The phenomen of NFT
NFTs are a relatively new phenomenon, but are increasingly making headlines
NFTs are a tool that can be used to tokenize almost anything. The NFT invasion of the market is among the most memorable phenomena in 2021. Within a few months, NFTs have gone from something completely unknown to the general public to one of the top investment assets.
Twitter founder Jack Dorsey sold his first NFT tweet for $2.9 million, and artist Mike Winkelmann received a record $69 million for his NFT painting.
What is NFT and why is everyone talking about them?
The abbreviation NFT means “non-fungible token”. To understand tokens, it is necessary to understand in what environment they exist — in this case, in the blockchain.
Each NFT is unique and exists in a single copy, it cannot be divided, and all information about its author, buyer and all transactions with it is securely stored in the blockchain. In other words, an NFT is a digital certificate attached to a unique object.
What can be sold in the form of an NFT?
In fact, anything. Music, images, text, video, 3D models — that is, any digital product that claims to be unique. Particular attention is paid to NFT collectors (who, if not them, to search for unique items), gamers (who are interested in in-game items: skins, weapons, collectible cards, etc.), as well as figures and art lovers. Moreover, art in all its manifestations.
The most expensive NFT to ever sell was Pak’s ‘The Merge’. The $91.8m price tag was a record for an artwork sold publicly by a living artist. The NFT was sold on Nifty Gateway to 28,893 collectors who purchased 312,686 units of mass (which were single NFTs). The starting price of these units was $575, which increased by $25 every six hours.
We haven’t heard of NFTs before. Did they appear recently?
Although blockchain and cryptocurrencies have been around for years, NFTs are a relatively new phenomenon.
Tokens of this kind were created back in the mid-2010s, but the first NFT projects became available only in 2017. The popularization of NFTs, with which people now earn millions of dollars, was originally the merit of CryptoKitties, a game in which you can breed virtual cats. The game became extremely popular, and the amounts for which you can sell digital pets exceeded $100,000.
According to the DappRadar resource, the size of the NFT market reached $22 billion at the end of the year. DappRadar analysts believe that the decisive factor in such explosive growth (in 2020, sales were only $100 million) was the active participation in the use and promotion of NFTs by the world’s largest brands, such as Coca- Cola, Nike, Adidas and Gucci. The Chainalysis report gives a figure of $26.9 billion.
At the same time, JPMorgan says that the growth of the market today is jerky, from one record sale to another at intervals of several weeks or months, and there is no progressive development. Another feature is the weak diversification of the market. Simply put, digital art works are traded on a par with memorabilia or works created according to quite classical canons (for example, Warhol prints) and only then tokenized. At the same time, auction houses can accept payment for NFT lots in traditional currencies and at the same time sell traditional art for bitcoins.
Morgan Stanley experts believe that if current trends continue, by 2030 the volume of NFT worlds could reach about $240 billion. In their opinion, tokens issued by luxury brands, either jointly with contemporary artists or independently, will become growth drivers.
Have you already tried creating your own NFT?