Non-fungible tokens (NFTs) have taken the world by storm since 2020. They represent digital ownership of items and goods and can describe any asset, including files, as precious investment metals, stocks, etc. However, there is much to learn about NFTs and why this industry is increasingly popular globally.
It is almost impossible to envision a world where NFTs do not exist. The public perception regarding non-fungible tokens remains divided, as some see merit in the approach, whereas others think it’s all a hoax. However, technology offers attractive benefits. These include establishing digital ownership, global traceability, transparency and traceability, and growing [real-world] utility.
Establishing digital scarcity, rewarding creators, and establishing a global and interconnected market for trading and other business operations is appealing. The big question is whether those benefits will lead to broader mainstream adoption of NFT technology. Before we can look toward the future, learning about the past and how it has brought NFTs to the forefront is essential.
$41 Billion Was Spent On NFTs in 2021
One sign of ongoing NFT market growth is the sheer amount of money people will spend on non-fungible tokens. The year 2021 was the best period for the industry to date, resulting in $41 billion in overall spending. Part of that growth comes from the weekly trading volume of non-fungible tokens, which often range between $10 – $20 million.
Recreating that momentum throughout 2022 will pose specific challenges. Growing attention to NFTs will likely trigger geopolitical and economic action by various nations. It is unclear what that might entail, although taxation guidelines are not out of the question. However, the NFT space will keep growing in 2022 and beyond, even if there is some pushback.
The Ongoing Success of Bored Ape Yacht Club
NFT enthusiasts will readily acknowledge Bored Ape Yacht Club (BAYC) is the most popular collection on the market. It is also a collection with various celebrity-level owners, including Johnny Depp, Eminem, Neymar Jr., Paris Hilton, Justin Bieber, Marc Cuban, Madonna, Post Malone, and Shaquille O’Neal. Celebrities bring mainstream attention to this collection and the broader NFT industry, sustaining the high value of every asset in this collection.
Interestingly, the asset with the highest value is Bored pe #2087, the 9th-rarest ape in the collection. It was purchased for the price of 769 ETH – or over $2.3 million – in September 2021 by an anonymous buyer.
NFTs Are Unique
Although this may seem like a given, many people struggle with the concept of how NFTs are unique. The average person thinks they can right-click an NFT image, save it to their hard drive, and “own” the asset. However, while images can be protected that way, the ownership of the non-fungible token does not come with it. Nor can one trade one NFT directly for another, as these assets are not fungible.
What differentiates them from cryptocurrencies like bitcoin, where 1 BTC = 1 BTC?
Much of the price appreciation of NFTs comes from that non-fungible approach. These assets are worth as much as one is willing to pay for them, enabling users to set the market prices. NFTs have the rarity and collectability of Pokemon cards but also provide a digital certificate of ownership stored on the blockchain. That certificate confirms the asset’s actual owner and ensures forging NFTs is impossible.
Singapore, Hong Kong, And China Are Huge NFT Hubs
It is always interesting to see how new technologies – blockchain, crypto, NFTs – gain traction in certain countries rather quickly. For non-fungible tokens, there are three primary activity hubs: China, Singapore, and Hong Kong. It is a bit of a surprising list, as cryptocurrencies have not received favorably in China in recent years. However, there is a thriving community of NFT enthusiasts across these three countries, lending more credibility to non-fungible tokens.
Singapore has a somewhat competitive edge where NFTs are concerned. The country’s central bank decided not to regulate non-fungible tokens at this time, despite growing concerns the bank would interfere somehow. A welcome decision, although it doesn’t mean there will never be any NFT regulation in the country. Overall interest in non-fungible tokens has skyrocketed in Singapore since that decision and shows no signs of slowing down.
You Can See An NFT’s Entire Ownership History
As non-fungible tokens are issued on the blockchain, they can see their entire lifespan without needing special software. Like cryptocurrencies, an NFT has a history of transactions -and ownership – for anyone to see. Using famous block explorers like Etherscan or even NFT marketplace OpenSea will give you a better idea of who owned a particular NFT in the past and for how long.
Blockchains are decentralized and transparent by default. All transactions and data are permanently recorded on this ledger, and NFTs are no exception. That record-keeping process prevents corruption and establishes immutable proof of ownership.
NFT Real Estate Is Big Business
While the current NFT landscape primarily caters to digital artwork, the technology applies to many potential use cases. One such concept is tokenizing real estate on the blockchain and selling virtual land plots in the metaverse. Early adopters and speculators shell out good money to acquire virtual land plots in The Sandbox, Decenttraland, and other metaverses. Facebook’s rebrand fuelled part of that growth to Meta.
The ongoing demand for virtual land plots continues unabated, with specific properties selling for more than 1$ million. Owners can use that land however they see fit, including building houses and theme parks, creating game worlds, introducing decentralized finance concepts, etc. The possibilities are endless when one owns virtual land in the metaverse, although one should prepare to pay a pretty penny for plots.
Twitter CEO Jack Dorsey Sold An NFT Of His First Tweet For $2.9 Million.
In theory, it is possible to tokenize anything into a non-fungible token, including Tweets. One could argue there is little merit in owning someone else’s Tweet, especially when it remains accessible through Twitter. However, the first tweet by then-Twitter CEO Jack Dorsey sold for $2.9 million as an NFT in March 2021. Bridge Oracle CEO Sina Estavi is the current owner of that NFT and has tried to accumulate tokenized Tweets of Elon Musk.
The $2.9 million from the sale were donated to various charities fighting poverty, confirming NFTs can be used for a social cause.
Ethereum Supports The Majority of NFTs
It is possible to create non-fungible tokens on dozens of blockchains, some of which are cheaper than competing networks. However, Ethereum remains the go-to network to mint and trade NFTs. Other NFT networks, such as Enjin, have a native NFT token standard but are still anchored to the Ethereum network for security.
The interest in NFT exposure has increased the ETH value in recent years. For example, in June 2017, one could buy an ETH for $320, which costs over $1,150 today. Moreover, ETH hit an all-time high of over $4,000 in 2021. That renewed price momentum is mainly due to the growing popularity of non-fungible tokens, which bring more attention and developer interest to Ethereum. As the ETH value rises, buying NFTs on Ethereum is considered a future investment in the NFT asset and Ethereum’s ETH.
Smart Contracts Can Convert Anything Into An NFT
Most of the attention focuses on selling digital art and collectibles, but the technology is incredibly versatile. Any digital item or asset can become an NFT with the help of blockchain technology and smart contracts. In theory, anything can be easily tokenized, including domain names, assets, Tweets, music, movies, etc. With smart contracts and NFTs, claiming and proving ownership over such items has become much more straightforward.
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