Traditional paintings, images, video clips, tweets selling for millions have paved the way for a revolution that has become a digital autonomous asset creation and redistribution. Yes, Non-Fungible Tokens (NFT) are cryptographic tokens that generate value because of their uniqueness. From tangible to intangible items, owning an NFT is like owning an original art or a collectable antique.
The difference between owning a physical collectable like a Pokémon card and a digital asset like NFT is that NFTs contain distinguishable information that distinguishes them from any other NFT and is easily verifiable. As each item could be traced back to its original creator, the duplication and circulation of fake collectables become pointless.
No two NFTs are identical. Unlike tangible real-money or digital cryptocurrencies, NFTs can’t be directly traded with one another, even if they exist on the same platform, game or collection.
The term ‘Fungibility’ means replaceable by another identical item; mutually interchangeable. For example, like how the conventional barter system works, we can exchange goods, services, money or cryptocurrency for the same value. In fact, this transactional value makes cryptocurrencies fit for use as a safe and secure medium in the digital economy.
On the other hand, this evolving digital asset is ‘Non-Fungible’, i.e., it is irreplaceable and, like a game token or a ticket, can only be used by the owner.
Most of the NFT tokens are built using two Ethereum token standards named ERC-721 and ERC-1155, enabling the software developers to easily deploy NFTs and ensure they’re compatible with the broader ecosystem.
Characteristics of NFTs include
Non-interoperable: After being sold as an NFT, a CryptoPunk cannot be used as a character on the CryptoKitties game or any other platforms, for that matter. An NFT art, once registered with blockchain, cannot be reused for any other platform.
Indivisible: NFTs can’t be divided into smaller denominations; they exist exclusively as a whole item.
Indestructible: NFT and its owner’s data is stored on a secure distributed database called ‘blockchain’ where each token is indestructible, irremovable, and irreplicable. Also, the gamers and collectors own their NFTs, not the companies that endorse or design them.
Verifiable: The original creator of NFT can be traced via blockchain’s data; you don’t need any third-party verification to authenticate these pieces.
Why do they have value?
Gamers can create, monetize, structure and sell individual digital items they procure for real money during gameplay. Artists get great profits when their artworks are sold directly to global buyers without an auction house. Like all assets, demand and supply are the important factors for price.
For example, gamer on the Decentraland virtual land combined 64 lots into a single estate after purchasing it and labelled it as “The Secrets of Satoshis Tea Garden”. It got sold for a whopping amount of $80,000 only because of its road access and location.
How to create, sell and buy NFTs?
You can create and sell your own NFT artwork, be it a GIF or an image, and it doesn’t require extensive knowledge of the crypto industry. As a plan, you will need to decide which blockchain you want to sell your NFTs on. Ethereum provides the blockchain service for NFT issuance.
Coming to sales, NFTs have become one of the hottest crypto trends of 2021, with overall sales already up by 55% since 2020 with $389 million.
When it comes to buying Non-Fungible Tokens, there are four things you need to be sure of:
- The marketplace you intend to buy the NFTs from.
- The wallet you need to download to purchase NFTs.
- The cryptocurrency you need to fund the wallet to complete the sale.
- The seasonal timings of purchase.
Let’s be clear about one thing: certain NFTs are only available on certain platforms. You will have to wait for one of the card pack drops to be announced; such NFTs can get over in seconds, so you need to have everything ready ahead of time.
Where to buy NFTs?
For NFT traders, here is a list of the most popular NFT marketplaces in 2021:
- Nifty Gateway
- Axie Marketplace
- NFT ShowRoom
Some of the most expensive NFTs
- Dragon the CryptoKitty, valued at 600 ETH, is still the most expensive NFTs.
- The “1-1-1” race car from F1 Delta Time was sold for 415.9 ETH in May 2019.
- The latest sale of Alien #2089 went for 605 ETH. It was also a part of the CryptoPunk collection, the first NFTs ever created.
- Basketball player LeBron James’ NBA digital collectable card was sold for $100,000.
- Angel, an Axie from the NFT-based game Axie Infinity, was sold for 300 ETH.
Popular references of Celebrities who bought NFTs
- Twitter’s CEO, Jack Dorsey, listed his first tweet — “just setting up my twttr” — at auction, with bidding reaching up to $2.5 million.
- Grimes, Elon Musk’s girlfriend, sold some animations she made on a website called Nifty Gateway for a total of more than $6 million.
- American Football player Rob Gronkowski is launching his digital trading cards as NFTs in March.
- $2,08,000 was paid to purchase a video clip that featured the famous Nyan Cat meme, which was sold for nearly $5,90,000 as an NFT.
- A 10-second video clip featuring a fallen Donald Trump sold for $6.6 million on Nifty Gateway.
Future of NFTs
A lot of brands and celebrities like UFC and Shawn Mendez have already signed deals to release their own non-fungible assets soon. It is anticipated that the NFT market will exceed $1.3 billion by the end of 2021 as more artists, brands, and icons utilize this space to create their own tokens. With more blockchains competing to produce better NFT services and a growing range of platforms to choose from, this is a great time to take part in the game!