Picture these things.
A video of LeBron James soaring through the air for a dunk.
A sneaker that you can’t wear.
10,000 uniquely generated characters that can be owned individually and no two are the same.
A piece of art that you can’t hang in your home
Does all of this sound completely random and make no sense? Well if it does, that is likely due to the fact that you have no idea what NFT’s are yet or their future potential/impact on the world.
All those things I mentioned above plus WAY MORE, have been turned into non-fungible tokens, or NFTs, a new method for digitally buying and selling art and other media. This now represents the latest major boom, which has taken a small part of the world by storm.
Three years ago, the entire NFT market was worth no more than $42 million. By the end of 2020, it had grown 705% to $338 million in value, according to the latest estimate from Nonfungible.com. Currently, over the last month alone, total sales are around 180 million.
Many are calling this the future of our world and I agree. This has so many potential applications and we are just in the beginning stages of really understanding it all.
This article is meant to be a Kickstarter, a way for you to grasp what NFTs are and see some actual use cases of it around the world.
Let’s dive in….
What is an NFT?
An NFT is an entry on a blockchain, the same decentralized digital ledger technology that underlies cryptocurrencies like bitcoin. But unlike most bitcoin–which is fungible, meaning that one coin is essentially indistinguishable from another and equivalent in value–tokens on these blockchains are non-fungible. That means they are unique, so they can represent one-of-a-kind things, like a rare Lebron James dunk or even the title to a piece of real estate or digital land.
And because they’re unique and stored on the blockchain, they’re unquestionably authentic. That’s especially important when the asset they represent is digital. Since digital files can be copied infinitely and perfectly, it’s hard to own (or sell) a rare digital photo of Michael Jordan. An NTF token solves the riddle by proving that one digital file is the one-and-only “original.”
When purchasing an NFT, you acquire both the unerasable ownership record of an asset and access to the actual asset. These assets can be anything. At the moment they’re mostly works of digital art or trading cards. Some are virtual goods existing only within the marketplace selling them, and some come packaged in familiar formats like a JPEG or a PDF.
When did they start?
Around 2017. Two popular early NFTs were CryptoPunks, digital images of 10,000 human and animal characters in 8-bit-style animation, and CryptoKitties, a collection of fancifully drawn felines. They were originally given away for free. The most valuable CryptoKitties now sell for more than $100,000, CryptoPunks for over $1 million.
What’s special about the tokens?
For a buyer, they provide a secure certificate of ownership over a digital object, protecting the good’s value. The internet makes it easy to duplicate and forge something, and without an indisputable ownership record such as an NFT, the good is essentially worthless.
For a seller, NFTs make it not only possible to sell something today, but also to keep earning tomorrow. Artists in particular have historically struggled to reap rewards if their work appreciates in value. NFTs can be coded to allow the original creator to collect money each time the token trades hands, usually for between 2.5% to 10% of the sale price. The ability to set up a recurring revenue stream appeals to any famous person looking to extend their fame’s earning potential.
For example, YouTube star Logan Paul sold $5 million worth of his own NFT—a cartoon image of himself styled as a Pokémon trainer—last weekend.
The growth of NFT’s in the past few months has been tremendous and it can be credited to many news outlets sharing stories, Gary V, Mark Cuban, Dapper Labs, influencers like Logan Paul and so many more.
I promise that I can go on and on about NFT’s and my favorite current platform NBA Top Shot, but I will save that for a future post.
For now, I recommend you learn about NFT’s and keep them in your mind for the next few years.