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NFTs are digital objects that are verified on the blockchain and have properties such as uniqueness and immutability. They can be in just about any category, but most importantly they appear in art, music, items in blockchain-based video games, and the form of video.

NFTs are of particular interest in the art world, where they sell for millions of dollars at major auction houses and beyond. Artists who once published their work for free or sold for cheap are starting to realize that they can monetize their talents using blockchain technology and NFTs.

After the NFT market surged close to 300% in 2020 to over $250 million annually, these stylish digital assets have captured the imaginations of traders and creative types alike. Another sign of increased adoption is the number of NFT wallets where NFT transactions take place and the fact that it nearly doubled in 2020 to more than 222,000 annually.

You don’t need to have long experience in the crypto space to adopt NFTs. It won’t be long before you decide to enter the world of NFT like the rest of the community to acquire some digital arts to diversify your portfolio. But before you do, it’s important to understand the NFT ecosystem and what it’s all about.

Non-fungible tokens appeal to collectors, investors, and traders alike. They are a digital version of a product that, like a work of art, gives its owner a certified version of that asset. NFT becomes even more important where, as in the art world, having a picture, a unique version of an item is much more valuable than owning a copy.

Take, for example, the Mona Lisa painting. Would you rather have the original painting or a perfect copy? The answer to this question is subjective and depends on how you value the artwork. The same concept applies to NFTs, where the owners of these digital assets whose proof of ownership has been verified on the blockchain believe the asset will either increase or add immeasurable value to their collection. Interchangeability, or lack thereof, is at the heart of an NFT’s value. Like the art world itself, NFTs draws on the idea of ​​an author or creative genius who places monumental value on an object.

There are numerous marketplaces where users can mine or purchase non-exchangeable tokens. Doing so often requires having a digital wallet with digital currencies to direct the purchase of your desired token. Also, there are various ways to purchase such tokens directly from sale or auction. Buying NFTs takes place not only on digital platforms but also at many famous auction houses such as Sotheby’s, which can sell NFTs bought with crypto.

The value of NFTs revolves around the immutable nature of these digital assets, the feature that sets them apart from cryptocurrencies as NFTs and cryptocurrencies are not the same things. Each NFT’s size, scarcity, creativity, etc. It has its own properties, such as By way of comparison, Bitcoin (BTC) is an exchangeable asset. If you are lucky enough to have 1 BTC and exchange it for 1 BTC, nothing will change. You still have the same amount of Bitcoin to use, hold, or “hodl”.

The same is true for fiat currencies such as the US dollar or the euro, and other examples of convertible assets.

By some accounts, NFTs first appeared in the cryptocurrency industry in 2012/2013, although they did not migrate to the Ethereum blockchain until 2017. The tokens are based on the Ethereum blockchain. While Ethereum is not the only blockchain where tokens can be created and traded, it is the most popular. The main standard for NFTs on the Ethereum blockchain is ERC-721.

When a transaction occurs on Ethereum, the wallet that initiates this process must pay miners a fee known as the gas fee for their work. The problem with immutable tokens on the Ethereum blockchain is that it is an expensive network and these transaction fees can reach unreasonably high amounts when demand for transactions is high.

For example, the price attached to an NFT could be as low as $60, but half of that could be spent on transaction fees to enable the transfer of that token. This greatly reduces the fun of the experience of using Ethereum to interact with NFTs. In some rare cases, the transaction fee may exceed the cost of the asset, so it may be worth waiting for the demand on the blockchain to drop so you pay lower fees to transfer collectibles.

NFTs offer creatives new ways to monetize their work and gain new followers.

If you’re wondering how intangible tokens are already changing the art world, look no further than Christie’s, an auction house with over 250 years of history. Digital artist Mike Winkelmann, aka Beeple, has sold his famous work “Everyday: The First 5000 Days” in JPG format for $69 million. It was a sign of the times, proving just how much the blockchain space has influenced modern art.

That price tag places Beeple among the three most expensive living artists in terms of the amount obtained through an auction. And while you might see NFTs hanging in a museum-like some of Christie’s other celebrity sales, the owner is sure to enjoy bragging rights while the art can be verified on the blockchain. Beeple’s story is also important because its involvement in the fine art world began when it met NFTs, which showed how fast a new artist can become a phenomenon in this digital art age.

After Christie’s announced it would auction a Beeple NFT, nearly one-fifth of the 33 regional bidders for digital art were Asian investors. Singaporean cryptocurrency investor “MetaKovan” has won the auction.

Musician Grimes has also joined the world of NFT, making nearly $6 million from the sale of digital art and video collection. Its best piece was a one-of-a-kind video called “The Death of the Elderly”. This NFT alone is worth close to $389,000.

NFTs have also made their mark on the gaming industry. CryptoKitties became the first to combine gaming features with NFTs in 2017, publishing digital cats on the blockchain, giving users the ability to interact and trade with them. The model was so successful that it briefly blocked the Ethereum network with high volumes of transactions.

Since then, gaming has become a staple use case for NFTs.

In the case of NFTs, there has been a crossover between traditional gaming companies and decentralized startups as both parties want to leverage digital cards, artwork, and even fashion on the blockchain. You can be sure that matchmaking will continue to disrupt the industry as players try to score points not just as competitors but also as investors.

Just because there isn’t a physical safe to steal NFTs doesn’t mean it isn’t a security issue. After all, much like the cryptocurrency industry itself, the NFT industry is a new market where developers are still solving some confusion and users are still getting an education.

NFTs architecturally made it the center of attention even while still being built. New entrants to the cryptocurrency industry may still be struggling to send Bitcoin or Ether (ETH) to the right addresses. With the rise of NFTs, they now have to learn about MetaMask wallets and the various blockchains on which NFTs can be created. All of this can be overwhelming for the new user and lead to irreversible errors in a decentralized world where there is no third party to return funds or products to the rightful owner.

While the immutable nature of the blockchain was intended to prevent fraud, this has not prevented fraud from happening in the NFT space. Bad actors find a way to infiltrate emerging markets, and NFTs are no exception when it comes to copyrights.

According to their social media accounts, the scammers managed to hijack some of the accounts’ tweets and sell them as their own NFT. While the industry has caught wind of this behavior and Twitter has since cracked down on it, this is an example of scams still prevalent in an emerging market.

The NFT market has achieved most of its impressive growth over one year. In 2020, most of the popular NFT platforms were not even in the middle yet, the start of 2021 kicked off with an unprecedented increase in activity and trading volume. Even if this trend continues at a slower pace, the overall adoption rate of NFTs is likely to be much higher in the coming years.

The NFT market has achieved most of its impressive growth over one year. In 2020, most of the popular NFT platforms were not even in the middle yet, the start of 2021 kicked off with an unprecedented increase in activity and trading volume. Even if this trend continues at a slower pace, the overall adoption rate of NFTs is likely to be much higher in the coming years.

While it is difficult to determine the value of intangible tokens, attributes such as uniqueness, tradability, talent, and whether the original artist was behind the sale all affect the price. The next wave of the NFT market could see tokens heading towards another frenzy taking the cryptocurrency market by storm. This is DEFI. In our next article, we will examine the subject of Defi.

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