Where Do NFTs Get Their Value?
In the Philippines, the explosion in the popularity of NFTs or tokenized digital artwork is now an excellent opportunity for Filipino creatives to bring their art to a broader audience. It can even help many artists take their initial steps into this beautiful space as the Philippines is an excellent oasis of artistic talent.
With NFTs or Nonfungible tokens, people can prove that they own a digital item that may be a text, sound file, or image similar to how people own crypto coins. Because of the emerging Non-Fungible Tokens, Binance will be launching an NFT cryptocurrency marketplace this June 2021.
Early in the 1980s, there was the anti-video game propaganda that depicted “vidiots.” These are zombie-like creatures that the Space Invaders and Pac-Mans hypnotized. Here, teenagers got lured into the arcade’s dark depths. Because of the risk of getting addicted, they flunked school and then killed and destroyed.
Nowadays, people recognize video games as a tool that is valuable in promoting the development of skills. The World of Warcraft was able to teach students about scientific concepts and strategy. Kids use Minecraft to demonstrate the principles of engineering. Brock Pierce credits his bitcoin success in his early start to gaming, while Mark Zuckerberg and Elon Musk touted that video games have educational benefits.
The Philippines has a famous blockchain-based game that provides pathways for people to get out of poverty by spreading information on novel technology. Axie Infinity, a Vietnamese startup created by Sky Maviz, is a decentralized application on the Ethereum blockchain. Here, players raise, breed, trade, and battle Axies that are adorably cute digital critters.
In Cabanatuan City, around 68 miles north of Metro Manila, located in the Nueva Ecija province, is Ijon Inton, an Axie player. In February 2021, he learned about Axie when his friend came across a video that explained it on YouTube. Since he was intrigued by the game’s “Play to Earn” element, he decided to try it out.
Initially, he only wanted to see if the game is legitimate. After playing it for a week, he became amazed by his first income. Now, he earns approximately $206 or 10 thousand PHP a week because of playing this game. He eventually invited his family, neighbors, and friends to play. Since he has been a crypto trader since the year 2016, he was able to help his friends create an account in Coins.ph so they can purchase their first ETH and start playing. Now, he has a local community of more than a hundred individuals playing to earn on Axie. Included here is his grandmother, who is 66 years old.
It’s great as it lets them have food on the table despite the COVID-19 pandemic that made people become confined in their residences and have limited opportunities to earn money. In combination with the Axie game’s compelling nature, it encouraged people who don’t usually play to get into the game.
According to the Filipino co-founder of Altitude Games, a mobile app development company, crypto investors may not consider earning $300 to $400 a month a lot, but this can mean the world to most people. It provides food on the table and money for their families to save them as they cannot get outside their homes during the pandemic.
The game has been described as something similar to CryptoKitties and Pokémon. Cryptokitties became a collectibles craze that was able to attract a lot of traffic to the blockchain Ethereum last 2017 that it made the network kneel.
Like CryptoKitties, Axies are NFTs or nonfungible tokens. They are cryptographically represented as unique cartoon pets that can’t get replicated. Because of that, they are digitally scarce and are born to battle like Pokémon. They have extraordinary features as well as little bodies that are adorably plump. Some of them can look something like a fantasized Mr. Potato Head. One can have an eggshell on its head, and the other can be with a chili pepper tail.
With Axies, there are many ways people can earn money. The most common method for new players is making the utility token that is an SLP or small love potion. People can sell it through a decentralized trading platform like Uniswap’s liquidity pool. It got issued as a reward whenever the Axies win the battles. SLP became in demand because it is required to have some Axies in the mood for breeding.
There are now people who are earning SLP as their full-time job. Before the COVID-19 pandemic, Filipinos may have planned to go to another country to take on new careers because of insufficient job opportunities. However, because of the travel ban, people are now stuck at home.
Nowadays, people do everything they can to earn money. Because of Axie, people at home because of the pandemic are starting to acquire approximately 1,500 SLP daily as they take care of their children. SLP now trades for around 5 PHP, but it went up to 16 PHP last May 2, 2021. People that have a more significant risk appetite can earn more returns when they trade Axies themselves. In this space, people can breed and sell Axies for around $41 or 2,000 PHP. Last year, two highly rare Axies got sold for 60 and 90 ETH. The highest price ever that a single Axie fetched was at 110 ETH.
If you want to put this into perspective, when quarantine got enforces on the Luzon, national unemployment went up to an all-time high of 17.7%. In the same period, GDP shrank by 16.5%.
Aside from that, an excess of 100 thousand overseas Filipino workers got repatriated. According to the Asian Development Bank, remittance losses are estimated to be more than $50 billion this 2021. Last 2020, remittances comprised more than 10% of the Philippine GDP and acted as the crucial lifeline of low-income families whenever there is a crisis.
In the rural area of the Philippines, the video game was able to capture the whole community’s minds and hearts as it demonstrated the strong use case for the Dapps.
Even if the government assisted the people, it might not be sufficient for people to survive. Some families received a couple of relief payments for a year that only amounted to $267 or 13,000 PHP. Local barangays may have attempted to provide additional help by giving out canned sardines and rice. However, they only deliver a week’s worth of food just once every month. Thus, having the ability to increase their income while being housebound can save lives.
The Growth Lead of Axie Infinity, Jeffrey “Jiho” Zirlin, was the one who initially discovered the family story of Inton when he did a regular scan for the bots to make sure that there aren’t any automated programs that gamed the system. He raised a red flag after identifying ten accounts that operated from a similar IP address 24/7. He appealed for his account ban through Discord which made Jiho ask for a piece of video evidence that showed his family playing with Axie.
The video that his Axie-playing friend captured showed that Inton, his wife, sisters, nephews, brother-in-law, cousin, uncle, and aunt were sitting on the floor at their home as they played Axie. Every player looked up briefly to wave and smile at the camera before they returned to their game.
According to Jiho, what they wanted was to make people outside of the NFTs, app space, and Ethereum become interested in Axie. He observed the other play-to-earn Axie community clusters in Venezuela and Indonesia, and he thought that this might be the dApp user household’s first multi-generational evidence. Since it is becoming easier to onboard as benefits can be easier to explain, the players can now bring this into their family and friends.
Jiho has attributed most of the success of Axie in the Philippines to Dizon and Altitude Games. After they initially met in Manila’s Gamefest last 2018, Jiho gave three Axies to Dizon to begin. Dizon eventually became a top breeder that owned 200 plots of land and approximately 800 Axies. It is an example of how you can use the marketplace of Axie Infinity to buy NFT.
Since 2003, Dizon has been involved in mobile gaming. He only began to experiment with the blockchain last 2017 when the CryptoKitties took off. At first, Dizon was not interested in the fintech scene. However, he discovered that crypto involved most of his friends. Thus, he eventually considered this technology capable of drastically improving the efficiency and cost of remittance. However, despite seeing its importance, it was not interesting for him in terms of his career.
Yet, upon the emergence of NFTs, he became pretty excited. It appeared as a great thing to play with, which was why he got involved in crypto through blockchain games. Dizon was also able to build Battle Racers. It is Decentraland’s racing car game that Ethereum has powered. Here players can use NFT parts to make, race, and design cars.
According to Dizon, it may not be easy to become successful in blockchain gaming. So many people have tried and failed in the past several years. That is because it can be challenging to make sure that the audience is engaged in the games. However, in the Philippines, Axie became successful as it became a viable way for anyone to earn a living and spur viral growth through referral by word of mouth. Because of the COVID-19 pandemic, so many Filipinos have popped up in their Discord channel to ask how they can begin and how they can play.
Although the usual pains plague Ethereum in growth include the increasing gas fees and onboarding issues, the video game could still capture the rural Philippine community’s hearts and minds. It demonstrated a great use case for the dapps. Within several months, it taught players an extensive range of highly complex concepts, from DeFi to NFTs. By having the correct incentives and design in place, it appears that there are so many blockchain developers who need to look into the underserved people in the world to get user adoption training.The NFT and Its Quick History
Last 2017, NFTs became prominent because of the game CyrptoKitties wherein players are allowed to “breed” and purchase virtual limited-edition cats. Since then, game developers have adopted NFTs to let gamers win items in the game like swords, shields, prizes, and game collectibles. The game assets’ tokenization was the best game-changer as it allowed for the transfer of tokens from one game to another or between players through the specialized marketplaces of the NFT blockchain.
Aside from gaming, people frequently use NFTs to sell an extensive array of virtual collectibles that include virtual real estate in the virtual world Decentraland, video clips, digital images, music, and virtual NBA trading cards. The website NonFungible tracks NFT marketplaces and projects. The NFT market had a total value of $338.04 million last 2020. Even if this may be a small fraction of crypto’s entire market, it can still be quite attractive to any content creator. Based on the standard ERC-721 in NFT creation, the contract behind the token can get set to allow content creators to continue earning a percentage from every subsequent sale.
It is highly likely for the NFT market to expand as any digital information can get quickly “minted” into NFT, which is an excellent way for people to secure and manage digital assets.
Blocks and Keys
People use the technique to protect a message’s privacy by turning it into something that only the intended recipients will understand is cryptography. It will only appear as random characters in an unintelligible sequence to everyone else. The manipulation of th e message gets enable with a pair of private and public keys. You can have your private key used so it can go back to the original form. You can have your public key shared with a friend who can use it to have his message transformed into random characters in an unintelligible sequence. The manipulation of this message is allowed because of a pair of private and public keys. You can have your private key used to have it brought back to its original appearance. You can have your public key shared with a friend who can use it to have his message for you transformed into random characters in an unintelligible sequence.
If you want to make it go back to its original form, you can use your private key. These two crypto keys have unique properties in mathematics that people widely use to give integrity and secrecy. The role of digital signatures is what the two crypto keys play, and they are what people commonly use in the blockchain to allow transactions to become anonymous and authentic.
When it comes to the creation of NFTs, the technology crucial for this is blockchain. It uses cryptography in chaining blocks so that it will turn into an expanding list of records. Every block can get locked by a string of characters or cryptographic hash. It allows for the unique identification of a data set to the past block. A chain of blocks is the transaction records and stores in the Merkle tree, a data structure. It allows for the immediate retrieval of any record. If you want to become a party in the transactions based on blockchain, every user would have to make a pair of keys: a private key and a public key. It has a design that allows the alteration of transaction data stored in the blockchain to become rigid.
The blockchain may initially get devised to give fungible assets such as cryptocurrencies and Bitcoin support. Thus, it could evolve to allow users to make a unique crypto asset that is nonfungible or provable unique. Most of the NFTs offered nowadays are based on the Ethereum blockchain as it gives support to the token standard ERC-721. Here, NFT creators can capture information relevant to digital artifacts to get these stored as blockchain tokens.
The NFTs first got created with the use of the Ethereum cryptocurrency’s underlying cryptographic technology. Whenever you need to pay for an NFT, you get the right to have the token transferred to your digital wallet. The token is proof that your digital file copy is initially similar to having ownership of original artwork. Like masterpiece paintings that you can copy and distribute as affordable posters, people can have your NFT’s digital copy.
You can prove to the owner of the original with your private crypto key. The public crypto key of the content creator will serve as a specific digital artifact’s authenticity certificate. Primarily, the owner’s private key and the creator’s public key will be the ones that will determine the NFT token’s value.
The Carbon Footprint of Blockchain
Despite the people’s excitement in NFTs, there have been concerns regarding NFTs not being ecologically friendly. They are created on blockchain technology that some of the cryptocurrencies are hungry for energy use. For example, every NFT transaction on the network Ethereum can consume the same amount of energy that two households in America use.
Most of the blockchain networks nowadays have security that is based on “miners.” These are special computers that compete to solve highly complex mathematical puzzles. The principle of proof-of-work makes the people avoid gaming the system and gives incentive for its building and maintenance. Miners who solve the math problem first will get a prize award in virtual coins. Since there is so much computational power required in mining, it can drive the consumption of electricity.
The blockchain technology of Ethereum has evolved to move toward a design that is minimally computationally intensive. Other emerging technologies in blockchain like the Cardano have a plan from the outset with a minimal carbon footprint. It was able to launch Cardano Kidz, which is an NFT platform that is fast-growing.
Blockchain technology’s transformation speed into a newer and more ecologically friendly variant can decide the NFT market’s future in the short term. Some artists are against NFTs as they strongly feel that it has an ecological impact that can affect trends in global warming.
The Upcoming Economy of Cryptocurrency
Regardless of the capability of the existing NFT craze to make its momentum continue, NFTs have now accelerated to a more significant trend of innovation in digital economics. Because of NFTs, the public is confirmed to feel highly favorable in adopting a crypto economy that they now want to embrace the short-term risks in exchange for creating new possibilities in business.
NFTs were already able to create significant inroads in the gaming and luxury industries. It has so much room for growth that is beyond these applications. The sector of art can continuously be a vital segment of the NFT market. Overall, it may likely eventually get to its maturity in the following years to come.
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