Autor Cointelegraph By Rachel Wolfson

Sales of nonfungible tokens, or NFTs, reached $25 billion in 2021, demonstrating that the sector is one of the most sought-after markets in crypto. Art NFTs, in particular, made a big impact last year with Christie’s reporting over $93 million in nonfungible token sales during its fourth annual Art+Tech Summit that took place this past August. While notable, much of the crypto art scene appears to be dominated by cartoons and memes, as projects like CryptoPunks and Bored Ape Yacht Club have taken center stage. Although these projects are some of the most successful to date, a new subset of NFTs is emerging based on advanced technologies and the human imagination. AI-generative NFTs become a new art genreKnown as “AI-generative NFTs,” these nonfungible tokens are becoming increasingly popular within the art community, along with those interested in emerging technologies like artificial intelligence, blockchain and the Metaverse. In order to create AI-generative NFTs, one would typically use generative adversarial networks, or GANs. These are algorithms that leverage computers to use data to train models to produce machine-made images resembling art. Claire Silver, an AI-collaborative artist, told Cointelegraph that AI-generative NFT art is a relatively new genre, noting that the basic principle is that art is created in tandem with some semblance of artificial intelligence, like GAN: “There are code-heavy options and completely code-free tools that anyone can work with. I use the latter in my work. Being able to work with an AI to bring your ideas to life is an experience like no other, it augments creativity in a way that feels like freedom, a type of play you haven’t experienced since you were a child.”In order to create AI-generative NFTs, Silver explained that she leverages a text-to-art generator called “Eponym.” Developed by the AI-generated art company, Art AI, the Eponym tool allows users to create art based on their text of choice and then mint these creations directly to the largest NFT marketplace, OpenSea. “Cassandra Ex Machina” Source: Claire SilverEyal Fisher, co-founder of Art AI, told Cointelegraph that Eponym allows for any phrase to be transformed into a unique NFT art piece that will forever be etched onto the Ethereum blockchain as a visual representation. Fisher explained that Eponym was built on algorithms for personalized generated art that lets people create art by interacting with a computer. “Eponym is a collaborative NFT project. Users access it by coming to the website and typing any phrase or word into a text box. The AI then generates artwork based on the text entered.” Fisher added that each text prompt can only be generated once. “There is only one Eponym called ‘Bitcoin,’” he said. “$btc” image produced by Eponym. Source: EponymAlthough AI-generative art is a fairly new concept, Fisher shared that the first Eponym project sold out overnight on OpenSea, making it one of the largest collaborative art projects created by 3,500 different artists. “This is an experiment in decentralizing art. People who own Eponyms are creators of that art and want to curate it,” he said. While Eponym lets users create their own art NFTs, Metascapes is another project that was developed by three photographers looking to combine human expression with computer algorithms. Ryan Newburn, one of the photographers behind Metascapes, told Cointelegraph that the project consists of 3,333 rare AI-generated NFTs based on photographs taken across the world. Like Eponym, Metascapes leverges AI algorithms to create nature-inspired NFTs. According to Newburn, the first Metascapes collection is planned to be minted by the end of this month or early February.”Ice Journey” Source: MetascapesThe AI-team behind Metascapes — which goes by the name Versus Labs — explained that the artwork in each collection is created by training data to recognize real-world images:“We have images and labels for our photographs, which are called ‘training data.’ When it’s time to generate the output model, we put in a label that tells the model what type of images to put out. For example, ice caves and volcanoes were two categories the photographers have done work for in the past, but this wasn’t a majority of the input data, so we wanted to make sure the output contained examples of ice caves and volcanoes.”Versus Labs added that Metascapes’ AI learns as it goes, noting that the generator that outputs data gets better over time since two models of learning are being used in tandem. “The generator outputs random noise at the beginning and the discriminator model tells the generator how to improve the output, so it looks more like the training data. This cycle continues, ensuring both models improve over time.” Iurie Belegurschi, another photographer behind Metascapes, told Cointelegraph that as photographers, the Metascapes team chose to work with AI to generate images because everything related to NFTs and Web3 is about machines, computers and code:“We decided to collaborate with a machine to create an entirely new world in the Metaverse. Everyone now is buying PFP avatars, but in our case, people will get a unique piece of land in the Metaverse.” AI’s impact on artists and NFT collectors Although AI-generated NFTs are still an emerging concept, this model has started to impact both artists and NFT collectors. For instance, the digital artist known as “Kami was Here” told Cointelegraph that working with AI has fundamentally changed the role of the human artist:“The human needs the algorithm and the algorithm needs the human. For me, this new role meant data collection, writing code, curation, the inspiration to create a theme and, most of all, ‘coaching’ an algorithm. The process is dynamic and the outcome collaborative.” “The Cartographer” Source: Kami was HereIn terms of how generative art NFTs differ from other nonfungible tokens, “Kami was Here” explained that each result is fully unique since it is birthed from an algorithm. “Generative art explores the future of a society hardwired with human-computer interaction,” the artist mentioned. Moreover, Fisher pointed out that accessibility and a newfound desire to own NFTs has been an outcome of AI-generated images. “Many of our users are creating NFTs for the first time, while NFT collectors and buyers are making their own creations. This is unusual, as most people in our community are not professional artists.” Dr. Alex Alter, principle AI-scientist for Altered State Machine — a protocol that uses NFT intelligence to create smart AI agents — further told Cointelegraph that not only do AI-generated NFTs look unique, but they also bring a deeper abstract feeling to individuals. “These NFTs are truly unique in the sense that there is no single area in any of the AI works that have similar pixels. Also, in the future, people will be able to create AI artwork through DAOs and chatbot technology. This is far more than what other NFTs can do today.” “Singularity by AIIV” Source: Dr. Alex AlterCan AI be trusted to create meaningful NFTs?While the potential for AI-generative NFTs is apparent, the question of whether or not artificial intelligence can be trusted to generate quality images based on text or photographs remains a concern. As such, Newburn mentioned that Metascapes carefully curates each of their collections. “Our AI team has generated tens of thousands of images. Not all of these will be showcased in our mints. If we aren’t satisfied with the category, we strategize and retest what categories will work with each other. Our AI has learned from multiple tests.” It’s also important to note that there are different ways to generate AI-based NFTs. For instance, Fisher mentioned that Eponym has two versions of its generator available to the public, one on the company’s Discord channel operating as a chatbot and the other as a private link that contains more complex algorithms capable of creating more advanced images. “Kami was Here” further pointed out that some AI-art pieces can take only a few minutes to generate, while others can take longer: “There are free apps now like Wombo that can easily generate images. It’s simple for people to create. On the other hand, AI art can also take months to build and train your algorithms, collect input data and pay for processing power. AI art can also be very resource intensive and personalized.” Technology aside, AI-generative NFTs are bound to be a disruptive trend moving forward. According to Dr. Alter, AI-generated art has already seen huge volumes on OpenSea, noting that the market will continue to grow this year. He mentioned that this will be the case partially due to the functionality of AI-generative NFTs. “In the future, people will be able to own their own ‘AI artist’ NFT (AI which can produce art) or use a DAO AI to create art together with that AI artist.” Additionally, the rise of the Metaverse should prompt the growth of AI-based NFTs. For example, Fisher remarked that Eponym’s next project will feature interactive virtual identities where users can take their own portraits to create 3D avatars and animate them using artificial intelligence. “Our idea is to use AI that will allow for avatars to take different shapes that are compatible in metaverse environments like Sandbox. In February, the company will be introducing additional algorithms that will allow users to generate personalized avatars.”

Nonfungible tokens, or NFTs, have become one of the most discussed markets in the crypto space this year. A recent report from Cointelegraph Research found that NFT sales are aiming for a $17.7 billion record by the end of 2021. This may very well be the case, as a number of mainstream brands have begun launching NFTs. According to recent research from Bain & Company and the online luxury fashion platform Farfetch, digital interactions with consumers are becoming increasingly important for brands. The report specifically states that “digital interaction with peers is on the rise when choosing to purchase a product.” As such, nonfungible tokens tied directly to brands and their consumers are now more important than ever before. Understanding what utility means for fashion NFTsWhile it’s notable that mainstream labels like Adidas, Dolce & Gabbana and others have already released NFTs, the utility behind nonfungible tokens is proving to be the real key to a fashion brand’s success. Karinna Grant, co-chief executive officer of The Dematerialised, a digital fashion marketplace, told Cointelegraph that utilities are what give nonfungible tokens purpose and value:“Just as in real-life, where a physical card can scan you access into a club, a utility can be anything from using the NFT as a membership pass to the ability to wear an asset in a game, or incorporating a sustainability or social responsibility benefit for purchasers of the NFT.”Grant noted that The Dematerialised has experimented with multiple forms of utility with each of the fashion NFT drips the platform has launched. She explained that previous releases have included utilities like wearing or playing with a 3D asset in augmented reality, or unlocking access to brand communities. “With Rebecca Minkoff’s sold-out NFT collection in September, the highest tier of NFTs unlocked VIP access to brand experiences for a year.” She added: “Karl Lagerfeld’s “x Endless” collection provided an opportunity for owners of Karl collectibles, an IRL and URL ticket to a brand event in Paris in 2022, which will feature another launch where only Karl holders will be invited to take part.”It’s become clear that fashion NFTs must offer some type of consumer engagement, allowing brands to interact with individuals in both the physical and the digital worlds. Avery Akkineni, president of VaynerNFT — an NFT consultancy agency — told Cointelegraph that while the utility of some NFTs can simply be for the sake of art, brands launching NFTs require deeper functionality built upon an existing community. For example, Akkineni shared that VaynerNFT recently helped the global fashion house, Coach, launch its first NFT collection, which featured eight Coach Holiday animals from the brands’ Snow City digital game. Akkineni added that the NFT launch was also in celebration of Coach’s 80th birthday, which resulted in the creation of 80 unique digital art pieces featuring the eight Coach holiday animals. “Bella the Penguin” from the Coach NFT collection. Source: VaynerNFTAkkineni explained that each digital Coach NFT also grants the right for the initial holders to receive one complimentary made-to-order physical rogue bag in 2022. “Something that Coach wanted to do was to explore this new world of NFTs, but wanted to in a way that wouldn’t commercialize their IP or ask consumers to pay for anything,” she said. To efficiently engage with the Coach community, Akkineni mentioned that the Coach NFTs were given away for free during Dec. 17–24 this year: “The Coach NFTs were claimable on the Polygon blockchain. Coach made sure not to commercialize too early and to learn about the space to gauge demand to see if their audience was interested in NFTs.” Fashion NFTs must also function in the MetaverseThe fact that brands must now interact with consumers both virtually and in real-life has also added an extra layer of technical utility to NFTs. As Bain & Company’s latest luxury goods report states, “new keywords and phrases — such as metaverse, personalization at scale, and tech stack — will come to the fore as the industry grows and evolves.” As such, some companies have started to explore NFTs in the Metaverse. For example, Pet Krewe — a pet apparel e-commerce company — recently opened a digital commercial space in the Metaverse community known as “ShibaVerse.” Allison Albert, founder and chief executive officer of Pet Krewe, told Cointelegraph that the company is promoting its brand by featuring its NFT pet clothing in a Metaverse containing balloon dogs called “Shibaloons.” Source: Pet KreweAccording to Albert, Pet Krewe’s NFTs will be worn as unique designs that fit the Shibaloons. While Albert pointed out that these costumes can be held and swapped out on different Shibaloon dogs within ShibaVerse, Pet Krewe is using this digital commercial space as another form of brand engagement or marketing. “We can connect with dog-loving customers in a dog-centric Metaverse. This is reaching our customer base in an entirely different marketing element.”The 18-year-old fashion label Mishka has also entered the NFT space with its famous eyeball logo. The collection of 6,696 NFTs is known as “The Keep Watch Crew,” or “KWC” for short. Greg Mishka, founder of Mishka NFT and the Keep Watch Crew, told Cointelegraph that Keep Watch is the most iconic and well-known branding element of Mishka, for both fans and the streetwear and fashion community. Andy Milonakis KWC NFT. Source: MishkaGiven the label’s strong user base, Mishka explained that the KWC NFTs are the next chapter for the brand. “The KWC is your ticket into what we like to call the MISHKAVERSE. Immediate utilities include lifetime discounts and exclusive merchandise,” he explained. Mishka added that the label is working on integrating Web3 elements to their website. “This would allow for consumers to verify the NFTs they own in order to access exclusive pages and drops via the website.” Should fashion NFTs still be tied to physical items?While the utility of fashion NFTs extends beyond simply offering digital items connected to physical goods, some in the industry believe that this is still one of the most important functions. For instance, Grant noted that connecting physical items to digital NFTs is a critical part of the adoption process for nonfungible tokens of all categories. She elaborated:“We have a very interesting split perspective with our current community, with half asking for more physicals and half asking more digital-only. However, when we survey outside of our current community the figure is much higher. This makes sense as first-time or new NFT owners tend to still hold more traditional beliefs that physical products are more “valuable” than digital ones.” Echoing Grant, Mishka commented that it’s important to have physical items that can be claimed or achieved by acquiring something in the Metaverse since most consumers still live in the “real world.” This is why it shouldn’t come as a surprise that a mainstream fashion label like Coach gifted NFT holders with physical made-to-order rogue bags. Interestingly enough though, Akkineni mentioned that sometimes NFT holders don’t redeem their physical items, which has proven to be the case for other drops associated with consumer-facing brands. “VaynerNFT did a collaboration called “Anwar Carrots x Veefriends,” which was a collection sold at Nordstrom and made available to all “Self-Aware Hare” NFT holders. It was only after some reminders that the holders did claim the physical items,” she commented. Fashion NFTs will be a trendThe rise of NFTs in 2021 has demonstrated growth moving forward for major brands. While companies like Nike have already taken steps to enter the Metaverse, more labels will follow suit. This has become the case as the world moves toward digital business models, which have also been promoted by the rise of COVID-19. For instance, Albert explained that Pet Krewe is still unsure of how COVID-19 is going to play out in 2022, noting that current supply chains are still being disrupted:“We need to hedge our bets on alternative revenue streams. Entering into a metaverse that aligns with our own company values means that we can add additional revenue streams through art NFTs and digital wearables.”Grant further remarked that The Dematerialised is excited for “behavior-changing launches,” which include using NFTs to disrupt physical production methods. However, it’s important to point out that brands will face challenges along the way. According to Grant, fashion labels will encounter three main obstacles, with the first being a shift in thinking when it comes to the value of Web3 and digital ownership. Secondly, Grant explained that understanding the purpose and narrative of an NFT launch is important: “We support launches that are part of long term strategic commitments to Web3, not a marketing gimmick to briefly drive revenue.”Finally, Grant pointed out that it will be challenging for major brands to ensure a 3D asset design pipeline in house. Yet Grant remains optimistic that these challenges will be resolved: “Mainstream adoption will come as more major fashion brands, influencers and creators get involved.”