„Woah, that’s a lot of money that you have in your wallet.“ The llama is astonished.
„Yeah, I collect dollar bills,“ I explain.
„...that doesn’t make any sense. One dollar is like every other dollar.“
I stared at the llama.
„You mean... if you exchanged it for another bill, I wouldn’t even notice?“
„Exactly,“ the llama stated. „Just collect other things. Like stamps. Or properties.“
Humans always loved to collect things. Back in the past it was a severe necessity to collect food and resources in order to survive. This is clearly not the case today, but nevertheless we have not stopped collecting what we get in our hands.
With the emerging blockchain technology amazing possibilities pathed their way. The magic is called „non-fungible tokens“. But what makes them so amazing?
Honestly: The idea to create, own and trade digital assets is neither new nor particularly unique. Until today there has been one „small“ detail that was missing when talking about digital assets or property: The question of true ownership. If an admin decided to take his game offline, all of your digital belongings would vanish. If he decided to reset all accounts - the same thing. Back in the past you would have no possibility to secure your assets or to actually tie it on your very own personal account. Because of the centralized structures within gaming platforms, you would always be at the game developer‘s mercy.
So, how to fix this? Here comes the blockchain!
To break it down, the biggest question has been the question of true ownership. If someone could offer a solution that you would have your assets or items at your disposal at all times, this would change not only the gaming industry but art, finance, and marketplaces forever.
Now, what are assets that can be tokenized and secured on the blockchain?
Art or investment? Why not both?
There is already a magnificent number of different types of NFTs available. For now I don't want to go too much into technical detail, so let's look at a few examples so that we can understand their use.
The blockchain-based game Upland deals with NFTs in a way of property trading. NFTs that are available and can be bought and sold are properties that are secured on the EOS blockchain. Now you can ask „Why should I spend money on a virtual piece of land?“
I raised the same question when I started with Upland. But the answer is quite easy.
It is about possession, trading and collecting. Maybe the game is even more appealing when you have a connection to San Francisco, the first minted city in Upland. But even for me as a European I absolutely wanted to own a piece of this city.
In my opinion this has mainly two dimensions: Owning a piece of art, and owning an item that may increase its value. The art factor clearly has emotional implications. Not every person in this world would estimate the same value for a piece of digital land as you do or as I do. Buying it fuels the human strive for collecting and maintaining things. Although it has a strong connection to the (rational) aspect of investment, NFTs could never reach high prices, if there weren’t people who search for collectibles and were willing to pay a reasonable price.
Cycle of NFTs
To put it even more comprehensive, we can say:
Without collectors there would be no speculation on rising prices.
Without speculation on rising prices there would be no sound community of collectors.
Dimensions of usage and value
Knowing about this background we quickly can assume that NFTs can’t stop at being simple objects of art. Topics that are connected with the blockchain technology have one deep potential: Everything we know today is just the beginning, it is trial and error, gamification in order to test what is possible.
The quickly increasing number of people who are willing to participate and spend money in Upland is a proof for the successful concept of the game. We can observe that specific minted properties gain a massive amount of value in a relative short period of time. One of the reasons is active community management and the constant provision of activities for the players. NFTs hold big parts of their value because there is some kind of context that fuels supply and demand. Mutual activities that are limited in time not only strengthen the feeling of community. They create a myth around property collections. As a result rare collections gain value and can be sold for even higher prices.
Conclusion
Soon non-fungible tokens will mainly switch their use to a background in financial services, real estate and consumer issues. For Upland this means a huge potential when it comes to market goods on the blockchain. Regarding the whitepaper the founders of Upland already keep in mind to what extent this digital world can develop. Although there is an official existing plan for the future I want to go through conceivable scenarios in what way NFTs can be utilized in the context of DeFi and privat usage in the next article.
Disclaimer: This article does not reflect the official view and opinion of upland.me. All views are my own.
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