NFTs came into existence roughly two years ago and they have already created quite the commotion in the financial world. Millions of dollars have been traded in wealthy neighbourhoods all across the world in a very short time and their sales figures on the internet increased dramatically in the early months of 2021. NFTs made headlines for a number of reasons, including a $172,000 sale of a digital cat cartoon (Nyan Cat) and a $500,000 donation from a New York Times column. A number of records were also shattered, the highest sale of an NFT reaching a whopping $69 million. So what is the situation now? Was it all a bubble that has burst already or is there some solid future for these tokens? Read on to find out.
What is NFT and how does it work?
You’re probably aware that you may “tokenise” your physical belongings by assigning digital values to them in a distributed system. Some of these tokens are “fungible,” meaning that their constituent parts can be traded for other tokens like fiat cash or gold. Others, such as a work of art or a blog entry, are “non-fungible,” meaning their individual elements cannot be swapped since they are unique. Non-fungible tokens, or NFTs, are the second type of token. These are created on a blockchain forum, usually Ethereum, and exchanged on the same blockchain’s marketplace.
These non-fungible tokens are developed exclusively on a blockchain platform to take advantage of all of the technology’s additional security features, viz., guaranteed anonymity, robust cryptographic protection, and an unchangeable, everlasting, and practically unhackable database. On a blockchain ecosystem, manufacturing and distributing fake collectibles is pointless because the original holder of each artifact is easily traceable.
Each set of NFTs has distinct properties that distinguish it from other NFTs and simplify validation and in exchange for NFTs, you get an authentication certificate for the purchased item which demonstrates your ownership. Even if there are copies of the artwork, the NFT will not be reproduced thanks to a blockchain public ledger that maintains track of who owns what. Another perk of being constructed on the blockchain is that when the token and the NFT marketplace both are created using the same blockchain framework, two network participants can swap tokens. For example, you can exchange a piece of art for a concert ticket.
An overall NFT statistics for this year
At the beginning of 2021, NFTs created quite the stir in the fintech industry, especially with the auction price of some pieces of art gaining huge traction. Beeple, alias Mike Winkelmann, a South Carolina-based graphic designer, sold an NFT for a remarkable $69 million in March 2021. Soon afterwards, Twitter CEO Jack Dorsey sold his first tweet as an NFT for $2.9 million. In more recent news, in June this year, CryptoPunk, an unusual digital avatar, was sold for more than $11.7 million. As per NFT market overview figures from Nonfungible, a website monitoring the sector, total NFT sales reached an eye-popping $2 billion in the first quarter.
However, more fresh data demonstrates a dip in the NFT market size. According to Nonfungible’s NFT statistics, overall revenues in the area dropped from a seven-day high of $176 million on May 9 to just $8.7 million on June 15.
What does the NFT market overview tell about its future?
The most recent NFT sales statistics may look discouraging, but experts working in the field aren’t worried much. According to them, the plunge can be looked at like any other market where up and down is a common occurrence and a quick rise of a trend is almost always balanced out by a relative decrease. It is nothing but a sign of stabilisation of the markets. Many believe that NFTs serve a bigger purpose and have the potential to create a definitive long-term value since the digital world is already becoming the norm, leading more people to spend their time, and therefore, money for digital environments.
As stated by professionals, here are a few ways NFT market size is predicted to have a steady rise in the coming years –
- NFT joins hand with Augmented Reality (AR):
Professionals working in AR and NFTs believe integrating them will bring a huge value to both industries. AR allows 3D designers, architects, and innovators to bring their projects out of the standardized 2D display and into reality, introducing whole new scales, interpretation, reflections, engagement, and contrasting challenges. When art turns digital, NFTs will become the major trading currency for it. We may picture a society in which we possess and administer our own design of cities via NFTs, either individually or as a group.
- The effect of AR as well as NFTs on the art world:
It is predicted that incorporating AR into art and NFTs into AR will soon completely transform the art industry. The pandemic hit the art world pretty badly and according to a UN report, 43% of museums risked closure during this disaster. Going digital has saved many artists this year. Plus the amalgamation of AR in museum and gallery exhibitions have a better chance of drawing the newer generation more. So it is very likely that in the near future, digital art is all people will buy or invest in, and NFTs will make owning a piece of art safe, convenient, and less prone to copyright infringements. So it seems like, despite the current NFT sales statistics, these tokens are here to stay.
NFTs have proven to be a distinctive and lucrative financial instrument in the gaming and collectibles industries so far and as we can see, their future is quite bright. Apart from the fields mentioned above, these may even exist for real estate deeds, vehicle names, ownership of a company, and a number of other vast and complex situations in the future. The NFT world invites you to invest with open arms, however, it is highly recommended that you thoroughly research these tokens and marketplaces and get expert advice, so that you can stay protected while having a fascinating financial journey.