Collectors have long been willing to shell out huge sums of money on unique items such as paintings, baseball cards and vintage cars. But now, collectible items have moved into the digital space in the form of NFTs, or non-fungible tokens. So, what exactly are NFTs? And why are they suddenly being sold for millions? NFTs, are a type of digital asset. Ownership of these tokens is recorded on a blockchain, a digital ledger using similar technology to the networks that underpin bitcoin and other cryptocurrencies. But unlike currencies, where every token is of equal value and could be swapped for any other, NFTs have unique qualities which stop them from being interchangeable, or ‘fungible’.
In 2012 a first concept of nft emerged under the name “Colored Coins”. “Colored Coins” was a method to represent and manage real-world assets on top of bitcoin. Unfortunately, it never really took off at that time. In 2014 a digital artist called Kevin Mccoy mined a nft called Quantum on name-coin blockchain. In 2015 a subset of the popular pepe memes began to be referred to as rare pepe and in 2016 some rare pepe were mined into bitcoin blocks. In 2017 as the trading of pepe meme started to pick up, a company called Lava Labs created crypto punks, a collection of images mined into Ethereum blocks. The same year another company called Dapper labs created Crypto-Kitties one of the first games one Ethereum where players could adopt, breed and trade
virtual cats. CryptoKitties became so popular that it clogged the Ethereum network. After all these successes a standard called erc721 was created and it was the first time the term nft was mentioned. The public awareness of NFTs kept growing with projects like NBA top shots but it’s only in 2021 that NFTs became mainstream and exploded some old nft projects like crypto punk were rediscovered and reached enormous valuation. Some new nft projects became super successful and big brands like Nike, Pepsi, visa and Budweiser started to buy NFTs and created their own.
NFTs ARE UNIQUE
NFTs turn your digital assets into one of a kind by creating a unique digital signature which defines the ownership of your Assets and that can be bought and sold for real money cryptocurrency or any other asset like a non-fungible Token aka NFT, means that they are not interchangeable and each of them represents unique assets owned by a specific person. On the other hand, fungible tokens are interchangeable and can be divided into smaller units to form the same value for example a one-hundred-dollar bill is fungible as you can exchange it with five twenty-dollar bills or two fifty-dollar bills but the painting of the last supper is non-fungible as it cannot be generated in bulk even if it is copied it will not be Authentic. Each NFT contains distinguishable information like who owns the digital Asset and who sold it making them distinct and easily verifiable as it is impossible to forge such a certificate.
You can think of them like the crypto alternative to rare Pokémon or baseball cards. And just like the traditional art market, NFTs are often sold at auction, with prospective buyers bidding against each other until a price is reached. The rise of the internet meant that images, videos and songs could be reproduced and distributed infinitely online, often without any royalties being paid to their creators. And even tech giants such as YouTube and Spotify have faced criticism for not compensating artists sufficiently for their work. Proponents of NFTs say they address this problem by allowing ownership to be recorded on the blockchain, preventing unlimited reproduction or piracy, and enabling creators to reap the financial rewards.
NFT basically creates a blockchain-based digital certificate for your digital collectibles including games, music, art and many more. This certificate gives your artwork a unique identity. The underlying technology and the programming language used by NFTs are the same as other Cryptocurrencies such as bitcoin. NFT majorly exists on Ethereum Blockchain, a distributed public ledger that records all the transactions. However, NFT is quite different from these cryptocurrencies as bitcoin and Ethereum are fungible tokens which means if you trade bitcoin or Ethereum for one another you will have the same value or item in return basically money. On the other hand, NFT is a unique token. Therefore, if you try to trade it you may end up with something completely different in your hands. Crypto punks are a remarkable example of NFT, it enables you to buy, sell and store 10,000 collectibles with the proof of ownership being stored on the Ethereum Blockchain.
NFT has proved itself to be a boon in the lives of many people. Rock band Kings of Leon sold NFTs over two weeks in March 2021, which gave buyers access to a deluxe form of their album for $50M, whilst also auctioning off an even more exclusive version limited to just 18 copies. In the same month, the NFT of Twitter CEO Jack Dorsey’s first tweet sold for nearly $3 million to Sina Estavi, a Malaysia-based crypto entrepreneur. Meanwhile, art dealers are also getting in on the action, with auction house Christie’s running an auction for a virtual work from the artist Beeple which eventually sold for nearly $70M. But NFTs aren’t a totally new phenomenon. CryptoKitties, a virtual pet game based on the blockchain Ethereum, was so popular in 2017 that they clogged up the network of cryptocurrency Ether. To date, these colorful online cats have generated sales of over $40 million. Vignesh Sunderson famously known as MetaKovan, is a famous entrepreneur and crypto investor, who bought 69.3 million dollars-worth of NFT art.
So, why are we hearing so much about NFTs now? The coronavirus pandemic played a big role in the NFT boom. In 2020, the total value of NFT transactions quadrupled to $250 million, and the market looks set to grow further in 2022. Owing to its increasing popularity people are now willing to pay hundreds of thousands of dollars for NFTs. NFT has enhanced media exposure and special perks for aspiring artists on social media this popularity of NFT creates new opportunities for new art platforms motivating people to buy art from internet platforms and promoting copyright or originality of digital assets.
Many experts in the crypto industry say that around 40 of new crypto users will use NFTs as their entry point. As a result of its growing popularity NFT could represent a more significant part of the digital economy in the future. Well, it’s true that there is an NFT bubble. NFTs are here to stay and are going to massively change the art industry, the gaming industry and help create new ones like metaverses and as a web street developer. Specializing in NFTs can be very lucrative.
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