art is confined to time and space. You have to be in the right city, go to a museum, be invited to someone’s home, etc. Anyone, anywhere with an Internet connection can view NFTs and take them in. This is a huge breakthrough.”
— Cameron Winklevoss, entrepreneur & Gemini exchange co-founder

NFTs in gaming

The aforementioned CryptoKitties game debuted on the Ethereum blockchain in 2017. The game was essentially next-gen

tamagotchis
in the form of cartoon-cute NFT cats, and it caught on fast. In early December that year, the

BBC reported
that $4.5 million had been spent on the non-fungible felines and resulted in enough transaction traffic to slow the Ethereum blockchain. (Remember that need for Layer 2 solutions?) In 2019, the CryptoKitties team announced it had created a new blockchain called

Flow, which has since attracted many NFT publishers.

One of today’s hottest NFT-driven games is

Axie Infinity, which is like CryptoKitties meets Pokémon Go, complete with battling monsters. The game’s ERC-20-based Small Love Potion ($SLP) tokens function as currency for breeding Axies and trade outside the game on global exchanges, such as Binance (see 90-day price chart below). Axie Infinity now has over 40,000 daily active users, $15 million per month in NFT volume, a $2B market cap, and partners including Ubisoft, Binance, and Samsung. Axie Infinity players can earn several hundred U.S. dollars per month through $SLP farming, potentially earning more through gaming than the wages of college graduates in developing countries. This injection of NFTs and blockchain tech into gaming stands ready to open a new front in online entertainment and to make

play-to-earn
gaming into a global phenomenon. Some suspect it will even replace today’s incredibly popular free-to-play gaming model.

NFTs as MUSIC

While the conversation around music and NFTs largely benefits independent artists, it cannot be said that it is a democratic option for every artist. There are still many ways that music NFTs can be used in a transparent way that benefits everyone.

‘s research One common criticism of Music NFTS is that it destroys the planet. However, this may not be true, as people have not been purchasing albums as much as shown in Arthur Zuckerman’s research.

“Physical or pure sales are dying. That’s a fact.”
In the past, it was very easy to see how many records were being sold; you would just look at the Billboard Hot 100 or Nielsen SoundScan. However, that doesn’t work as well anymore because now people are streaming music more often than buying records. This is a problem for labels and artists because one stream is not the same as one sale.
There are a small number of artists who continue to make high sales despite the prevalence of streaming services. Taylor Swift is one example- her album Reputation sold over a million copies in its first week. However, her album Lover released in 2019 only sold 679,000 copies in its first week. In most year-end reports for 2019, she was the only artist to sell a million copies of an album.

In 2019, digital sales revenue declined by -23.5%.
Revenue from physical album sales declined by -15% in 2019.
Vinyl sales are up by 14.5%.
Japan (47%) and Germany (35%) are the two markets with the highest intent of purchasing physical copies.
Jazz genre sold the most physical albums in 2019 with 24% from the total SPS.
Digital sales dominated the Classical genre, accounting for 12% of the total album equivalent units.

The cheap option of paying $10 per month for access to music streaming services makes them more attractive to music lovers. The annual growth in revenue from streaming services mirrors the growth in the number of paid subscribers across all music streaming platforms.

To showcase how fragmented royalties can get here are the all the mediums that, if they use your music, will pay out a royalty:

Streaming platforms (when someone streams your song from DSPs)
Radio stations
TV stations (commercials and shows)
Non-interactive online radio stations (like Sirius XM and Pandora)
Music venues

needs to pay for a public performance license. If a public place plays your music, they need to get a public performance license.

A Performance Rights Organization (PRO) represents songwriters and publishers.

You are owed a performance royalty every time your song is publicly performed. A PRO collects these royalties for you.

What’s considered a “public performance”? This is when

You or someone else plays your song live
If a public place streams your song in their establishment, this is called public performance. Your song may be used in a television program, movie, or any other type of public performance. When this happens, you are due performance royalties.
The music you create could be featured on TV or in a video game.
A radio station airs your song
The current system for payments from streaming services to artists is very inefficient, with many middlemen taking a cut. One big problem is that songwriters can often go 6-12 months without seeing any payment for their work.

I believe Smart Contracts can help in this situation.

Smart contracts are programs stored on a blockchain that are executed when predetermined conditions are met. They can be used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss.

Smart Contracts can be used not only to distribute fair royalty payments, but also to make those payments transparent and easy to track from beginning to end with little human involvement. The royalty process needs to be simplified and consolidated in a way that makes sense for artists when you look at the millions of dollars stored in unclaimed/undistributed funds. Imagine a world where a song and its songwriters formed a DAO to represent the interest of the song. Whenever there is a conflict, it would be quickly voted upon by people who are invested in the song/in the DAO of the record.

s. The possibilities for new ideas and approaches are endless in the untapped territory of blockchain technology. A more creative approach to the traditional world could change the industry for those artists and developers willing to take the leap and build something new. It makes you wonder if a decentralized publishing company or licensing company could be possible. I believe it will be, as this space gets more developed over time and financial interests align.

Group* The trend of music being present in multiple mediums will continue to grow as major labels and companies attempt to figure out how to navigate these spaces. In a report by Roberto Neri COO at Utopia Music Group,

”*The global recorded music market have the potential to grow by 58% to reach $61.7bn in 2028 — up from $39.2bn in 2021. This will be made up by:
Recorded music streaming $26bn (up 86% on 2020’s $14bn value)
Sync $5.8bn (up 66% on 2020’s $3.5bn value)
UGC and social $8bn (up 100% on 2020’s $4bn value)
Creator tools (plugins, DAWs, VSTs and services) $2bn (up 100% on 2020’s $1bn value)
Live streamed concerts $6.4bn (up 967% on 2020’s $600m value)
Fandom $5bn (up 900% on 2020’s $500m value)
Games $4bn

In order to cause a further expansion in the music industry, companies need to look into these five areas that have potential for growth within the cryptocurrency world: Sync Licensing, Creator Tools, Live Streaming, Social Connection, and Games.

NFT marketplaces allow artists who are willing to be early adapters of the technology to be rewarded financially by speculative investors and collectors. But some people argue that it is not necessary for artists to participate in this market, and that it is simply people trying to make a quick profit.

Both of what?

Whether you agree with the use of Music NFTs or not, it is undeniable that properly harnessing smart contracts and creating transparency with the Royalty Chain are invaluable to the music industry. This is especially true for the growing independent sector that relies on metadata and overall data to survive and generate additional income. This data is crucial for independent artists to determine where to place their resources and efforts.

NFT platforms are not only selling and trading tokens, but some are also giving away tokens for free to early adopters.

I’ve been involved in a few of these, like Audius ($AUDIO) – which gave an airdrop to people who uploaded music when the website was first being promoted – and ENS ($ENS), a decentralized naming service behind the “.eth” names you might have seen.

If you’re interested in learning about and benefiting from crypto, music NFTs, and DeFi from a musician’s perspective, the best thing to do is to be curious and dive in to the things that grab your attention. Thoroughly research them and you’ll be amazed at the opportunities you’ll have if you’re sincere.

I’m sharing some Web 3 services that I’ve used or am paying attention to for music. This is not financial advice.

, Lokandes and Jules Kurre, the platform is currently in closed beta with a number of high-profile artists. Royal.IO is a platform where you can buy ownership in songs directly from your favorite artists and earn royalties with them. The platform was founded by 3LAU, Lokandes and Jules Kurre, and is currently in closed beta with a number of high-profile artists.

If you’re an artist looking for a great streaming + marketplace option, Catalog Works is the way to go. offering top notch streaming quality and a marketplace for artists to sell their wares, Catalog Works is the perfect solution for your needs.

OurZora is a decentralized marketplace that is perfect for uploading art in many mediums beyond music and photos.

PartyBid is a decentralized application that allows users to collectively bid on non-fungible tokens. PartyDAO is a decentralized autonomous organization that builds and ships crypto products. This is the first product developed by PartyDAO.

MintSongs – Music NFT Marketplace

Audius ($AUDIO) – Music Streaming Alternative

– Arpeggi Labs Arpeggi labs is the first on chain music creation platform that allows users to create, share, and manage their digital music Arpeggi labs also allows users to Tokenize their music. Arpeggi Labs is the first on-chain music creation platform that allows users to create, share, and manage their digital music. Arpeggi Labs also allows users to tokenize their music.

Nina Markets, a decentralized music distribution service, is coming soon to Solana. Nina Markets offers a unique, decentralized way for artists to sell and distribute their music. With Nina Markets, artists can sell their music directly to fans, without having to go through a third-party, such as a record label. Nina Markets is being built on the Solana blockchain, which offers fast, scalable, and secure transactions. Nina Markets is expected to launch in the coming months.

The data is stored on a decentralized network of computers, called a blockchain. The Arweave network enables you to store data permanently. The data is stored on a decentralized network of computers, called a blockchain.

Mintgate – Token Gating NFT Platform

$GRAPE is a toolset designed for decentralized social networking on the Solana blockchain. The toolset includes a variety of features that allow users to interact with each other on the Solana blockchain in a variety of ways.