Digital assets, such as cryptocurrencies and digital tokens, seem to be growing at a phenomenal speed alongside crypto and blockchain technologies.
The “Non-Fungible Tokens” known as NFTs, represent some of the fastest growing assets in several sectors of the crypto industry. In this article, we will examine what NFTs are, what they are used for, how to use them, and the possible evolutions of the market in the coming years.
What is an NFT ?
An NFT (non-fungible token) represents a cryptographic token using the Blockchain. This token is directly linked to digital content, sometimes physical, and provides unique and unforgeable proof of ownership.
Unlike Bitcoin, which is a so-called “fungible” asset and therefore can be quantified, exchanged, and divided, Non-Fungible Tokens (NFTs) are not divisible in the same way as a physical work of art would lose all or part of its value if it was cut into several parts.
The authenticity provided by this token is at the genesis of a revolution in all areas of collectables, such as art, music, video games, real estate and many others. No counterfeiting is possible, NFTs are unique, and their transactions are “engraved” publicly in the Blockchain.
How do they work?
Non-Fungible Tokens (NFTs) reside on the blockchain, a public ledger that records every transaction. For example, the most popular blockchain for NFTs is the Ethereum network, although other networks are developing rapidly such as Solana, Polygon, Binance Smart Chain, Cardano or Tezos.
An NFT is created or “minted” from a digital object that can represent both fungible and non-fungible elements such as:
Artwork
Photographs
GIFs
Vidéos
Collectibles
Video game assets
Sneakers
Music
Domain names
Virtual land or real estate
Moreover, an NFT is like the artwork of a collector, only digital. Instead of receiving a painted work to hang on top of a wall, the buyer will receive a digital file instead.
NFT owners have unique rights tied to their tokens. Recorded data allows for a single owner per NFT, and also simplifies the process of verifying possession and circulation of the NFT.
What are they used for ?
Blockchain and NFT technology allows creators, artists and photographers to access a new industry with much more visibility, giving them an optimal way to monetize their work. The fact that they have access to a global market that never closes with a very diverse audience allows them to sell their artwork directly to the end customer, without going through a gallery or an exhibition. Additionally, they can program royalties as a percentage of each sale on the secondary market, which creates an additional source of income for them on-top of the initial sale of the artwork.
Art is not the only utility that NFTs have. Many brands and celebrities are entering the industry with increasingly creative collections that create real value for buyers. Gucci, Adidas, Nike, have all managed to carve out a real place for themselves in the NFT industry, especially with the rise of the metaverse and its possibilities.
How to buy an NFT?
If you want to enter the extraordinary space of NFTs, you will need to have a few tools:
First, you will need to create a digital crypto wallet in order to be able to store your NFTs and cryptocurrencies (for example, “MetaMask” digital wallet).
Then, it will be necessary to buy cryptocurrency such as Ether, depending on the NFT platform used. You can buy your cryptocurrencies with a credit card or by bank transfer on platforms such as Coinbase, Binance or Kraken.
Once done, you will need to transfer your cryptocurrencies to your digital wallet mentioned above.
Be sure to do your research before proceeding, as there may be significant differences in fees depending on the platforms and payment methods used.
Here are some marketplaces for buying and selling NFTs:
OPENSEA: Largest marketplace based on the Ethereum blockchain.
RARIBLE: Marketplace similar to Opensea, more oriented towards independent artists and creators, also based on the Ethereum blockchain.
SOLANART: First marketplace based on the SOLANA blockchain.
SUPERRARE: Similar to Rarible, this marketplace allows creators to sell their 3D works, photos, videos, and is based on the Ethereum blockchain.
Market evolution and potential for the future
The convergence of the physical and digital world is increasingly prevalent with the rise of Non-Fungible Tokens (NFTs), and gives artists and brands a real head start on the future.
NFT sales volume was less than $100 million in 2020, and grew exponentially to $25 billion in 2021 according to DappRadar. The estimates for the coming years are excellent given a market that is democratizing, and which benefits from a growing audience over time. Estimates show that the NFT market could be worth $35 billion in 2022, and $80 billion in 2025 (according to Jefferies).
More and more individuals, companies, institutional investors, are getting into this dynamic market with the purchase of cryptocurrencies or NFT’s in the form of art or land in the metaverses (such as Sandbox or Decentraland).
The Non-Fungible Tokens (NFTs) industry is still very young and unstable, with still many disadvantages with certain blockchains, such as high costs (gas fees) and possible transaction congestion at times.
However, there are many extremely positive signals that lead us to believe that this market will evolve well in the coming months and years, and will represent a great opportunity for those who manage to establish themselves there quickly.
The future is within reach!