We expected cryptocurrency to promote a revolution in different industries. However, the impact has been more than expected. It is amazing to see how the cryptocurrency industry has improved many businesses and professions. This has led to new concepts and digital tools such as the NFTs, an acronym for Nonfungible Tokens.
NFTs are digital identifiers that confirm that a digital asset is unique. It is the microdata that makes digital assets such as artwork, poetry, social media posts, videos, and music different from other copies, so it is easy to identify the originals. NFTs are applicable for a wide range of digital assets, which is great news for investors who would like to trade with cryptocurrency.
NFTs have made it possible for any talented person to create content and sell it for the right value. And the consumers who buy NFTs are not worried about buying fakes because the NFT data on an original copy cannot be changed, thanks to Blockchain technology.
How NFT trends started
We started hearing about NFTs in 2012, and over the years, the concept has been developed and fully implemented. The NFTs have filled a vacuum created with the introduction of the Decentralized Apps (DApps). Creative software engineers develop DApps that can be purchased or subscribed to. Applications such as the CryptoPunks and Cryptokitties became popular among investors. These apps created the need for NFTs in the crypto industry.
CryptoPunk was launched in 2017. It is the digital marketplace for unique artwork. The platform started with sales of sketched cartoon characters that could not be found on any other digital platform. These characters were offered to members of the Ethereum community for free, at first. Later, the assets were sold and traded. The realization that there is a demand for digital artwork because they are rare pushed the NFT concept.
Cryptokitties also became popular in 2017. People could own virtual cats, which are later sold for a good price. Every virtual cat has a unique number and traits. The cats are interbred to generate offspring with similar but unique features, which attracts collectors. The virtual cats purchased became one of the first NFTs to be traded on the Blockchain network. By September 2018, virtual CryptoKitties were already selling for up to $170,000, which is approximately ETH 600.
Soon many creative people joined the trend to offer their unique NFTs to collectors online, who were willing to buy and pay in cryptocurrency.
In 2020, the value of the NFT market had grown by 300%, with over $250 million worth of transactions with digital assets. It is expected that these figures will rise in the coming future because of the growing demand for NFT wallets.
NFT concept can influence your career
If you are a creative person with the ability to create unique digital content, it won’t be long before you start getting demands for NFT. Many investors have discovered how they can securely make purchases with NFT, so it is the first choice. You also get the opportunity to earn more money from a diverse portfolio featuring NFTs and physical content for your audience.
How to certify NFTs
You have all the claims to creative content when you own the certified digital version. If you are a buyer, you should only contact people who own certified versions of music, artwork, or other NFT categories. As a seller, you should ensure your intellectual property has been certified on the Blockchain to protect your interests. The demand for certified versions for artwork, music, or poetry is associated with the pride of owning the real thing instead of a fake copy. Certified versions of NFTs make the copies and other fakes worthless and undesirable.
To certify your intellectual property as an NFT, it has to be verified on the Blockchain network. Verification is done by miners who mint NFTs. However, there are many platforms that allow you to Mint your NFTs when you register to use the tools on the forum. After your content is certified, you get a unique signature or identification that confirms you are the original creator. This data is stored in the NFT code. The Blockchain is the perfect platform for the sale of NFTs because of its security.
What are Nonfungible NFT features
NFTs are so valuable today because of their nonfungible features. It is different from cryptocurrency, which is a fungible digital asset. The nonfungible features of NFTs make it possible to create content with different digital sizes that make the NFT rare and impossible to exchange with another digital asset.
For example, you can swap 1 BTC with another person, and all you get is 1BTC, with no change in value. The same goes for regular currencies such as the USD, which has the same value as other USDs in circulation. The uniqueness of an NFT gives you leverage to exchange it with another NFT, and you get much more value.
NFTs and the Ethereum Blockchain
You will probably hear people mentioning ETH when they talk about NFTs. That is because the concept was first integrated with the ETH network before others. The integration of ETH and NFTs happened in 2017. Since then, NFTs have been mined and traded on the ETH Blockchain. The development of the ERC 721 improved the effectiveness of miners who could solve blocks faster on the ETH network, which was necessary because of the rise in demand for NFTs.
The miners responsible for verifying transactions earn a gas fee after completing their tasks. The gas fee depends on the demand for that NFT which is usually a high price, and that means more money for the miner. On average, NFT transactions are more expensive than regular crypto transactions.
For example, you can find an NFT on sale for $50, but you will need to spend much more to secure and receive the NFT. There are instances when the gas fee you pay exceeds the cost of an NFT. However, this only happens for rare NFTs in high demand. To avoid unnecessary fees, you can patiently wait until there is a decline in the demand for an NFT you want to buy.
There are indications that migrating the ETH network from a Proof of Work consensus to a Proof of Stake system will improve the processing of NFT transactions. It will also mark the introduction of Ethereum 2.0 (ETH 2). These events will also have an impact on the costs of NFTs, making it easier to secure these digital assets.
How NFTs changed the world of art
Many artists have been earning more money and growing their fan base by selling NFTs.
Artists are selling modern art featuring different themes and in simple JPG format. For example, an artist named Mike Winkelmann made the headlines for selling artwork for a whopping $69 million. This art piece was sold during an auction. There have been many other record-breaking sales, so it is not surprising to see many other artists adopting the NFT platform to sell their artwork.
The top bidders for NFT arts are from Asia. There is always a long line of bidders trying to outwit themselves to secure rare artwork. It is also an investment that can pay off in the long run since NFTs are sold for much more money after the value increases.
Some of the highly demanded artworks are from artists such as Mike Winkelmann, who is fondly called Beeple, and CryptoPunk – the creators of eccentric zombie and alien characters with 24×24 pixels. There is also the musician named Grimes, who has sold NFTs worth about $6 million, including the record-breaking “Death of the Old” video sold for $389,000. These high figures have attracted more creatives to start selling NFTs.
NFTs and Cryptocurrency gaming industry
The cryptocurrency gaming industry has witnessed a huge impact from NFT transactions. The first trend started with the launch of CryptoKitties in 2017. CryptoKitties offered the ETH community an opportunity to own unique kitties, which attracted collectors. There was such a huge demand for kitties offered as NFTs, which caused more awareness.
For such addictive games, the developers earn more money from selling themes, upgrade codes, digital cards, and other features that improve the user’s experience.
It is expected that more opportunities will be provided to help investors and gamers become more involved in the crypto gaming industry.
Are NFTs secure?
There are always cyber criminals planning to find loopholes to steal from the cryptocurrency community. This threat extends to NFTs as well. However, with more awareness and education, investors and users can avoid losing NFTs to thieves. The main threat at the moment is that NFT is a new evolving concept, which could still be vulnerable in many ways.
While the threats exist, there are also issues related to new investors who make mistakes while performing transactions, such as entering the wrong wallet address when sending cryptocurrency. The new NFT trend and other additions to the crypto industry may encourage the use of more complex systems such as the MetaMask wallets, which are best for creating NFTs. However, these complex systems could further make the situation worse for new users without experience.
There are possibilities that copyrights for NFTs can be breached, especially when new investors buy these digital assets without comprehensive verification. Also, the content creators who sell social media posts as NFTs have complained about fraudsters who copy and attempt to sell their posts to unsuspecting buyers.
It is understandable that these challenges exist in such a new industry. Over time, the stakeholders will design better methods to overcome all issues.
Requirements to buy NFTs
First, you need an NFT wallet, which must contain enough cryptocurrency to fund your purchase. Next, you need to sign up on the marketplace of your choice. You can browse NFTs on sale before creating an account to ensure you will find what you need in the marketplace.
You should also confirm the cryptocurrency required to purchase the NFT. And use a wallet that holds the cryptocurrency.
Marketplace for NFTs
As expected, so many marketplaces have been created for NFTs, to meet the rising demand. The trusted platforms have become very popular online. You can spend minutes browsing and viewing different types of NFTs on sale. The popular marketplaces for NFTs, include OpenSea, RareBits, KnownOrigin, SuperRare, and Nifty Gateway, among others.
You can also buy NFTs from auction houses such as Sotheby’s. Payment is always made in cryptocurrency. For each NFT, you will find the conditions for sale. It is indicated whether the owner would like to sell the NFT via auction or direct sale at a fixed rate. You may also need to buy NFTs in packs or during art drops, which are mainly used for rare artworks. The art drop option is like a preorder sale, where you make a commitment before the NFT is available for sale.
The future of NFTs
The increase in demand for NFTs at the start of 2021 indicates it can only get better from now on. It is expected that trade volume will rise, and more artists, content creators, and social media influencers from all over the world will reveal how other intellectuals can take advantage of the platform.
One thing is certain, the value of NFTs will continue to appreciate because there is always a demand for the original digital asset. Market analysts who study the crypto industry have predicted that the marketplace for NFTs will become so vast that it will need to be integrated with the upcoming Decentralized Finance (DeFi) concept in the coming years.