If you are in the blockchain and crypto space, there’s a high chance you might have heard about NFTs (Non-Fungible Tokens). If you haven’t yet, maybe very soon you will. The crypto space is swarming with innovative projects coming up every other day, aiming towards a common goal – adoption.
Before delving deeper into why NFTs are the talk of the crypto town, let’s understand the basics.
What are NFTs?
NFTs or Non-Fungible Tokens are unique tokens, as in they cannot be replicated or be equated with an asset that might seem similar, unlike fungible ones like dollars, stocks, or bars of gold.
Technically, NFTs are documents with hashes stored on Ethereum (ERC-721) usually, that points out where the associated content or image is stored virtually.
The simplest example of Fungible tokens can be Rs 100 owned by you, Rs 100 owned by your friend, and others. The value is the same for every Rs 100, owned by whosoever as they are interchangeable. On the other hand, an example of NFT can be plane tickets. All the tickets might look similar, but the information is unique on every one of them.
Apart from being non-interchangeable, NFTs are indivisible too. Like you can send Bitcoin in satoshis, you can’t send a portion of NFT to anyone.
Now let’s see why NFTs are all over the news headlines nowadays. It’s even trending on social media platforms. A few days back, a 10-second video by Mike Winklemann, AKA Beeple, became viral, as it got sold for $6.6 million USD. His digital artwork was authenticated by blockchain through which one can claim their ownership rights through a digital signature.
This digital artwork is an NFT, which gets its value because of who’s behind it. Similarly, you can take a pic of the Mona Lisa from Louvre, but it doesn’t hold any value as it doesn’t have the provenance of the work, stated by one of Beeple’s artwork buyers, Rodriguez-Fraile.
Even the auction house Christie’s launched its first-ever sale of digital art, which is a collage of 5000 pictures by Beeple itself, existing solely as an NFT.
For this, the bidding has already hit $3 million.
Advent of NFT
The advent of the NFT boom started with the launch of the National Basketball Academy’s (NBA’s) Top Shot website launch, which will allow users to buy NFTs in the form of video highlights of the games. In 5 months, they got 100,000+ buyers and reached $250 million in sales. They have seen a five-fold increase in its volume in one month – January 2021 ($44M) to February 2021 (198M).
Real-Time Use Cases
A Nashville-based NFT investor – Nate Hart, has been involved in the NFT market since 2017 and owns some digital arts such as CryptoPunk and Autoglyphs. The growing interest in NFTs coincides with the surge in online retail trading. NFTs has expanded like crazy during this lockdown as more people are jumping online to make enormous money easily.
Very recently, one of the most famous musicians and wife to Elon Musk, Grimes has made $5.8 million in 20 minutes on Nifty Gateway after she auctioned 8 tokenized artworks in her first NFT airdrop.
Even the meme creator – Eric Nakagawa announced his lolcat NFT ‘Happy Cat’ on NFT marketplace OpenSea very recently. OpenSea has been growing insanely from $1 million volume in August ’20 to $50 million in February ’21 – stated by the CEO of OpenSea, Devin Finzer.
Last month itself, Nyan Cat’s creator made around $600,000 in ETH, a single hashmark sold for $65,000, unique CryptoPunks are worth over $1 million, and a chunk of land in the game Axie Infinity fetched as much as 888 ETH.
As per dApp stats, February 2021 was the best month for NFTs, where their volume grew from $71 million in January 2021 to as high as $342 million in February 2021, which is a 400% growth. NBA contributed majorly to the growth, as it was responsible for 67% of the NFT transactions.
High gas fees on the Ethereum network led to the moving of several DeFi and NFT projects but this report observed a high rate of growth for many copycat NFT projects on the Binance Smart Chain (BSC), like Bashmarks and Binance Punks.
But despite the high fees, CryptoSlam statistics show that out of 10 best-selling NFT products, 7 are hosted on Ethereum. NBA’s Top Shot uses the Flow blockchain and the other two are hosted on WAX.
The rapidly growing brand among the top 10 NFTs is CryptoKitties, which saw a growth of 1300% in a few months. The latest entrant to CryptoSlam’s list is Capcom’s Street Fighter II Series, which generated sales of $1.26 million since its launch on February 16, 2021.
A couple of days back, a new NFT sales record was set when the renowned DJ 3LAU sold $11.6 million of his NFTs in a single evening.
Litecoin Creator, Charlie Lee compared the surge in NFT popularity with ICOs back in 2017.
NFTs are here to stay and gain momentum. Know the basics of NFT here.