New Era of Opportunity: NFTs
The rise of blockchain technology has created a new asset class — nonfungible tokens, or NFTs.
What makes them popular is that there can only be one of each NFT in existence. And we are in the midst of the NFT mania, with some selling for millions of dollars.
What Are NFTs?
These are tokens that exist on the blockchain like cryptocurrencies. But cryptos such as bitcoin are fungible tokens, or interchangeable and carrying monetary value.
The bitcoin you might own is the same bitcoin others also own. You can easily trade bitcoin, and it holds the same value for you as for the others who own it.
NFTs only carry value in their uniqueness.
They are certificates of authenticity for digital content, which are stored on the blockchain. NFTs are used to represent a wide range of things such as digital art, real estate, music and more.
Compare it to other digital creations, such as a song on Spotify. Those are usually in infinite supply.
The most common uses of NFTs are digital art, media and collectibles. Artists can put their unique ownership and signature on the NFT, which makes it impossible to recreate.
What Is Fueling the NFT Trend?
Like many trends that first started, such as pop art, NFTs have their share of controversy.
For one, no one is stopping people from copying digital art. If an artist posts an NFT for sale, people can still copy and share the art all over the internet.
But only the owner of the NFT will have the “original” of the art.
That hasn’t slowed down NFT trading. In fact, its sales have surged 792% in 2021.
OpenSea.io is the most popular site for trading NFTs. Below is a chart of monthly volume. As you can see, it’s up 40 times in trading volume from 2020.
The most popular NFTs on OpenSea at the moment are CryptoPunks. Rare ones have traded for up to $3 million. They are digital avatars, and only 10,000 were originally created. Even credit card giant Visa bought a crypto punk for $150,000.
But it’s not just digital artists on the NFT train. Big brands are also joining the hype.
Charmin sold toilet paper art, and Taco Bell sold taco-themed images and GIFs.
But one of the best use cases for NFTs will be the video game market. The video game market is huge and only growing.
A big chunk of video game revenue comes from in-game sales, which is currently a $40 billion market. This is where NFTs come into play.
NFTs have the potential to be outfits, weapons, cosmetics and more. Players can buy unique assets for their avatars and use them in video games. They can also sell them or collect them. NFTs provide a unique opportunity for the video game industry.
How to Own One
NFTs are bought with cryptocurrency. So you need an account with an exchange such as Coinbase to buy cryptos, and move them to a wallet such as MetaMask to store them. You also need an NFT wallet to store your NFTs — you can also use MetaMask to store NFTs.
On OpenSea, you can buy most of the NFTs with a credit card or Ethereum. It allows you to connect your MetaMask wallet for easy trading.