Non-Fungible Tokens to represent a multi-billion dollar market?
What are Non-Fungible Tokens(NFTs):
Non-Fungible tokens are unique and collectable items widely popular in the cryptocurrency industry. NFTs are the crypto assets that behave differently and offer opportunities for investors which cannot be exchanged with any token of the same type. They are similar to cryptocurrencies in terms of trade, stored or sold without a third party. Non-Fungible Tokens are mainly stored and operated on the blockchain.
Like virtual assets, they are resistant to thefts and are easily trackable and immutable. But what makes them different from crypto assets is that they are unique. They can’t be interchanged with any other NFT, all the NFTs of a project will differ somehow or the other no matter what. NFTs function like trading cards or collectables. The best part is these tokens can represent a wide range of digital things like music, art, real estate, any in-game item etc.
The world of Non-Fungible Tokens(NFTs) have provided digital artists with digital ownership of their Non-Fungibles Token art. They can not only showcase their art on the internet but can also evolve and grow with them.
The emergence of the Non-Fungible Tokens:
The concept of Non-Fungible Tokens is now trendy, but it has existed for a long time now. Kevin McCoy minted the first NFT in May 2014, a digital artist who minted an NFT called Quantum. And only last year, in November, this Unique art piece got sold in a Sotheby auction for a value of approx $1.4 million. And in the following years, several experiments took place, and with the launch of the Ethereum platform, NFTs got a good position and began to popularise. Several projects like CryptoPunks, CryptoKitties, etc. Now the space has ample projects to choose from. And with the prominence of Metaverse and NFT gaming in the current times. The NFTs concept has made a significant position in the crypto industry.
Non-Fungible Tokens on Blockchain Technology:
Most of the significant NFT projects are primarily based on the Ethereum Blockchain.
ERC-721 is the standard that acted as the first and most popular interface for the creation of the NFTs. It allows the trading and issuance of NFTs on the Ethereum blockchain. The blockchain facilitates the developers to program smart contracts and store details about their creations. Hence, when users exchange these NFTs, they interact with these contracts.
There are other blockchains like Flow, which is designed explicitly for Non-Fungible Tokens. Blockchains like Solana, Tezos, etc., also allow the creation of NFTs.
Features of Non-Fungible Tokens:
- Interchangeability: NFTs are unique and cannot be interchanged with any NFT of the same type.
- Data Storing: NFTs can store data. They can be a wide range of things like gaming, utilities, music composition, intellectual property, real estate, digital artwork etc.
- The technology used: Non-Fungible Tokens are built using Blockchain technology via smart contracts.
- Value Transfer: Transferring tokens is easier using direct transaction or swap technologies to other Ethereum accounts.
- Ownership: NFTs have a particular owner, and values are different because all NFTs are treated as different. Non-Fungible Token art is also becoming popular now.
Risks associated with Non-Fungible Tokens:
- Because Non-Fungible tokens don’t have a specific definition and can represent a wide range of things, they can have legal and regulatory challenges. Also, because they don’t have a specific regulatory platform.
- There are risks of unstable prices because they are generally valued based on their owners and buyers, on how they perceive them or their scarcity.
- Maintenance of NFTs becomes a challenge sometimes because Smart Contracts are not entirely resistant to hacks and frauds.
- These NFTs might be created uniquely, but Fake NFT marketplaces can replicate non-Fungible Token art or their logos. Illicit users can also fake themselves as real artists.
- The concept is still at its early stages, and there are no precedent use cases. Hence, all the information about them is yet to be unveiled completely.
Some of the Top NFT Projects:
Larva labs created Meebits in May 2021. The 20,000 unique 3D Avatars can be used in the virtual world. The average price could be up to US$14,700. The price also depends upon the rarity of the characters. Its prominent investors include Hong Kong singer and actor Shawn Yue Man-Lok.
The Axie Infinity is a popular play-to-earn game based on the blockchain launched in May 2018. It is one of the top NFT projects of the year, having around 2,800,000 active players every day. The Axies are creatures that build, fight, hunt for treasure, etc. Players can build up a collection and use it in the gaming universe. Axie players can earn tokens like DAI, KNC, etc.
CryptoPunks was the first NFT project on Ethereum. It is a collection of about 10,000 unique collectable tokens launched by Larva Labs, which collaborates with two Canadian software developers to bring out this collection. CryptoPunks has been featured in places like Christie’s of London, The New York Times, The PBS Newshour, etc. The project is an inspiration for the CryptoArt movement and ERC 721 standards.
Dotdotdots have characters that are based and live on Solidity. Dotdotdots can be minted through the contract with a value of 0.05ETH directly. There are 4360 dotdotdots for minting initially, which disguise themselves as decimals in the code and are rarely seen by the human eye. The species of the cultish characters is unknown, but they are usually referred to as bugs.
Bored Ape Yacht Club(BAYC):
Launched in April last year and created by Yuga Labs, Bored Ape Yacht Club(BAYC) is an Ethereum based collection of 10,000 unique Bored Ape NFTs. BAYC features animated Apes with unique and varied characteristics. This NFT project is on its way to becoming an off-chain brand, something that exists out of blockchain. The notable names and brands associated with it are Adidas, Gwyneth Paltrow, Justin Bieber, Jimmy Fallon, etc.
The Emerging Popularity of the Non-Fungible Tokens:
Non-Fungible Tokens are now just not limited to the gaming industry. They are getting more limelight as they are being widely used for a range of industries like gaming, sports, real estate, Non-Fungible Tokens art etc. Significant names and brands are continuously getting associated with the NFT projects. NFTs have facilitated the sports industry by enhancing fan interactions and experiences, for instance, providing digital sports merchandise to fans. Names like Justin Bieber, Gwyneth Paltrow, Johnny Depp, Eminem, Snoop Dogg, Paris Hilton, Adidas, Jimmy Fallon, Avenged Sevenfold, Katy Perry, who also happens to be a partner of Theta network, etc. who own some NFTs.
Yasin Dabhelia, the head of automation at Bidstack, recently said that NFTs would represent a multi-billion dollar market in 2022.
According to Alex Atallah, co-founder of OpenSea, the NFT sector has endless possibilities as they allow the ownership of any unique asset.
How to buy Non-Fungible Tokens:
- Digital wallet: Having a digital wallet that can store your cryptocurrencies and Non-Fungible Tokens is the first step to buy Non-Fungible Tokens.
- If you are a new person in the industry, you might need to purchase some cryptocurrency, for instance, Ether. It depends upon what digital currency your NFT provider will accept. Cryptocurrencies can be bought using credit cards or other options. There are exchanges like Kraken, Coinbase, Binance, Robinhood etc.
- You can then move the crypto assets from the exchange to your wallet.
- Once the wallet is all set, you are almost done with the buying of Non-Fungible Tokens. There are several NFT marketplaces choices that you have. OpenSea is one of the largest NFT marketplaces currently, with other marketplaces like Rarible, Foundation,
Before buying Non-Fungible Tokens, people should do proper and thorough research about the exchange and NFT marketplace they choose. And also, a knowledge of the transaction fees, specific requirements, etc., should be there before considering the buying of non-fungible tokens.
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