In the recent months you might have seen or heard of digital images being sold for ridiculous prices whilst people mentioned the term „NFT” leaving you wondering why would anyone pay that much for an image; or is there more to it than just an image?
Non-fungible tokens (NFTs) are the latest cryptocurrency phenomenon. Non-fungible meaning unique, one-of-a-kind and can’t be replaced with something else. Verifiable digital assets that are linked to the blockchain. Think of trading cards or rare coins, but as a digital asset that is unique and there is a certificate of authenticity to easily prove that it’s the real deal.
What are NFTs?
It can be really anything - drawings, music and even tweets. Initially NFTs that fetched the highest prices were the ones made by popular artists, popular memes (e.g. Nyan Cat GIF sold for $600,000) or the first-ever tweet by Jack Dorsey which sold for $2.9 million. Since then, a lot has changed and people don’t want simple art that they will only be able to use as a profile picture on Twitter, they want utility. Some projects thought of very creative ways in which they can bring utility to their holders and passive income
Although NFTs are becoming increasingly popular on various blockchains the two most popular are Ethereum and Solana, with Ethereum being the more popular option since a lot more people know and trust Ethereum. Solana is slowly but surely catching up, especially with the NFTs. Solana is an open-source blockchain that supports smart-contracts and is simply built better for this kind of thing. It has nearly zero gas fees and is super fast. Unlike Ethereum where buying a single NFT could cost you more in gas fees than the actual NFT.
On Solana a project such as MMCC (Meerkat Millionaires Country Club) was one of the first projects to offer their holders a percentage of all the royalties they gathered from sales fees, providing a passive income by just holding a meerkat image. Other projects even built their own marketplaces or casinos thanks to their communities offering a percentage of revenue to their NFT holders and as you can imagine that raises the NFT price since who would sell their NFT if they can get passive income from just holding it, but it’s not all just passive income. Some projects offer utility and online tools that can be used, only accessible to the holders.
How to buy and sell NFTs?
Here comes the dilemma because currently the most popular blockchains for NFTs are Ethereum and Solana, with Ethereum leading the way. One of them, being Ethereum, is the more popular one, first in the scene and has a bigger following, but has astronomical fees for each transaction as well as being slower than for example Solana.
Therefore, depending on the blockchain you would like to buy or sell depends on what website you would have to use. As for the Ethereum network, the most popular and trust-worthy website is OpenSea, whereas for Solana, the most popular marketplace at the time of writing is probably MagicEden.
It is worth noting that some collections do have their own websites and marketplaces where their collections are traded, like for example Solana Monkey Business (SMB), one of the most popular and expensive Solana NFT collections.
Even though the possibilities are endless, and it all comes down to the creativity of the creator, there are a couple of solutions that, we think, could be implemented right now into real-world use cases. First being in the realm of gaming, where companies already started taking initiative.
In games such as Hearthstone or Magic the Gathering, which are both card games, NFTs seem to be the perfect solution. Players would be able to have their cards as NFTs, meaning those would be unique, tradeable and most importantly immutable. This could bring a small layer of making the game feel a bit more realistic, where the cards could feel more realistic rather than just being stored in the game developers' database which can be hacked and changed.
Other game developers are already eyeing such solutions for their in-game characters and items, but a new emerging genre from NFTs that gets mentioned a lot is play-to-earn (P2E) model. These games such as Star Atlas, Ember Sword or Gold Fever are monetized accordingly and reward players with tokens or NFT gaming items that are tradeable in game or can be sold. Allowing players to sell them for their currency.
For example, Axie Infinity (AXS) has been a great success with demand and growth within the industry; having a market capitalization of nearly $4.1 billion and over 720,000 members. Here in the game the monsters which are used to play the leading role are NFTs stored on the Ethereum network as tokens in the ERC-721 standard, making them non-replicable, unique and immutable.
As for a more real-world use case, why not use NFTs as means of tickets to concerts or other types of events? Instead of having a ticket be an emailed to you as a PDF with data stored about you in the database, wouldn’t it be better to have the ticket stored in an immutable way on the blockchain, being unique and tradeable with your data being anonymous - and if someone wants to sell it because they can’t attend, then it’s as easy as that.
Also another use case could be that the data stored on the blockchain with the NFT could also be used for digital mapping of real estate. As there are smart contracts, everything is contracted and signed digitally. Where a transaction on the blockchain serves as a security and would allow small private investors to access real estate. Even though for now, most NFT real estate is in VR environment, who knows, we might see some real-world properties being auctioned off as NFTs and VR presentations of those properties.
Future of NFTs
The NFT space is very fast-changing, many new projects are being launched every day, with more and more events and conferences being launched on a global scale and selling out, projects crowdfunding their movies or other ideas by selling NFTs to the International Cricket Council launching cricket NFTs. The possibilities are endless, bridging the gap between consumers and creators. Giving value and security to digital assets, which are shaping up to shake up the world.