The popularity of unique NFT tokens is growing rapidly in the cryptocurrency industry. Analysts suggest that the trend even has every chance of repeating the success of the decentralized finance niche in 2020.
World famous stars, musicians, artists and other figures are connected to the topic, who use the advantages of the blockchain to their advantage. Who has already contacted NFT and how?
By tradition, let’s start with an explanation. NFT is a new type of digital asset. These are unique tokens that are most often tied to digital art objects and digital collections, and the fact of their ownership is recorded in a transparent and public blockchain.
What are NFT tokens
In fact, this is the same as ETH, DOT, LINK and other cryptocurrencies on the Ethereum network, but with one important difference. All NFT tokens are unique and non-fungible. If we can exchange our ethers for Polkadot tokens using the Uniswap decentralized exchange, and then reverse the operation and own the same amount of ETH, this trick will not work with NFT tokens. Each of them is unique and, in fact, is a collectible. Since it is not possible to create a copy of the NFT token, they are rare by default.
As we have noted, NFTs are digitally often tied to something in the real world, such as a painting or animation. Binding the NFT to such a file guarantees the fact that its «original» is owned by the one who currently has the corresponding token. The token cannot be forged, re-produced or duplicated in any way. For ease, you can think of NFT tokens as a rare baseball card or collectible Pokemon cards .
The uniqueness of tokens affects the demand of investors. For example, this work was estimated at 140 ethers, which at today’s exchange rate translates into 219 thousand dollars. It would seem that there is nothing remarkable in a small picture of a monkey, but cryptocurrency lovers do not think so. Exactly the same monkey no longer exists in the world, which means that its buyer really becomes unique . Well, forgeries and exact copies are simply not considered, because a unique token will not be assigned to them.
As a result, NFTs have become popular among digital content creators as well, as part of the token resale value is returned directly to its original author.
The prevalence of the Internet allows everyone to view images and pictures, as well as listen to songs – and do it for free. In this case, NFT tokens are a kind of shield against piracy and counterfeiting, because thanks to the immutability and transparency of the blockchain, their owners can easily prove their unique ownership of a particular item. Investors are investing a lot of money in this kind of thing because of this too.
Why are NFT tokens so popular
According to CNBC, the coronavirus pandemic has become the main impetus for the development of the NFT token and digital art industry. Because of her, the authorities introduced various restrictions that forced people to spend more time at home. As a result, they increased their time on the Internet and at the same time saved money, which was usually spent meeting with friends in bars and restaurants.
We have already seen examples of people’s activity on the Internet. We are talking about a massive buy-up of Gamestop shares thanks to the idea of Reddit users. As a result, stock prices skyrocketed and the big Wall Street funds were forced to take huge losses.
In addition, over this year, since the introduction of restrictive measures, the value of cryptocurrencies has grown significantly, which has attracted many new people to the blockchain industry. An anonymous collector of NFT tokens under the pseudonym Whale Shark agrees with this point of view. His collection of digital art is the equivalent of $ 2.7 million. Here is an investor quote.
Right now, we live in a period where the majority of the population spends half of their free time on the Internet and spends a significant part of their life on the computer.
So he agrees that the new way of life of people and the amount of free funds contributed to the popularization of NFT.
The growing popularity of NFT tokens is visible on the charts. We checked the actual data: the numbers are really breaking records. For example, here is the NFT trade volume data. Last week’s figure was the equivalent of $ 196 million.
And here is the number of users in the NFT industry. And this figure is also growing: in a week it amounted to 237 thousand addresses.
Finally, the number of transactions in the NFT niche is also on the rise. There were 1.69 million of them in the last week.
In addition, the art market giants are gradually joining the topic. As we learned in February, Christie’s made its debut sale of a digital artwork on the blockchain. And this is a great achievement for the industry.
NFT sets new records
In general, trading platforms for the sale of unique tokens are showing increased interest from cryptocurrency fans as never before. In February of this year alone, the NFT trade volume surpassed the $ 342 million mark . At the same time, back in December, the volume did not exceed the $ 12 million mark, and the sum of all transactions with NFT for 2020 reached only $ 200 million , Decrypt reports.
Trading volumes of the most popular NFT exchange platforms
The NBA TopShot platform, which hosts officially licensed NBA-licensed digital basketball collectibles, is the leading NFT marketplace today. In February, the NBA Top Shot captured over 65 percent of the total NFT market, worth over $ 225 million, according to Dapp Radar .
Another collectible, called Cryptopunks, had $ 79 million in deals during the same period, and the Hashmasks series grew to $ 33 million . The largest NFT sale to date was 6.6 million for a work called «Crossroads» on the Nifty Gateway platform.
Given the sharp growth rates in this area, it can be assumed that in a few months, the trading volumes for transactions with NFT will reach billions of dollars.
NFTs sold for more than 200 thousand dollars
Celebrities are also joining this trend. The singer Grimes, who is the mother of Elon Musk’s son, recently sold a collection of her digital works for $ 6 million . The collection is centered around the digital avatar «WarNymph», which is Grimes’ identification during the release of her fifth album, «Miss Anthropocene».
The singer sold her works on the NiftyGateway platform, seven works were unique and two more with the so-called «open version». The buyer of the latter could get the right to release his own version of the original work of Grimes.
The latest work, entitled «Death of the Old», sold for $ 388,938. It is noteworthy that most of the collectibles from Grimes are digital images, but the three latest works «Earth», «Mars» and «Death of the Old» are animations for the yet unreleased tracks on the singer’s new album.
Disadvantages of NFT tokens
Experts believe that speculation is a key problem for NFT art, that is, the desire to make money by simply reselling an object at a higher price. At the same time, experts note that the number of holders of unique long-term tokens is also growing.
Here is a quote from Nadezhda Ivanova, chief operating officer of the L’Atelier platform.
As with other tech hype cycles, we start with speculative activity, which often gives way to great fundamental values. NFT started in 2017. Then it was mainly about speculation, but in 2020 the market showed much more maturity.
Some critics consider the industry not so useful and just hype. Some even compare the current NFT situation to the legendary Initial Token Offering (ICO) bubble in 2017. However, fans of the new trend disagree. Here is a quote from the already mentioned investor under the pseudonym WhaleShark.
I think that 99 percent of the projects that exist in the industry today may not exist after two or three years – and this is also reminiscent of the ICO boom.
That is, he believes that representatives of the cryptocurrency industry are generally equal to each other. Therefore, it is not worth highlighting NFT from the negative side.
Also, since NFTs so far mainly operate on the Ethereum network, users are forced to pay large commissions for interacting with smart contracts. However, this also does not make the NFT industry specifically worse, because the problem is relevant for everyone.
We believe that the NFT token and digital art market will continue to evolve. The sphere has great potential, with developers finding ways to apply unique coins in new areas. Therefore, it is too early to criticize the trend – especially given the fact that many representatives of the blockchain niche heard about it only this year.