NFTs : The Next Revolution
In this article, I’m going to cover the basic knowledge you need to know about NFTs and CryptoArt.
What actually are NFTs? Are they worth the money and effort? Some experts claim that NFTs are here to stay, and that they will absolutely change investing forever. Others on the other hand say they’re a just like the dotcom craze or Beanie Babies, a bubble poised to pop. So let’s gooo!
What is an NFT?
Non-fungible token.
Not clear yet, right?! Don’t worry I got you!
A non-fungible token (NFT) is a non-interchangeable unit of data, a digital asset stored on a blockchain in order to be sold and traded online with cryptocurrency.
Now, you may be wondering why would people buy NFTs and spend millions on them when they can easily take a screenshot?🤔
Well, a Non-Fungible Token is a form of digital ledger which means that it has a public certificate of authenticity that makes it easy to verify their ownership. For instance, NFT creators can include their personalized signature in their NFT’s metadata. Nike came up with a method to verify sneakers’ authenticity using an NFT system called CryptoKicks.
“Essentially, NFTs create digital scarcity,” says Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures.
NFTs can represent art, music, in-game items, images, GIFs, videos, audios and technically any digital thing (including articles from Quartz and The New York Times and Tweets as well, I mean why not, the founder of Twitter sold one for about $2.9 million😮).
NFTs History: Are they new?
I was myself surprised to know that NFTs have been around since about 2012. Let’s dive into the extensive history of these assets:
Colored Coins :
Firstly, “Colored Coins” emerged as tokens that represent real-world assets on the blockchain which means they were used to verify the authenticity of any asset, but it wasn’t as sophisticated as nowadays NFTs.
Counterparty :
A peer-to-peer financial platform founded by Robert Dermody, Adam Krellenstein, and Evan Wagner that allows users to create their own tradable currencies including meme trading.
- Spells of Genesis on Counterparty
SoG is the 1st blockchain-based mobile game ever made. Its creators partnered up with Counterparty in April 2015. They were among the first to launch an ICO (“Initial Coin Offering”). For more details on ICOs click here... . And they introduced BitCrystals (their own in-game currency).
- Trading Cards on Counterparty
The popular trading card game Force of Will launched their cards on the Counterparty. According to sales volume, Force of Will was ranked 4th card game in North America.
- Rare Pepes on Counterparty
In 2016, blockchain was invaded by memes. There were a particular meme called “Rare Pepes” which features a frog character, I’m sure you’ve seen it before…
By early 2017, Rare Pepes started to be traded in Ethereum. CryptoArt was orn and gained notoriety with the Rare Pepe Wallet. Creators were thus able to sell their own artwork.
But wait! What is Ethereum?
Well, Ethereum is a decentralized, open-source blockchain. Ether (ETH or Ξ) is the native cryptocurrency of the platform. Ethereum is a technology that’s home to digital money, global payments, and applications. The community has built a booming digital economy, bold new ways for creators to earn online, and so much more.
- Cryptopunks
As Rare Pepes trading was successful, the creators of Larva Labs John Watkinson and Matt Hall created CryptoPunks on the Ethereum blockchain. CryptoPunks characters are unique and limited to 10,000. They can be described as an ERC721 and ERC20 hybrid.
ERC-20 was the first token introduced in the Ethereum blockchain. It was used to, and still is mint fungible tokens (fungible tokens are cryptocurrencies like Bitcoin (BTC)). Then the system brought a new token standard: ERC-721, which is used to mint non-fungible tokens (units of data that represent a unique digital asset stored and verified on the blockchain, as mentioned before).
- CryptoKitties
CryptoKitties are a blockchain-based virtual game in which players adopt and trade cat characters on Ethereum. It uses the ERC721 standard. Created by Axiom Zen, they went viral promptly. Axiom Zen later turned CryptoKitties into Dapper Labs.
The NFT Explosion (2018–2021)
The Crypto community transioned to more mainstream art and reached an inflection point in 2018 when Kevin Abosch partnered with GIFTO for a charitable auction which led to a $1M transaction of The Forever Rose, a CryptoArt.
Within the massive growth of the NFT ecosystem, NFT marketplaces are thriving, led by OpenSea, Rarible, Larva Lab, Axie Infinity, SuperRare and much more.
Now, Why Are Non-Fungible Tokens Important?
1. Market efficiency:
Yeah that was obvious, right?! The transition into a digital asset guarantees processes efficiency and rapidity (no agents needed and no intermediaries! Artists are in direct contact with buyers and collectors).
2. Identity management:
Just imagine how much time and energy would saved if passports, for instance, were converted to NFTs (No need to produce physical passeports at every entry and exit point anymore, the enrty and exit processes will be streamlined for jurisdictions).
3. Easy Artwork tracking:
It is much easier to track NFT Artworks during the entire process (From production to sale). In the blockchain transactions are recorded, there is a chain of ownership that goes from the current owner all the way back the original creator.
4. Royalties!
Let’s say you are an artist and you sold an NFT, okay. Each time your art is sold again, a portion of that sale slides in your bank account. Impressive, right?! There are plateforms that allow you to set up royalty fees for your original art such as Rarible.
5. Investing democratization by fractionalizing physical assets:
It’s quite difficult to fractionalize ownership of certain assets like real estate, artwork and fine jewelry. We all agree that it is much easier to divide a digitized version of a building among multiple owners than a physical one. Thus, a painting can have multiple owners, each responsible for a fraction of the painting which could increase its worth and revenues.
Some NFT Statistics since you’ve come this far 😊
Collectible NFTs are the most popular!
OpenSea’s Trading Volume Increased by +800%
NBA’s Top Shots Has Already Made $700+ Million
Millennials and men are more likely to buy NFTs
Most NFT Sales are Under $200!
Conclusion
Non-Fungible Tokens may be one of the most exciting trends to ever hit the cryptocurrency landscape. Countless top brands, celebrities, and influencers got involved. Some say that NFTs will even serve as a key concept in the broad ecosystem of the vitrual property of the metaverse.
See you in the Nft-EXT article! I can’t stop writing “NFT” .
You may be wondering how many times I wrote it… .
Well, 28, not that much, Right?
