Dynamic NFTs Create A New Type of Active Entertainment
Projects are typically developed around problems that need to be the decisions of retail impact investors to understand how they trade-off potentially conflicting objectives between generating financial returns and generating social impact. Many people in high-income countries struggle to find investments that provide financial returns and align with their values. At the same time, many firms in low-income countries struggle to gain access to finance. A response to this mismatch is impact investing, where investors with a social vision lend firms with a social mission, with the understanding that the relationship has to be financially sustainable for both sides.
Similarly, a Web3 development company which uses blockchain technology to bring NFTs and new forms of digital engagement comprising real asset value to investors around the world paving the way to a more open and inclusive digital world starting with games and entertainment and developing real-life art into digital virtual experience also will have to care about its social impact.
How, then, do impact investors use their influence, and which type of borrowers do they prefer, those that offer high financial returns or those that offer a high expected social impact?
An ideal environment to study individual investment decisions is peer-to-peer lending because investors choose directly and repeatedly among many different borrowers. That investors choose loans that generate financial returns and social impact is unusual for peer-to-peer lending, but common in large-scale impact investing. The initiative partners with digital artists and Web3 organizations, and it welcomes both novice and seasoned NFT collectors who are interested in exploring and purchasing NFTs for conservation.
This paper contributes to the understanding of individual investment decisions when impact investors pursue a double bottom line of generating financial returns and generating social impact. To my knowledge, it is the first empirical analysis of transactions on a peer-to-peer lending platform on which investors are getting paid to publicize a standardized set of social impact indicators.
Platforms need to function as gatekeepers of social impact and cannot outsource the decision about which firm should receive funding from a social impact perspective to the crowd. For NFTs on the platform, financial returns and expected social impact are excellent so low social impact borrowers that promise high financial returns might out-compete high social impact borrowers. Committed as we were to the purpose of NFTs being used to create environmental conservation, we have spent a lot of time evaluating many possible technology stacks and solutions.
This paper contributes to the understanding of individual investment decisions when impact investors pursue a double bottom line of generating financial returns and generating social impact. To my knowledge, it is the first empirical analysis of transactions on a peer-to-peer lending platform on which investors are getting paid to publicize a standardized set of social impact indicators.
Platforms need to function as gatekeepers of social impact and cannot outsource the decision about which firm should receive funding from a social impact perspective to the crowd. For NFTs on the platform, financial returns and expected social impact are excellent, so low social impact borrowers that promise high financial returns might out-compete high social impact borrowers.
Committed as we were to the purpose of NFTs being used to create environmental conservation, we have spent a lot of time evaluating many possible technology stacks and solutions
The firms’ turnover and the number of beneficiaries do not significantly influence funding success, even if all available loan applications promise the same financial returns, consistent with the baseline result using the full sample of transactions. However, investors are more likely to choose to buy and purchase online which is more quick and efficient. It is believed all-new platforms associated with the cryptocurrency and NFT projects are in demand and this is a gap to fill. The findings have important implications for peer-to-peer lending platforms with a social mission: they face the same challenges as impact investment funds, in that they need to carefully select NFTs that align with the platform’s social mission.
To date, companies and creators have developed a wide variety of NFTs, including:
Digital artwork: Like the Beeple example above, many visual artists have put up their art for sale in NFT form.
Digital music: Rock band Kings of Leon, for example, released a new album as an NFT and earned more than $2 million from the sales.
Video clips: The NBA Top Shot marketplace features highlight clips of notable players, such as slam dunks by LeBron James and Steph Curry, that can be purchased as NFTs.
Virtual real estate: Pieces of land in virtual worlds such as Decentraland are NFTs that can be purchased.
Digital pets: One of the very first NFT offerings was CryptoKitties, a game that lets you collect and breed one-of-a-kind digital cats.
Prior to a reflection on NFT pros, it is important to have a brief glimpse into NFT basics. NFT or non-fungible token refers to a unit of data stored on a blockchain network. The token serves as a representation of real assets such as paintings, music files, or digital art. As a matter of fact, NFTs provide a certificate of authenticity or ownership of a specific asset.
So, you can clearly notice the benefits of non-fungible tokens in the possibility of using the blockchain to exchange or trade-in real assets. NFT buyers could also re-sell the NFT to obtain profit when they deem it necessary. At the same time, NFT creators could also associate the NFTs with a royalty agreement to receive added compensation with every sale. Well, let’s not dive too much into the NFT basics now! With the unique traits and capability for digital representation of assets on the blockchain, NFTs are tailored for promising benefits. Let us shed some attention on the top advantages of non-fungible tokens.
The potential downsides of NFTs
One final thing businesses should know about NFTs are the potential downsides. First and foremost, NFTs are speculative assets that rise and fall in price just like any piece of artwork might. As such, an NFT created for sale may not sell for much, or an NFT you purchase may simply lose value over time.
Secondarily, some reporting has revealed back-end technological problems, such as occurrences of NFT assets disappearing.
Because the NFT you own is effectively just a piece of code, viewing and controlling the asset also relies on third parties in order to work. For example, if you buy a digital art NFT, it still has to be hosted online somewhere to view it. But if the hosting service takes it down, it can no longer be accessed.
NFT creators issue them on a blockchain network that also stores the NFTs. In addition, NFT creators also have a say in determining the number of NFTs they want to issue. Subsequently, the NFT creator also has the privilege of putting up the NFT for sale on a marketplace. The new owner of an NFT would receive possession of the NFT through a smart contract.
#rachayatatech #solana #blockchain #crypto #NFT #nfts #tech
