NFTs – What’s All the Fuss?

Non-fungible tokens, or NFTs as they're known, haven't been around too long, but they already threaten to disrupt the collectibles market. NFTs have become one of the hottest niches in the blockchain space, selling for anywhere from $100,000 to millions of dollars and giving cryptocurrencies a run for their money.

NFTs are for creators, collectors, and investors alike, and their value comes down to what someone thinks they're worth today and how much they are expected to appreciate in value over time. These digital collectibles have captured the attention of major companies such as Visa and Adidas, celebrities including Paris Hilton and Jimmy Fallon, and famous athletes like Tom Brady and Tiger Woods. All of them are helping to catapult NFTs into the mainstream.

So, what are they, exactly? NFTs are digital collectibles that contain a component such as art, video, music, real estate, or even tweets on the blockchain, pretty much wherever the creator's imagination can take them. For example, they can take the form of a jpeg or a video or audio clip. Their charm is their unique nature in that they can only have one owner at a time, thanks to a code assigned to each token on the blockchain that makes them trackable. Despite clamoring to the contrary, an NFT that is copied and pasted does not carry the same weight as the original to any severe collector in that reproductions don't carry the same value in the art world.

To understand how far NFTs have come, let's start from the beginning. NFTs came on the scene in 2017 with the rise of projects like CryptoKitties, an early blockchain game built on the Ethereum blockchain. TechCrunch likens CryptoKitties to a “digital version of Pokémon cards,” with the key distinction that they exist on the blockchain. They are also alike because of the non-fungible feature.

For example, in Pokémon, a basic Pikachu card may be interchangeable with other basic Pikachu cards but not so much with a Shadowless Holo Charizard card. The same concept applies to fungibility, which makes these digital collectibles so valuable.

CryptoKitties are infamous for having clogged the Ethereum network back when they were new due to the sheer demand for these digital felines. As a result, users trying to send Ethereum on the blockchain were stuck with slow transaction times and higher than usual fees. This problem continues to plague the Ethereum network today (for reasons beyond just these adorable cats).

Bored Apes & Coolheadz

Ethereum is the most popular blockchain for NFTs. Remember that Ethereum is the name used for both the project's blockchain and the second-biggest cryptocurrency, which can also go by ether. non-fungible tokens issued on Ethereum use a standard known as ERC721. A couple of the wildly popular NFTs on Ethereum include CryptoPunks, Bored Ape Yacht Club, and Loot.

  • CryptoPunks are a set of 10,000 digital collectibles launched and were the first NFTs to be built on Ethereum in 2017. At one time, you could get a CryptoPunk for free, but those days are long gone. Now, these tokens are selling like hotcakes for no less than $1.5 million unless you get lucky and there is a fluke.
  • Bored Ape Yacht Club is a collection of 10,000 tokens going for hundreds of thousands of dollars up to a cool $2.7 million each so far.
  • Loot is a community-fueled NFT gaming platform that, instead of images, is based on text — white text on a black background, to be exact.

Comedian Jimmy Fallon caught NFT fever and announced on his show, The Tonight Show, that he purchased his first NFT, a Bored Ape. Fallon named the NFT Captain Breezy after polling his Twitter followers.

And while developers tend to flock to Ethereum, it is not the only blockchain for NFTs. Competing blockchains are increasingly addressing Ethereum's issues, such as high fees and slow transactions, and fixing them, making them more attractive to creators.

Solana, which has the reputation of an “Ethereum killer,” is also growing in popularity for NFTs. For example, in the three months leading up to November 2021, the Solana blockchain experienced secondary sales volume of $500 million, according to crypto research firm Messari. One of the up-and-coming NFT collections built on Solana is Coolheadz, a metaverse-focused project that comprises a set of just under 10,000 handcrafted NFTs.

 

In addition to Ethereum and Solana, other popular platforms for NFTs include Flow, Polygon, WAX, Binance Smart Chain, and Tezos.

As a sign of the times, NFTs are already being auctioned off on traditional platforms, including Christie's and Sotheby's. Digital artist Beeple became famous for selling his NFT called “Everydays — The First 5000 Days” on Christie's auction platform for $69 million, paid for in Ethereum.

NFT Marketplaces

If your curiosity is piqued, you might be wondering how you could participate in the NFT craze before it grows even bigger. Some of the most widely used marketplaces for minting, buying, and selling NFTs include but are not limited to:

  • OpenSea – This is the go-to platform for NFTs. To participate, you must have a digital wallet such as MetaMask, the Coinbase wallet, or Bitski, to name a few.
  • Axie Infinity – This is an online game whose marketplace is also a hit and supports trading solely in Ethereum-based digital pet NFTs known as Axies, the developers who got their inspiration from Pokemon.
  • Larva Labs – Larva Labs is behind the CryptoPunks NFT collection. If you are interested in CryptoPunks, this is the marketplace to be.
  • NBA Top Shot – This is where you go to collect and trade NFT versions of your favorite NBA and WNBA players. In addition to teams and players, NBA Top Shot NFTs also include Moments, video clips with game highlights, like the Kevin Durant dunk.
  • Rarible – Rarible is another popular option and provides a similar experience to OpenSea. It supports Ethereum, Flow, and Tezos.

If you are not too keen on going ‘down the rabbit hole' on crypto and the blockchain, you are in luck. Companies like cryptocurrency exchange Coinbase are making it easier to participate in this market to hasten NFT adoption. Coinbase aims to streamline the user experience for NFTs, similar to how it onboarded bitcoin investors, saying that the interface will be “user friendly” and NFTs could be created with the tap of a few buttons. For its part, Coinbase has announced a new NFT division where users can mint and collect these digital collectibles, the waitlist for which is over 2.5 million strong.

Given the nascent nature of the NFT market, these digital collectibles could be just scratching the surface. Ethereum developers envision a world where you use an NFT to prove ownership of a physical asset like a car.

This post was produced and syndicated by Wealth of Geeks


+ posts