Digital Transformation Agency

Beatles, brands and blockchain: what is possible with the next generation of NFTs?

By Paola Demichelis | Creative Developer

April 13, 2022 | 8 min read

NFTs are no longer limited to just exhibiting traditional media such as images or videos – or a digital replica of John Lennon’s guitar – says Paola Demichelis, creative developer at Superunion.

It’s easy to understand why someone would want to buy John Lennon’s guitar.

NFT

NFTs are no longer limited to just exhibiting traditional media such as images or videos

It’s the chance to hold the instrument that created Hey Jude. Fingers sliding across the same strings as one of modern music’s great pioneers. A small slice of sonic history.

But what if you couldn’t actually hold it? And what if John Lennon never physically touched it either?

John Lennon’s eldest son is auctioning several items from his father’s collection. But each piece of memorabilia will be sold as a non-fungible token (NFT) – a digital collectable with narration from Julian Lennon alongside imagery of the item.

This story is increasingly common. Investment and interest continues to flow toward blockchain-powered digital assets. Recent analyst reports anticipate the NFT market-cap to be around $35bn in 2022, and forecast the sector to grow to over $80bn by 2025.

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Brands are keeping a keen eye on the space too – with McDonald’s, Asics and Hot Wheels launching their own blockchain-based tokens.

But most of these early expeditions into the NFT space are scarcely scratching the surface of the technology’s potential.

A unique generation

The vast majority of NFTs available on the market now, including John Lennon’s non-fungible string instrument, are static NFTs.

Here, static doesn’t mean still. In fact, they can take many forms; it can feature video, sound and a host of other unique formats and complexities. What makes these tokens static is its data. It gives these NFTs a series of defined traits embedded in their DNA. It is this DNA that sets the parameters for its existence – and it can never change beyond these.

Dynamic NFTs

There are NFTs that do have a broader scope of traits. Dynamic NFTs continually evolve and develop over time, responding to outside influences.

All NFTs have a unique digital footprint, immutably enshrined on a decentralized blockchain. And all NFTs have a ‘smart contract,’ which enables the network to store all the information that is indicated in an NFT transaction.

But with Dynamic NFTs developers can manipulate the nature of these tokens over time. Their smart contracts provide a blueprint for how an NFT can change over time, with the NFT responding to oracles – third-party data feeds that trigger dynamic NFTs to evolve based on new, real-world information. Oracles act as bridges between the NFT and external data systems – but the changes that they induce are still written into the core DNA of an NFT during its creation.

This technology empowers artists and creators to expand the horizons for NFTs. For example, a sports club could sell a season card NFT that updates with scores in real-time. Or perhaps a game studio could create an in-game NFT sword that changes color depending on real-world weather.

Michael Joo and Danil Kivoruchko illustrate this potential with OG:Crystals; a project where each uniquely individual piece of digital art grows every time it is resold. All 10,301 OG:Crystals will become a direct reflection of both their owner and future transactional history, creating a visual record of combined digital and organic processes.

Generative NFTs

Generative art describes pieces of art that have been created through a system; a collaboration between an artist and autonomous systems. This generative process adds a level of uniqueness to NFTs, where creators can generate multiple variations of the same design, with varying degrees of rarity.

These variations can be manually controlled by designers or respond to data points – or they can be entirely imagined through artificial intelligence (AI). The most impactful element of generative design is that the creators can control the likelihood of certain elements appearing – empowering brands and artists to wield the power of scarcity. The rarer the traits, the more valuable the token.

Artists including Dimitri Cherniak are pushing the boundaries in this space. ‘Ringers‘ by Cherniak explores a string wrapping around a set of pegs where the algorithm could produce an almost infinite number of combinations, while Tyler Hobbs‘s Fidenza line exhibits an ever-changing pattern generated via an algorithm.

Both these designs live on ArtBlocks – a new platform where creators can upload their algorithms as opposed to just directly uploading the NFT. This means that users can customize an NFT before minting it – adding a new layer of personalization, as well as reducing the environmental impact, minting their personalized NFTs on demand.

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This technology is opening exciting new doors for creators – and for brands too.

Non-fungible brands

Pepsi recently chose to mark its birth year, 1893, with the same number of generative NFTs. Each of these is generated through an algorithm that defines their individual characteristics – and consequently the rarity of each token.

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Nike is breaking new ground through CryptoKicks – a pioneering NFT where each token is paired with a physical shoe release. Through a unique patent, the brand has opened the door to ‘genetic sneaker engineering’ – allowing for two NFTs to come together and create a shoe ‘offspring.’ This is a novel approach, empowering Nike to open up a new market – and giving fans access to increasingly unique collections.

Branded NFTs mark a new era of interaction between brands and consumers. But this isn’t all about creating external value through uniqueness.

Dynamic NFTs are agents of personalization; they can reflect the preferences, habits and traits of their owner. A fitness brand could create dynamic NFTs generated by using data points of its members’ fitness wearable, or a music streaming service could release a unique NFT that reflects its audience’s individual listening habits, perhaps created in collaboration with the artist.

Instead of having an NFT collection released to the world in a one-off event, brands can release NFTs that reflect the individual characteristics of their customers. People change. And branded NFTs can change alongside them.

These appeal much in the same way as traditional investments. People invest in stocks, fine wine or property because of their capacity to mature, develop and grow in value over time. But the connection goes beyond simply being an asset with the potential to increase in fiscal value. Dynamic and generative NFTs take user-centricity to new heights – deepening the connection between the creator and the NFT owner.

Here comes the sun

NFTs are no longer limited to just exhibiting traditional media such as images or videos – or a digital replica of John Lennon’s guitar.

The borders between art and technology in NFTs are blending, and technology is influencing creative possibilities for the generation and the manipulation of NFTs. There is a lot more to discover under the surface.

Through generative NFTs, brands have the opportunity to create even more powerful digital connections, combining autonomous design and customization with controllable rarity to spark connections and drive value.

It can be daunting creating parameters for growth, rather than the specifics of how a branded NFT would look. But, just like brands themselves, these NFTs can grow and develop over time – building relationships and creating value on the way.

Paola Demichelis is creative developer at Superunion.

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