Non-fungible tokens, or NFTs, have gained significant strength in the crypto space in recent months, with some tokens selling for millions of dollars. Even if the current excitement about NFTs wanes, the concept will live on, according to MyEtherWallet CEO and founder, Kosala Hemachandra.
“NFT is currently a hot topic, but I’m sure the hype around it will soon subside,” Hemachandra told Cointelegraph. “Likewise, ERC-20-based tokens were an important topic in 2017 because of ICOs, now it’s nothing new for anyone, as people use these tokens on a daily basis.”
All non-fungible tokens are proven to be unique and therefore distinct in value. They cannot be exchanged one by one with another asset of its kind, because each NFT contains distinct verifiable characteristics. These differences affect the rarity of each token (and sometimes its usefulness within an ecosystem), even though they appear superficially similar at first.
“The value of an NFT is purely based on how much a person interested in it is willing to pay,” said Hemachandra, adding:
“If someone is really interested in an NFT sold in 2021, I’m sure that person will pay any amount to buy it in 2030. That’s why we can’t say that the 2017 crypto are worthless now. I am sure that even now some people would love to purchase some of these exclusive items at a higher price if the current owner is willing to sell them. “
CryptoKitties, the first functional NFT implementation, was notably popular in the crypto space in 2017.
The NFT scene also resembles the initial coin offerings, or ICOs, in 2017, according to Nadav Hollander, co-founder of Dharma. “NFTs appear to perform much like ICOs – 6-9 months of increasingly valuable and sickeningly cynical sales, followed by a multi-year crash,” he tweeted on February 24th.
Hemachandra sees great potential for the NFT niche, although he questions the logic behind the current advertising campaign in the market. “Is it ownership or ownership status? At the moment, the appeal of the NFT is the status of owning one,” he said, adding:
“NFTs are attractive in the same way that lambo’s are attractive to bitcoin purists. I think this current version of non-fungible tokens will continue to evolve into larger and broader use cases. Things like real estate and proof of ownership tangible; wherever NFTs can help to take legal action. This is where things will start to get really interesting. “