Photo by Zack Walker on Unsplash
Non-Fungible Tokens (NFTs) have grown drastically in popularity, not only for crypto enthusiasts but also for artists and investors.
Therefore, many people consider blockchain investments as likely to be profitable and a way to secure ROI on digital assets.
These virtual properties can be anything like digital art, music, video, or anything that can be linked to or stored on a blockchain. But what is making them so popular? How can you enter this space? Is the future of NFTs promising?
What is a Non-Fungible Token (NFT)?
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As the name implies, NFT is a token that exists on a blockchain and has special token standards. Every token number is unique and protects your rights to a particular digital property.
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In other words, an NFT (Non-Fungible Token) is like a digital certification of authenticity. Without it, anyone can copy or distribute your digital content's copies. But, NFTs give a type of proof to customers. This proof shows that they now have real ownership rights.
NFTs Attract ‘Insane’ Profits
With NFTs, there is profit to be made.
According to a Business Insider report, "Musician 3LAU sells the world's first-ever crypto-album, making $11.6 million in under 24 hours".
One song from "Ultraviolet" earned more than $3.6 million from his own custom-made digital-token auction site.
Currently, the crypto art market is valued at over $100 million.
Mike Winkelmann, a popular NFT artist, makes short films, VJ loops, and digital artwork. He summarised the first 5000 days of artwork in a digital collage and created one piece. The artwork was sold as an NFT for $69 million. This sale positioned him among the top 3 most valuable artists.
YouTube creator and social media influencer Logan Paul is another example. He sold Pokemon-related videos and rare items as NFTs for over $5M.
Where did NFTs Come From?
Different people have different theories.
Some have argued that Colored Coins were the very first NFTs to exist in 2012-2013. These worked as small denominations of a bitcoin, as a single satoshi. These coins represent a multitude of assets and are used for multiple purposes.
- In 2014, Robert Dermody, Evan Wagner, and Adam Krellenstein founded Counterparty. It is an open-source Internet protocol used for peer-to-peer financial transactions and distribution— built on top of the Bitcoin blockchain.
- In April 2015, game creators of Spells of Genesis issued game assets onto a blockchain via Counterparty. With this, they were the first to launch ICO (Initial Coin Offerings).
- In August 2016, a popular trading card game, Force of Will, launched its cards on the Counterparty platform. They were in 4th position in North America, after pokemon, Yu-Gi-Oh, and Magic.
- In October 2016, people started issuing "rare pepes" on the Counterparty platform as digital assets. You can see a frog character featured on the meme. Its intense fanbase can get the option to exchange memes on its platform.
- In October 2017 — CryptoKitties gained high popularity, it allows players to adopt, raise, and trade virtual cats. But, the cats are in the blockchain.
Why are NFTs so Popular Right now?
One prominent factor impacting the NFT trend is the ongoing impact of COVID-19. NFTs have a special appeal for artists who have legal rights on virtual assets.
As previously discussed, NFTs allow them to sell their unique artwork potentially for millions of dollars. Best of all, all the copyright of digital assets will be applied to its first owner, thus receiving royalties becomes much more likely.
The Major Confusion Between a Coin and a Token
If you are a newbie to cryptocurrencies, you might get confused between coins and tokens. Many people believe they are the same. That’s not the case.
Coins are the basic currencies of blockchains. These can include Bitcoin, Litecoin, Ether, and XRP.
Whereas, Tokens are created on the top of another blockchain. Some of the tokens created on the Ethereum blockchain are Basic Attention Token, Tether, Dai, Chainlink.
Another significant difference between coin and token is what they represent. Coins are the digital version of money and can be used as an exchange for any transaction. In comparison, tokens stand for assets or deeds.
You can buy tokens of any value with coins. In simple words, tokens represent what you own, and coins showcase your capability of buying something.
Royalties on Future Sales
NFT plays a huge role in enhancing an artist's potential for wealth. This is done in the form of royalties.
In the past, if an artist sold a painting, music, or game at $20,000 then that may have been the ultimate revenue that they made from this sale.
Now, NFTs serve as a huge opportunity for the artist. If the artist sells the first piece of art for $5000 and the second owner sells it for $500 000, there is a chance that they will get some portion of the profit from the second sale too.
It's a great way to enhance an artist's earning potential and motivate them to bring something new to the digital sphere.
Create Your Content, then Find the Right Marketplace
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If all of this information appeals to you, then the way to start is to first find something you’re good at, then create a unique piece.
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The next biggest question is finding the right marketplace to showcase and sell your product. Below are some options:
- Raible
- Opensea
- Falcon NFT
- The Sandbox
- HashMarks
- SoRare
- Aloha DeFi
- SuperRare
- Art Blocks
3. Now that you have completed your marketplace research, it's time to upload your content.
The Downsides of NFTs
Today, we are at the very early stage of NFT's. Therefore, you can still see some downsides of this tecnology.
The biggest factor is that the majority of NFTs get hosted on the Ethereum blockchain. Many people do not recommend it, as they have to deal with slow transaction speed and high transaction fees.
Keeping biases aside, there is a high volume of NFT transactions traded on Ethereum. Experts are putting great efforts into improving performance, and we are also looking at the brighter side of this technology.