By now, you’ve probably heard of NFTs. A more recent branch of the crypto world, which has swept the globe. Some people think it’s just hype and will eventually fade away. But those who look deeper into the subject soon realize that this is just the beginning.
This article aims to educate you on the topic of NFTs. Its history, applications, and future prospects.
What are NFTs?
Non-Fungible Tokens are unique data assets stored on the Blockchain. NFTs be many things, such as
- Animated Gifs
- Game Characters and Assets
Each NFT is one-of-a-kind and irreplaceable, since each NFT has a unique set of characteristics and code that cannot be duplicated. This code is fairly easy to track and makes it that much easier to identify its owner, decreasing the risk of fraud. This uniqueness is what drives the value of NFTs.
NFTs are also very valuable for artists, as they remove the need for a middleman between the creator and the audience. For example, a musician creates a song and the production company sells it. The production company takes a huge portion of the profits and then gives the musician a small percentage. In the case of NFTs, however, the musician can sell his music as an NFT, and his fans can purchase it directly from the artist. This helps creators make more profit from their work.
When did NFTs first appear?
The very first NFT, Quantum, was created in 2014 by Kevin McCoy and Anil Dash and sold for $4. Then, in 2015, came Etheria, the first NFT project. Etheria was a NFT strategy game. Each of the 457 hexagonal titles of Etheria were sold for 1 Ethereum token, which was only $0.43 per tile at that time. Today, those same Ethereum tokens are worth thousands of dollars each.
In 2017, NFTs went mainstream. When CryptoKitties launched, it became an instant success. This NFT game has more than 1.5 million users and has already generated more than $40 million in revenue. Since the success of CryptoKitties, the NFT market has skyrocketed and continues to grow. In 2021, the NFT market was valued at $41 billion.
What are some of the most expensive NFTs sold?
- Crypto Punk #5822
This NFT, part of the Crypto Punk Collection, sold for $23.7 million.
- Human One
This sculpture of a person in a spacesuit, created by the artist Beeple, was sold for $29 million at Christie’s auction.
This NFT with a black background and the word “One Thousand And Forty Seven” written on it, sold for $52.7 million.
- Everydays: The First 5000 Days
Another NFT from Beeple, representing his earliest artwork, sold for more than $69.3 million.
- The Merge
A NFT created by digital artist Pak, sold for nearly $92 Million.
Why do People Buy NFTs?
Aside from investment opportunities, NFTs are mostly bought by collectors. Like I said before, each NFT is one-of-a-kind, and purchasing one makes you the original owner. Furthermore, NFTs have a built-in authentication program that can be used to track them back to their original owner.
The concept of autographs is a simple way to explain this. Every celebrity autograph is made for a specific person and thus is one-of-a-kind. This one-of-a-kind quality is what gives autographs their value and explains why some are sold for such high prices. This “bragging right” is what collectors look for.
Should you buy NFTs?
Investing in the NFT marketplace is really a personal decision. It’s just like investing in any other collectible market… Should you purchase baseball cards, antiques, or coins? The choice is yours.
Arry Yu, a founding chair of the Cascadia Blockchain Council and managing director at Yellow Umbrella Ventures, stated, “NFTs are risky because their future is uncertain, and we don’t yet have a lot of history to judge their performance” She added, “Since NFTs are so new, it may be worth investing small amounts to try it out for now.”
There have been quite a few examples of extreme success in the market. But, if you are considering getting in on the action, I suggest you take Yu’s advice and start small.
Just like any other investment, conduct proper research, understand the risks, formulate a strategy, and proceed cautiously. By “start small”, what we mean is, don’t invest more than what you can afford to lose. As a new investor, gaining market experience is what holds the most importance. Going all-in as a newbie is never a smart move.
What are the Best NFT Marketplaces?
If you do decide to venture into the world of NFTs, first you will need to find some projects. The following are some of the best NFT marketplaces that you should know about.
OpenSea is a New York based American online NFT marketplace. Founded in 2017 by Devin Finzer and Alex Atallah. It’s a platform where you can scout upcoming NFT projects, buy them at a fixed price, or through an auction. Following the surge in NFT interest, the company rose to a market capitalization of $13.3 billion by January 2022, making it one of the most popular NFT marketplaces.
Similar to OpenSea, Rarible allows users to buy or sell NFTs, without a middleman. Many celebrities sell NFTs on Rarible, but you don’t have to be famous to use the platform. Rarible makes it easy for anyone to create, buy and sell NFTs.
Foundation is another very popular and private marketplace for NFTs. The reason I say private is that you can’t sell NFTs on Foundation without an invitation. Another member must invite you, before you can place an NFT for sale or auction. So you had better start making some connections. Of course, buyers are always welcome.
NFTs offer both creators and collectors a great opportunity to interact directly, and benefit the most from their work and investments. They can easily be traced back to the artist, the difference between a real and a fake is easily distinguishable (through its coding), and its very easy to buy, sell and trade.