In the beginning, there was a cat meme. For approximately $600,000 in NFT-marketplace sales in February, an animated GIF depicting a flying kitten with Pop-Tarts for limbs and a rainbow dangling from its rear was reported.
The proprietor of this Nyan Cat viral animation, which he made a decade ago, has now decided to cash in on his work. The floodgates then opened. For $208,000, a video clip of LeBron James dribbling sold A ten-piece digital art collection by Grimes, Elon Musk's partner and mother of their child X, sold for $6 million. Most recently, Twitter creator Jack Dorsey sold his first tweet for $2.9 million: "just putting up my twit" in March 2006.
Is there anything that connects these items except for their outrageous prices? NFTs have been around since at least 2015, but because of the constant stream of news stories about outrageous sales, most of the globe has been forced into a crash course on NFTs. And there's no evidence that the gold rush will calm down any time soon. There is currently a lot of interest in leveraging the technology to sell digital art, though.
Tokens that are non-fungible are digital items that have been authenticated using blockchain technology, making them one-of-a-kind. To put it another way, unlike an analog asset such as a painting, which is unique by design, digital works can be repurposed over and over. Because of this, the NFT issues a certificate of authenticity attesting to the fact that it is the sole remaining copy. As long as you buy the NFT, you can be assured that you're getting the real deal. In contrast to actual items, such as DRC wines or Vermeers in the real world, NFT cannot be forged; the code itself cannot be counterfeited. It can just be put in your digital wallet.
If you've ever wanted to create an NFT, you may do so by signing up and verifying your identity on a blockchain platform like Ethereum. As a social experiment, the New York Times is auctioning off a very meta NFT of a recent essay on NFTs on an online marketplace called Nifty Gateway, OpenSea, Rarible, and Foundation, where the commodities are traded. 21.00 ETH or $33,358.29 is the current bid.
Digital media creators who can formally verify their work of art have the ability to commercialize it and deal with customers directly, eliminating the need for an intermediary and giving themselves full control over their virtual work. Eloisa Marchesoni, the co-founder of blockchain consultancy Blockchain, thinks that "the premise that creative brains must be paid for what they feed to social digital platforms is finally becoming a thing" thanks to NFTs.
According to Marchesoni, the market for NFT transactions rose by 97 percent between 2019 and 2020. A rise in online activity due to the pandemic has inevitably been a factor. There has been an increase in expenditure on virtual goods, services, or experiences, according to Marchesoni. "The surge in NFTs is just getting started."
Also worth noting is that NFTs and cryptocurrencies have a significant carbon footprint because the blockchain verification method known as Proof of Work, consumes a great deal of energy. The Bitcoin network uses as much electricity as Sweden, according to this analysis.
NFTs are becoming increasingly difficult to ignore as they have the potential to alter the future of ownership in virtually every aspect of our life. In the year 2020, the NFT market increased by 299%, and in February 2021, more NFTs were exchanged in 24 hours than in the entire year of 2020 combined. The question is, what's fueling this growth, and how can we employ NFTs in a revolutionary new manner? Let's take a look at a few samples.
1. The NFT Art Market
Since NFTs are so rare, they have the power to transform the digital art world, Sotheby's auction house claims. It's a much-needed layer of protection for artists who put their work online, where content may readily be duplicated and disseminated to their detriment.
A digital asset's scarcity and original ownership can be verified by NFTs because of the blockchain's immutable ledger technology. In the fight against creative theft and plagiarism, it's a triumph for artists, who can now monetize their enterprises.
As Sotheby's puts it, NFTs "offer opportunities for artists that never before existed" by allowing collectors to evaluate digital artwork in the same manner they would value physical art. When Beeple sold a $69 million NFT of his collage, "The First 5,000 Days," he proved this idea to be factual.
2. For Real Estate
NFTs could revolutionize the real estate market because of their ease of use and capacity to confirm ownership.
Buying and selling real estate involves a slew of middlemen, from estate agents and banks to notaries and solicitors, all of whom add unnecessary fees to what should be a straightforward transaction between two individuals.
Smart contracts that enable the secure and straightforward transfer of ownership might be used to replace these intermediaries in NFTs, allowing the purchase of real estate to proceed much more quickly. The blockchain records and commits all history of ownership and rights, making it immediately and easily verifiable.
Additionally, the use of NFTs could allow for fractional ownership of properties, allowing owners to quickly unlock value from previously illiquid assets and obtain financing without the need to turn to the bank. The possibilities are limitless, and they could have far-reaching effects that extend beyond the usual realm of real estate and finance.
As soon as the ERC-721 protocol was developed by an Ethereum Improvement Proposal (EIP) in January 2018, it became popular to gather NFT tokens. There came a point in time when Dapper Labs' legendary CryptoKitties captivated collectors worldwide, with one fetching $170,000 at the time.
NBA Top Shot, one of the most popular sports fan applications today, replaced traditional trading cards with NFT digital files of 'highlight moments' of its great players because of their attraction to mainstream sports teams. One of LeBron James' video highlights recently sold for a whopping $200,000 on eBay. Using NFTs, teams may develop new revenue streams and boost fan interaction across a wide range of locations.
NFTs are also making a splash in the music industry, with DJ and EDM remixer 3LAU selling $11.6 million worth of NFTs in February alone. Steve Aoki, a popular dance DJ, earned $4.25 million from his non-financial transactions in March.
On the other hand, as Airborne Toxic Event's Mikel Jollett, who is also the leader of "Hollywood Park," notes:
“For years, huge businesses have artificially kept the price of music at a low level than the worth of music to people's lives in order to protect their immense profits from the so-called piracy that would slash artists' benefit considerably.”
With smart contract technology and the use of NFTs, musicians can automatically receive royalties when their music is streamed or downloaded. Without profit, artists may finally receive their fair share of their work.
While the recent attention has been on art and entertainment, NFTs make the most sense in the game industry. More than 2.7 billion people play online games, so digital collectibles are nothing new.
Gamers are often encouraged to unlock in-game products that may be traded or exchanged for real money in order to create thriving economies in online gaming environments.
NFTs are extremely valuable to players because of their rarity and immutability, which allow them to verify the history, validity, and provenance of their things.