Wave Two: Utility — Generative Art
This is the 5th part of an ongoing NFT classification series.
In the fifth part of this NFT series, we’d like to focus on the emergence of Generative Art and how NFTs grew to become more than just digital collectibles, but tokens with actual real life utility.
Editor’s Note: We’re already on the fifth part of the series and I am very grateful for the responses we’ve received so far. Even as I write this, I know that the NFT space will only continue to evolve as it’s still in its nascence. Thank you for taking this journey with us and we’re looking forward to more opportunities to connect. Now, let’s continue the journey!
In the last two blog posts, we expounded heavily on the First Wave of NFTs that saw the Digital and Fine Art industries jumping on the NFT bandwagon. Rarity marked this particular Wave, where the value of NFTs were determined and inflated by principles such as scarcity, collectability, and groupthink.
Over the last year or so, hundreds of brands and celebrities have minted their own NFT collections.
NBA Top Shot sold USD$500k worth of NFTs detailing NBA history and highlights, Paris Hilton released her own NFT collection which raised over USD$1million, and even the beloved fast food chain with the golden arches McDonald’s released a McRib NFT to celebrate the 40th year of the burger’s existence.
“So, what’s the point of you telling me this?” Don’t worry we’re getting there!
What exactly drove the value of these purchases? We can say that hype, celebritydom, and clout did. Aspects found in the First Wave marked by Rarity can also be found in these purchases — scarcity (because these projects had limited supplies), groupthink (reputation and status can be huge value-drivers), and collectability (limited edition collectibles that capture culture).
However, what is the missing element? The missing element is Utility.
Beyond having unique tokenised ownership, bragging rights, and unspeakable joy, these NFTs (though valuable and very in demand) were not bought with a specific use case in mind. Therefore, we’re going to take a deeper dive into the Second Wave of NFTs — Utility
What is Utility?
Utility represents how easily an NFT can be used or utlised (as its name suggests). In the second Wave, NFTs evolved beyond unique tokenised ownership, scarcity, or collectability — moving towards tokens with greater value proposition.
This shift towards added utility has seen NFTs being used by top sporting organisations in the US like the National Football League (NFL) as game tickets, adopted by music bands like Kings of Leon for their “When You See Yourself” album release which generated US$2million in sales, and utilised as exclusive club membership verification by NFT projects such as Bored Apes Yacht Club.
This shift towards added utility is an exciting prospect. However, it begs the question, “how did Wave Two kick off into the machine that it is today?
Enter Generative Art.
What is Generative Art?
To put it very simply, Generative Art is art created by a computer script that is programmed by an artist. What is unique about it is that it is entirely AI-driven with each art piece receiving a unique set of features generated using an AI software.
Tiktoker and children’s book illustrator RyRyArt demonstrated this process in the creation of his NFT line — Crunchy Cows. Give the TikTok video a watch! But if you’re more of a YouTube purist then here is the link to his YouTube video.
Generative Art technology not only enables the speedy creation of more NFTs but this makes the Rarity of certain features a programmable characteristic, exponentially enhancing collectability and exclusivity — driving value higher and wider in volume.
If the previous paragraph was a bit of a mouthful, then I hope this helps — NFTs of varying rarity can be created faster which increases the number of artworks to sell, which means an increased volume in sales.
Before it gets too complicated, here are some examples of actual Generative Art projects that have captured the crypto world (and beyond) by storm with its Utility value.
Remember the shiny Charizard cards we talked about in our second Medium article? Great!
Now imagine that there’s only 10,000 of them in circulation and you happen to own one. And because you own a shiny Charizard card, you can now use it as a membership card to access digital clubhouses and exclusive members-only merchandise.
Take those Charizard cards and turn them into digital apes — you get the Bored Ape Yacht Club.
Bored Ape Yacht Club
The Bored Ape Yacht Club (BAYC) collection started with 10,000 randomly AI-generated digital apes with differing levels of rarity. Each Bored Ape was originally sold for 0.08ETH (around USD$168). Not only were they sold out in a day, but prices have skyrocketed to a peak of USD$24.4million as well.
Each Bored Ape NFT serves as a key to member-exclusive areas such as a private Discord server and the Bathroom — a digital area that acts as a collaborative graffiti board that users can draw on. To top it all off, club members were also rewarded with free NFTs which could be resold for a profit on the secondary market for profit.
BAYC is the perfect example of how NFTs can evolve into a community, and then into a sought-after brand in the matter of a few clicks! (literally).
Jimmy Fallon, Post Malone, The Chainsmokers, and Stephen Curry are some of the biggest names who own a BAYC NFT. Recently, Singaporean Mandopop superstar JJ Lin joined the ranks of the club and seems to be really happy with his BAYC NFT.
CyberKongz
“First apes and now gorillas — What is it with animal NFTs?”
We don’t really have an answer for you, but what we do know is that the Utility that these cyber gorillas are offering would totally blow your mind.
Genesis CyberKongz are the first 1,000 CyberKongz (released on 1 March of this year) which are part of the wider CyberKongz collection of 3,852 pixelated apes with a variety of characteristics, attributes, and accessories.
Genesis CyberKongz holders are now being rewarded with 10 $BANANA tokens a day. This adds up to a passive income generation of USD$480 a day (at time of writing).
No loopholes to jump through.
No action required or needed.
Just rewards for being a CyberKongz owner.
Users can either sell their tokens or utilise them to rename their Kongz or change their Kongz’ biography. And similar to BAYC, the CyberKongz NFT unlocks exclusive members-only channels in the CyberKongz Discord server.
Moving Forward
As part of the creative process, Generative Art intentionally invites randomness which creates a slot machine-like game where neither artist nor NFT minter is aware of the end result until the art is generated.
This changes and challenges the notion of what art is — which points to the innovation and disruptiveness of blockchain technologies. Nonetheless, it has also set the stage for the increasing utilities of NFTs.
Beyond being cool or cute collectibles, these NFTs serve as special tickets to real-life events, digital membership cards to exclusive clubs, or even dividend-yielding assets. The endless possibilities of blockchain technology is only starting to take form.
In the next article, we move on the Third Wave of NFTs! Stay tuned because there’s much more to come.
IMPORTANT DISCLAIMER:
THIS IS NOT FINANCIAL ADVICE
Cryptocurrencies like NFTs are nascent and in very early-stage startups. They are heavily subjected to speculation on the secondary markets and should never be treated as a form of investment.
Our write-up is a humble attempt to show the technological advancements and innovation that the blockchain technology possesses.
Readers are advised to engage their own financial advisors and do their own due diligence before making their first purchase.
All information expressed here are in the views of the writer based on the date of article.
We are looking for industry leaders to co-create this together. Please write to [admin@defisingapore.io] for your interest to participate in this community-written project.
LESLIE DANIEL CHAN. Founder, DEFI Singapore
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