The last bull run of 2017 was defined by the initial coin supply craze, which worsened with predictable consequences for overvalued projects that had little more than a team and poorly written white paper. While many useful projects could flourish in the ICO era, including Ethereum and others, most came and went with the wind, leaving thousands of unsuspecting investors clinging to worthless chip packs.
A complete market cycle later, and now there is another high that seems to be expanding in various sectors of the crypto industry, especially in decentralized finance. A lot has changed since 2017. Regulators have been cracked down, investors have become smarter and the space has matured.
Although ICOs are still relevant today, having turned into other forms of fundraising events – such as security token offers, initial exchange offers and decentralized initial exchange offers – DeFi and non-fungible tokens, or NFTs, are now the popular kids in the neighborhood.
NFTs appear to be the next hot topic in cryptography, and while the numbers are still relatively small, engagement and interest appear to be growing rapidly. This shows that the sector has a lot of room to grow.
NFTs are a different class of cryptocurrency tokens. Unlike Bitcoin (BTC) or Ether (ETH), they are used to represent various types of assets that differ in value from each other. These assets can be digital or physical. Popular examples include works of art, land or real estate and even people.
Trump-inspired art piece sold for $ 6.6 million
Inspired by the 45th president of the United States, an artist known as Beeple created an NFT called “Crossroads”. The artwork, a holographic animation depicting a defeated Donald Trump lying naked on the grass, was originally sold for $ 66,666 in November 2020. However, it was recently resold to an anonymous buyer for $ 6.6 million, breaking the previous record. $ 1.5 million for a single NFT sale.
Beeple is also about to break another record: the biggest sale of a single NFT through an auction house. His new piece – a work of 5,000 unique images on the dark aspects of technology, politics and wealth – is up for auction until March 11, with bids starting at $ 2.2 million.
Cointelegraph Magazine: NFT ‘Artistic Revolution’: Beeple in her 5,040-day love job
NFTs are exploding
Recent developments are simply the latest in a series of fascinating headlines about the NFT space, and it’s not just the artists who are profiting from these types of tokens. Empowered by the independence and proven authenticity of NFTs, many celebrities, musicians and filmmakers are also getting involved.
Perhaps the most striking example of this is the newly created Pokémon-inspired NFTs launched by Logan Paul, a popular YouTuber, who raised more than $ 3.5 million in a single day. The launch featured 3,000 NFTs inspired by the Pokémon card game, and there were 44 limited edition holographic versions featuring Logan Paul himself as Pokémon.
On February 28, another record was broken when popular musician 3LAU sold the first NFT album for $ 3.6 million. Other noteworthy examples include musician Grimes and Mike Shinoda from rock band Linkin Park. Even the iconic TV show Rick and Morty it now has its own cryptographic art stamped on the blockchain, which makes sense given the considerable crossover in the demographics of the show and the cryptographic space.
A genuine artistic movement or a gain of money?
The possible symbolism behind the bizarre dollar values for which Beeple’s Trump piece was resold ($ 6.6 million), coupled with the fact that the last buyer wants to remain anonymous, leaves some unanswered questions about the legitimacy of the movement. NFT art in general – especially when considering how art has traditionally been leveraged by the wealthy as a means of reducing tax expenditures.
Although the value of NFTs comes from scarcity, not everyone agrees with astronomical values, with many commentators in the industry calling digital art purchases as being nothing short of absurd.
Is NFT art being used as a way to launder money or evade taxes, a common practice in the world of traditional art, or is it really the latest craze in the worlds of cryptography and art – one that is possibly here to stay?
Sébastien Borget, co-founder of the NFT-based gaming platform The Sandbox, believes that there is substance behind the NFT movement and that the hype we are witnessing today has been slowly fermenting for years. He told Cointelegraph that a new paradigm is emerging due to the limited supply of digital collectibles:
“Anyone who is witnessing a large number of industry records earlier this year may not realize how long this has been growing. Several products have been boiled and built in the past three years and are now ready for mass adoption. “
The history of NFTs
Almost as old as Bitcoin itself, the first experiments with NFTs were created in 2012 and were dubbed “colored coins”. They were initially issued on the Bitcoin blockchain through protocols like Counterparty and Omni and were sometimes as cheap as 1 satoshi, Bitcoin’s smallest unit of account. They should represent a wide variety of assets and have different use cases. The colored coins ended up falling out of use, but they were instrumental in paving the way for the future of NFTs.
When the market finally caught the public’s attention in 2017 with CryptoKitties, the virtual pet game became so popular that it was responsible for clogging the Ethereum network and setting a new historical record for transaction volume on the blockchain of the time. Move on to 2021 and the entire infrastructure has become more robust and diverse.
A recent report by NonFungible shows that NFT transactions more than quadrupled in volume during 2020, growing from $ 62 million to more than $ 250 million. Sales of NFT art grew by leaps and bounds, surpassing any other category associated with the crypto industry. The number of active portfolios also grew by 97% between 2019 and 2020, an overwhelming number to say the least.
The report also suggests that, in the long run, NFTs will play an important role in today’s expanding virtual economy, as people will invest more money and time in virtual goods and experiences. The report also states that current features are just the beginning for the different NFT use cases, which will be integrated across different sectors. It will not be long before the first NFT-supported financial services will emerge. Examples can include digital insurance and secured loans.
NFTs impact different sectors
The art industry seems to be in the spotlight of the NFT now. He has received more attention and experienced unprecedented growth. However, it is important to note that other industries are following suit. Games are a perfectly suitable industry for NFTs, and that was obvious from the number of cryptocurrency games in existence and also from the investments made by renowned game companies like Ubisoft, with their game Raving Rabbids, and Atari, with collectible retro art.
As mentioned earlier, the entertainment industry also appears to be plunging into the waters of the NFT, and not just for artists. Tickets for live events will soon be issued using NFT-based systems, which would alleviate the prevalent counterfeiting problem found in the ticket industry.
Finally, sports leagues: NFTs are easily explained as a kind of “digital baseball cards”, so it would make sense to see major sports leagues start to adopt the technology. This is already happening, with Formula 1 Delta Time, an official Formula 1 collection game, and NBA Top Shot, an officially licensed platform that allows the best NBA highlights to be acquired in the form of collectibles known as “Moments”.
Wilhem Pujar, co-founder and CEO of Stacktical – a decentralized platform for service level agreements – shared an optimistic outlook for NFT sports collectibles, telling Cointelegraph: “Considering sports betting is a $ 200 billion market + , we can expect large amounts of capital to be reallocated to NFTs, which will function as an emotional and financial protection against empty stadiums and arenas. “
While collectibles for games, art and sports are the main industries for NFT adoption, there is an underlying potential in other markets. Yat Siu, co-founder of Animoca Brands – a platform for branded blockchain games, including F1 Delta Time, MotoGP Ignition and other sports-related projects – believes that NFTs can leave a mark in many other industries, telling Cointelegraph:
“At the moment, we see NFTs having a powerful effect on all forms of digital content, such as digital art, collectibles, games and, more recently, music, but eventually all the others will follow: medical, fashion, financial, manufacturing , agricultural, insurance – you name it and you will have relevant NFT applications. “
NFTs: just another trend?
NFTs and decentralized technologies as a whole are changing the landscape for digital content creators and consumers. They allow anyone to monetize their work directly, connecting with fans and removing annoying intermediaries. This guarantees the transparent ownership of your creations, which can be of any type of digital media, be it photos, memes, GIFs, videos, music, books or even domain names.
While there is still a long way to go before conventional adoption is achieved, there are already signs of large corporations advancing and becoming NFT pioneers. It is highly likely that more recognized brands will enter the space. Ian Friend, co-founder of the DeFi Ferrum Network project, admitted that mass adoption by companies has already started and is likely to continue, telling Cointelegraph: “It’s already happening. The big brands that fail to adapt this year will be trying to keep up with the pioneers. “
This is not just an exaggeration: NFTs can be responsible for a significant paradigm shift in the sharing of digital content in various sectors, including art, games, real estate and more. They may even have a dominant presence in future virtual economies, especially in the e-sports sector, where the largest demographic crossover appears to be among young tech-savvy “geeks”.
Various sectors will be disrupted and the collectible markets will be changed forever by the NFTs. JD Salbego, CEO of AnRKey X – a blockchain-based protocol platform that leverages DeFi and NTFs for the video game industry – told Cointelegraph: “We are already seeing this in the form of engagement, where serious institutions have begun to recognize the value of unparalleled security, authenticity and traceability for non-fungible assets in a digital environment.”