The expression “non-fungible” implies that each NFT is unique and bears a distinct individual value. To better explain this, take the example of baseball trading cards. A common card may not be worth anything but a rare card could be worth millions.
Non-Fungible Token or NFT was born out of several attempts by retail investors to create something unparallel like Bitcoin. They introduced the Altcoins followed by the ICO, which was Altcoins in a fresh wrapping. The ICO was succeeded by DeFi in 2020, which was yet another case of Altcoins in a new wrapping. They struck gold with the NFT in 2021. The NFT is indeed the most popular crypto trend in 2021. However, they aren’t merely rebranded Altcoins and have a unique use case.
How Non-Fungible?
As opposed to fungible tokens like Bitcoin, NFT is unique, one of a kind – one token cannot be replaced with another. For instance, the thousands of Altcoins riding on the Ethereum blockchain are each no different from the other. A token of specific crypto in person X’s wallet is no different from another token on the same crypto in person Y’s wallet. This is to say that a dollar in your bank account is no different from a dollar in your pocket.
The expression “non-fungible” implies that each NFT is unique and bears a distinct individual value. To better explain this, take the example of baseball trading cards. A common card may not be worth anything but a rare card could be worth millions.
A digital artwork or music when placed on a blockchain is an NFT. While many copies of this piece may be created but the original token is held by the owner, thus protecting the ownership of the content.
Also Read: Everything You Need to Know About Non-Fungible Tokens
Timeline
NFT started out in 2017 as 10,000-pixel art characters named CryptoPunks. Back in the day, anyone with an Ethereum wallet could claim one of those for free. The NFT that actually gained popularity was the CryptoKitties which was nearly the same as Crypto Punks but used digital pets instead of pixel art ‘punks’.
Back then NFTs weren’t taken seriously enough to be considered an investment.
The beginning of 2020 stood witness to the market capitalization of NFT at $141m. Later in the same year, it increased by $196m, reaching the mark of $338m by the end of the year. The main source of demand, which stimulated the growth of this market, stemmed from the metaverse – the conglomeration of the physical world, augmented and virtual reality, the world of art, and online gaming. Metaverse accounted for 25% of deals worth over $1,000, art objects accounted for 24% of such deals, and items from online games – 23%.
Revolution with Smart Contracts
The situation changed in 2020, with the advent of DeFi solutions. DeFi developers reinvented Non-Fungible Tokens and soon started to find new applications for what was once considered a mere novelty.
The NFT projects created today are more ambitious and advanced than the original CryptoPunks and CryptoKitties. It is owing to smart contracts technology that almost any object of art can be tokenized and stored on the blockchain, and the created NFT can be very complex.
The Future
It’s still very early to predict the future of NFT but much may be gathered from discrete events like Jack Dorsey, the founder of Twitter, sold his first-ever tweet for $2.9million. Realizing the potential of NFT in making money, many celebrity artists have resorted to selling their own NFTs. Tesla CEO, Elon Musk tweeted about selling an NFT but eventually reconsidered going with the idea.
Also Read: The Growing Traction of Blockchain Art in 2021
To Conclude
As is apparent from the trends, much money can be made from this technology as it serves to authenticate original ideas and content. That said, a group is already activated on grounds of the carbon footprint from this industry.
As already mentioned before, much innovation is expected from this technology as more people are gaining interest in it.
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