By Abhijith Reghu
NFT stands for Non Fungible Token. NFTs are tokens that we can use to represent ownership of unique items. They allow us to tokenize things like art, collectibles, even assets. They will only have one owner at a time and they are secured by the ethereum blockchain. NFTs are the solution to problems faced by digital artists as their artworks are easy to duplicate. NFTs proves authenticity to their art in the same way the blockchain ensures a single bitcoin is only owned by one person.
The rise of NFTs
The rise of NFTs can be tracked to the year 2017 where bitcoin had broken all its own records and peaked close to 20000 dollars. Bitcoin had started being more mainstream and started gathering media coverage. The rise of bitcoin also complimented the ethereum blockchain, which was much better for smart contracts and ledgers on large scale.
In June 2017, two Canadian software developers Matt Hall and John Watkinson released Cryptopunks NFT collection on the ethereum blockchain. The project consisted of 10000 distinctive cryptopunks, each one was algorithmically generated through code and no two characters were exactly alike. They were released for free and could be claimed by anyone with an ethereum wallet.
A very major breakthrough for NFTs occurred in October 2017 when a virtual game was built on the Ethereum blockchain by Dapper Labs known as CryptoKitties. The game became extremely popular and even caused an increase in pending transactions on Ethereum and at one point accounted for about 25% network traffic on ethereum. At the peak of the mania, CryptoKitties saw nearly 5000 eth in volume. These high prices drew more users into the hype. The project was valuable to the overall concept of NFTs, the project brought mass attention to the space.
The growth of the NFT market has been rapid. In 2018 the total market cap of NFTs was 40.96 million dollars, in 2019 that raised to 141.56 million, 2020 it increased to 338 million but the major increase occurred in 2021 where it surpassed 40 billion dollars. It is going unstoppable and is expected to hold a market value of 122.43 Billion dollars by 2028!?
2021- The Year of NFTs
NFTs were among the most searched terms of 2021, beating dogecoin, blockchain and even etherium in google searches. The biggest wake up call to the NFT wave was when Vignesh Sundaresan also known as MetaKovan spent 69.3 million dollars on Everydays: The First 5000 Days by Beeple through a Christie’s auction. This was a huge moment as it was the first time an auction was held for an NFT and also the first time cryptocurrencies were used as payment for an auction. The digital art consisted of every single image Beeple had posted since 2007 May , it shows society’s obsession and fear of technology, the desire and resentment of wealth and America’s recent political events as well.
Another major event that caught headlines was when Jack Dorcey founder and CEO of twitter sold his first ever tweet as an NFT for 2.9 million dollars. Sina Estavi the man who purchased the NFT later tweeted that, “This is not just a tweet, I think years later people will realize the true value of this tweet, like the Mona lisa painting,”.
Some of the Major NFT projects of 2021 & 2022
CryptoPunks
As an early project on the Ethereum blockchain, CryptoPunks was an inspiration for developing the NFT standard itself. The project is a group of 10,000 items, which are computer generated pixel-art characters – including human, zombie, and alien ‘punks.’ Each ‘punk’ is distinguishable, with its own attributes and accessories. The highest sale for a CryptoPunk is $11.7 million.
Bored Ape Yacht Club
The Bored Ape Yacht Club collection consists of 10,000 unique ‘Bored Ape’ NFTs that reside on the Ethereum blockchain. Every ‘ape’ has utterly completely different attributes, including facial expressions, colour and attributes. The CryptoPunks project served as inspiration for newer NFT projects, like the Bored Ape Yacht Club. And, just as with CryptoPunks, each ‘apes’ different attributes determine its rarity, and its value.
Axie Infinity
Metaverse game Axie Infinity has quickly gained popularity to take the lead among the top-rated NFTs. It is one of the games which has a play-to-earn model in which players can make real-world money. Players collect, breed and battle with creatures referred to as Axies, which are NFTs that players will trade for profit and play to earn cryptocurrency tokens.
Illuvium
A new Ethereum based role playing game, came in 2022 and has sold more than 72 million dollars worth of digital land plots as NFTs during a sale that happened in June 2022. Illuvium’s land NFTs run on Immutable X, a layer 2 scaling solution for Ethereum that enables cheaper, faster, and more energy efficient transactions.
Future of NFTs
The excitement around NFTs is high, which can also be seen in the number of increasing NFT projects that have been released daily. It is extremely important to maneuver with caution in the NFT space, even Vignesh Sundaresan, the enterpriser who bought Beeple’s record-breaking artwork, sees investing in NFTs as a “huge risk” and “even crazier than investing in crypto”. Also, an example of how some biggies are still a little paranoid about it is, that, a worldwide popular game Minecraft recently issued a statement saying that it won’t be allowing the sale of NFTs of the game, they believe that it is antithetical to their values.
We should also be careful about dismissing NFTs as a pump and dump scheme since the importance and value of these innovations often becomes clearer once the hype dies down. During the 1990s major internet companies were booming and the sudden crash caused people to overlook these companies only for giants like amazon to reemerge. The bitcoin crash of 2017 is also a good example of why you should keep faith in these innovation even after their bubble bursts after the initial hype.
NFTs could be the future of documentation. NFTs can also be used as digital assets which could be used across digital platforms. It is also possible to use NFTs to verify real world assets such as cars, stocks, bonds etc.
NFTs are definitely much more than just digital artwork and gaming and its uses and importance will definitely increase with time.
ABOUT THE AUTHOR
Abhijith Reghu is currently a first year student pursuing Bcom(P) in Kirori Mal College, University of Delhi. He is fascinated by the cryptocurrency market and other new technological advancements. He also hopes to be a successful stock trader in the future.
Disclaimer: The views expressed in this article are the author’s own and do not necessarily reflect the views of the organization.
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