NFTs Are Here. But Where Are They Headed?

It remains to be seen whether NFTs can get beyond the gimmick status they occupied in popular imagination since Dapper Labs launched CryptoKitties, the popular game that creates unique, collectible, breedable digital cats.

There are questions about scalability and interoperability associated with ERC-721, the dominant, Ethereum-based NFT standard, and on whether the world will embrace outside-the-box ideas for redefining value, property and commerce.

It's challenges like that which have people questioning what kind of business model could function for NFTs. Thankfully, some compelling ideas for new models that address them bubbled forth at the event.

For now, much of it is highly intangible, though it was good to see NFT.NYC exhibitors such as Vault.io, which demonstrated the potential for redeemable NFTs to transform gift tokens, branding and commercial exchange by showing visitors how to redeem a token in their wallet for a cup of coffee delivered by a Raspberry Pi-enabled coffee machine.

Still, the question remains whether the narrow community of interests attached to specific NFTs can generate enough liquidity to make them viable.

This will depend in part on the success of different blockchain community's scaling initiatives and on interoperability solutions such as the Cosmos and Polkadot networks, which could enable NFTs to move across blockchains.

It's why, in addition to NFTs, other projects are working on community-based digital asset issuance models that don't depend on an underlying chain or virtual machine such as Ethereum to process all transactions.

The common idea in these concepts is that the smart contract-features, the terms attached the token, and the consensus model can be designed uniquely according to each community's preferences.

In all of this, there is tension between the narrow, subjectivities of a distinct community's expressions of value and the requirement to interface that otherwise closed subset of interests with a more universally accepted expression of value in the wider economy - in other words with fungible, negotiable instruments such as bitcoin or dollars.

It's in confronting those tensions and figuring out the best business models to overcome them that NFTs and their ilk have the best chance of enabling practical, real implementations that can have a marked impact on the world.