- NFTs or non-fungible tokens are unique tokens that cannot be replaced or swapped
- This market has gone largely unnoticed, until some record-breaking advancements
- The non-fungible token market is witnessing a large increase in volume, completes over $4.6 million in the last 7 days
- The most popular NFT, Cryptokitties, remains the number one contributor
The crypto space is growing just as quickly as the underlying blockchain technology finds new use cases. While Bitcoin predominantly claims the spotlight for being the biggest and perhaps, the most important digital asset, there are other classes of assets quietly gaining traction.
If you’ve been around cryptos long enough there’s a chance you have heard the term NFT, short for non-fungible tokens. NFTs may not be as widely recognized as Bitcoin, but they also command serious cash in the industry. So, what are they? And what are they used for?
What are NFTs?
A non-fungible token or NFT is a class of Cryptocurrencies with a unique digital footprint. Each NFT contains a piece of unique identifying information pre-recorded in their smart contracts. This information is what makes one NFT different from every other.
Non-fungible tokens offer specific ownership that cannot be duplicated or falsified. NFTs represents a unique item, either in the digital world or the real world.
Unique Features of NFTs
Because of this, an NFT cannot be directly replaced or swapped for another token as no two NFTs are alike. While they are similar to banknotes which have a unique identifier, they cannot be exchanged for another even though they have the same value, and are on the same blockchain.
Another important thing to know about non-fungible tokens is that they are not divisible, just like you cannot send someone part of a football match ticket. Part of a football match ticket wouldn’t be worth anything on its own and would not be redeemable, this holds true for Non-fungible tokens.
On the other hand, fungible tokens, as the name implies, are tokens that can be easily replaced by something identical – and it is interchangeable with ease. Bitcoin is an example of a fungible token.
One Bitcoin can be sent and another received, for the holder it would still remain one Bitcoin. You can also send or receive any part of a Bitcoin, measured in Satoshi, as fungible tokens are divisible.
On rare occasions, a token may become non-fungible by losing its fungibility property as a result of its history. For instance, if a token, let’s say Bitcoin, is used to pay for drugs or launder money, and it becomes public, that Bitcoin is likely to become less- or non-fungible. This is because it is unlikely that exchanges and other service providers will accept it afterward.
What are Non-fungible Tokens Used For?
Non-fungible tokens first gained mainstream attention with the sudden popularity of Cryptokitties – a virtual cat collectible game. Owners of cats would know that it is practically impossible to get an exact replica of their current pets.
The game thrives on collectibles that cannot be replaced or recreated. The same idea guides NFTs. They create a verifiable digital scarcity because each token cannot be replaced. NFTs also create digital ownership and the possibility of asset interoperability across multiple platforms.
NFTs, find more practical applications in areas where unique digital items from the core of the platform. For example, NFTs are useful in crypto arts (rare art) platforms, crypto-collectibles, and crypto-gaming.
History of Non-Fungible Tokens
The origin of NFTs can arguably be traced back to Colored Coins. In 2012, Colored Coins were made to represent the smallest denominations of a bitcoin, a single satoshi. These Colored Coins were used to represent a multitude of assets and have multiple use cases, including Property, Coupons, subscriptions, collectibles, company shares, and even access tokens.
Colored Coins portrayed the immense capabilities of Bitcoin and blockchain technology. However, they could only represent certain values if everyone agrees on their worth.
The next noteworthy advancement in NFTs happened in 2014, when Robert Dermody, Adam Krellenstein, and Evan Wagner founded Counterparty. Counterparty was a peer-to-peer financial platform built on the Bitcoin blockchain.
The platform allowed projects to create a decentralized exchange and even a crypto token, games, and even meme trading. As more projects (majorly games) launched on counterparty and issued unique collectible items in their ecosystem, more people began to see the potentials of the Bitcoin network.
NFTs were not mainstream until CryptoKitties broke out in November 2017. A cat collectible game designed using ERC-721 token standard Ethereum tokens. In the game, each token represented a ‘CryptoKitty’, with a unique code that determined the attributes (‘cattributes’) of the CryptoKitty.
It didn’t take long before the game got mainstream attention, attracting users to buy, sell, and even bred unique tokens. The game enjoyed an unprecedented growth that caused the number of pending transactions on Ethereum to increase by a factor of six.
Although it raised an issue at the time involving Gas prices, Cryptokitties is still regarded as the most remarkable event in the history of NFTs. Since Cryptokitties launched, there have been numerous non-fungible tokens including exchanges, games, collectibles, exchanges, and even a virtual world.
On the Flipside
- Ethereum rival, Polkadot, has equally enjoyed tremendous growth in the last couple of months.
- In the last 3 months, the market cap of Polkadot has risen by over 4.5x. It now holds a market cap of $16 billion which makes it the fourth-largest cryptocurrency.
- Polkadot now has 274 validators, run by around 200 independent operators and backed by over 7,000. This makes it the most decentralized ecosystem.
- It has also seen an increased number of projects being launched on its network. Projects like Acala, Moonbeam, and Centrifuge lead the way on the network.
Market Overview of Non-Fungible Tokens
Non-fungible tokens are growing fast and are billed to be one of the crypto industry’s biggest trends in 2021. In 2020, there were many rare assets representing footballers and artwork went under the hammer for hundreds of thousands of dollars, marking an even bigger growth in the market.
Already, some of the biggest brands in the world, including top-flight football and basketball teams and the makers of Doctor Who, are issuing non-fungible tokens to their fanbase and avid gamers. Just how big has the NFTs market grown?
As the popularity of non-fungible tokens jumped in 2020, so did the market capitalization of this rather unique asset class. As of the time of this writing, the market cap of assets locked in the Ethereum 2.0 deposit contract was over $1 billion at the end of December 2020, compared to a $210 million market cap in 2019.
Data from nonfungible.com shows that during the last seven days, there were 13,791 sales total and $4,630,690 in NFT trade volume. The average U.S. dollar price for a single NFT according to statistics is $335.78 this week.
In the last 24 hours alone, there have been over 2,300 sales with an average price of $684. The NFTs markets have been growing at a steady rate. In 2021, the market is expected to take bigger strides. The top 3
In the last week, Cryptopunks has seen more trade volumes than any other NFT platform. On Cryptopunks there are over 10,000 unique collectible characters with proof of ownership stored on the Ethereum blockchain.
There have been Cryptopunks sales in the last 7 days totaling over $1.68 million or 1,349 Ethereum tokens.
Sorare is a fast-growing NFT platform based on the Ethereum Dapp of the same name. Sorare is a fantasy soccer game where you can trade official blockchain player cards; the football collectibles take the form of NFT tokens.
Sorare was only launched in 2019 but has quickly grown to become the second biggest NFT platform. Over the last 7 days, over 6,620 sales have been made on the platform totaling an amount of $870,000.
SuperRare is an NFT platform that makes it easy to create, sell, and collect rare digital art by artists around the world. Over the last seven days, there have been a total of 225 sales valued at over $520,000.
The Sgustok Magazine Issue 001 is currently the most expensive collectible ever sold in the NFT market. On November 23, 2020, it was sold for $1.34 million to a user with a registry address.
More Signs of Growth in the NFTs Ecosystem
NFTs are built on the Ethereum blockchain which recently progressed to ETH 2.0. As Ethereum continues to rise in price after its progression, the interest from gamers and traders are also increasing. There are a variety of famous and emerging artists making headlines.
Justin Roiland, the co-creator of the Adult Swim cartoon series Rick and Morty, has also joined the NFT ecosystem. Roiland sold an art collection on the NFT auction house Nifty Gateway, for over $1 million in Ethereum.
Similarly, SuperRare, a digital marketplace that specializes in NFTs sold over $4 million in digital art in November 2020. On the platform, artist Micah Jackson sold a single piece of artwork for $120,000.
The NFT ecosystem has also seen increased interest and adoption from gamers, as Enjin, a DeFi gaming platform, partnered with gaming Atari in December. The collaboration will offer Atari-themed NFTs on Enjin’s platform. Soon, Enjin users will utilize classicly-themed Atari NFTs in a variety of decentralized games.