In the last 30 days, there have been a whopping $300m in NFT sales! This is more spent on digital collectibles in one month than in the whole of 2020! NFTs are the new crypto craze of 2021. The world is suddenly hooked on NFTs. But what are they? How can you get involved?
What does NFT mean?
NFT — Definition
NFTs (or “non-fungible tokens”) are a special kind of cryptoasset in which each token is unique
Fungible Vs Non-Fungible
Fungible Assets are like gold, for example, one ounce of pure gold is equivalent to another ounce of pure gold. Shares of a company are fungible as one share in Tesla is equivalent to another share in Tesla.
Non-Fungible is when something is not interchangeable. For example, a theatre ticket is non-fungible, as it has its own value and properties including seat number, price, date, and showing. A unique painting is non-fungible, too.
Similarly, NFTs are limited editions of digital collectibles!
Let’s take a look at this in more detail
A huge problem with paintings or other collectibles is that there is the risk of counterfeits, someone could essentially create a fake painting and try selling it as an authentic one. The uniqueness of an NFT is that it not only is a one of one, but the NFT contains information that essentially proves its authenticity!
Also, another advantage of NFT’s compared to tangible assets like a painting is that a painting could be destroyed or damaged, an NFT cannot be destroyed or deleted since it lives on the blockchain.
Examples of Popular NFTs
CryptoKitties were first introduced in 2017 as the first big NFT. Each kitty is unique. Each kitten is a digital asset stored on a blockchain (usually Ethereum). Instead of the blockchain recording your ownership of a cryptocurrency, it records your ownership of a unique token representing the kitty!
Ownership of a Cyptokitty is similar to that of owning a cryptocurrency like bitcoin or another token. The blockchain holds the asset and the owner is the one who holds the private key for it. You can assign your kitty to somebody else by selling the private keys in return for cash or another token (like bitcoin).
Cryptokitties is a fun platform that allows you to breed and trade your kitties. Some features of kitties are rarer than others. The rarer the features, the more valuable the kitty!
This is another popular NFT. NBA Top Shot is a blockchain-based platform that allows fans to buy, sell, and trade numbered versions of officially-licensed video highlights. They were the largest contributor to NFT trading volume last month at a staggering $225 million!
You may be thinking ‘can’t somebody just record the video online?’ Of course, they can, the difference is what you’re paying for is “authenticity”. You can proudly say that you are the bonafide owner of the “original” digital asset. The blockchain, public ledger technology will ensure that people can’t create a copy of the authentication.
Cryptopunks is a collection of 10,000 uniquely created characters. They were distributed for FREE back in 2017.
The highest selling is CryptoPunk #7804, a computer-generated character of a teal-color, pipe-smoking alien wearing a hat and sunglasses, which was sold for 4,200 ethereum, which equates to approximately $7.5 million! That’s an astronomical profit!
How can you get your hands on your own NFT?
You can start collecting your own digital assets by visiting the websites above or market places such as opensea.io and Nifty. These are great places to look into when purchasing NFT’s. You’ll find a wide selection on their ‘marketplace’ and regular exciting new ‘drops’ from different artists to look out for!
Most of the NFT market places allow you to create an account and register with a debit or credit card, so you don’t even need to buy cryptocurrency to join in!
Future of NFTs
While it might be difficult to grasp why someone may spend so much on digital assets and why these assets are growing in value, NFTs seem to have tapped into a hunger for ownership. Many mainstream artists such as the Kings of Leon have gotten involved with the space, causing NFTs to skyrocket in price. This could become a permanent fixture in the world of collectibles. Or it may just be the flavor of the month. Time will tell!
It’s important to enjoy the collectibles that you buy and only spend after doing your research!
Happy Collecting! Good Luck finding the Digital equivalent of a Leonardo da Vinci!