Lately, NFTs (non-fungible tokens) have been making the headlines all over the world. A tweet sold for almost 3 million dollars, high-profile memes like Nyan Cat and the “Deal with it” sunglasses were auctioned and sold as NFTs, a 50-second video by Grimes fetched almost $400,000 and someone paid over $60 million for an NFT by artist Beeple, auctioned by Christie’s, making it the most expensive NFT ever sold at auction. Are NFTs just a buzzword which will soon fade away or there’s real substance behind the hype?
What exactly are NFTs?
NFTs are non-fungible tokens (can’t be exchanged one for another) which run on a blockchain network. Stored in digital wallets, each NFT is unique, can’t be replicated and each one accrues value independently. NFTs can be used to represent virtually any type of item: images, videos, audio files, music, code, contracts, drawings, animated GIFs, even elements from video games.
NFTs are part of the Ethereum blockchain as individual tokens with extra information stored in them. There are also other blockchains where NFTs can be issued: Flow, Tron, EOS, Polkadot, Tezos, Cosmos, Binance Smart Chain. We should also mention that if you create a NFT on the Ethereum blockchain, you can sell that token only on Ethereum token marketplaces, not on a platform which supports EOS or Binance Smart Chain NFT sales.
Blockchains work by using groups of computers to create a shared digital ledger that no single computer can change. Instead, they must agree by performing complex calculations. This process makes blockchains ideal for creating systems in which unique digital identifiers can be exchanged easily and securely. NFTs can also be seen as a certificate of authenticity. However, instead of a sheet of paper there’s a unique string of characters – for example, 60f80121c31a0d46b5279700f9 – connected to a blockchain.
What are NFTs good for?
NFTs allow individuals to buy and to sell ownership of unique digital items and keep track of who owns them using the blockchain. How are NFTs connected to the Ethereum blockchain? You buy an NFT (for instance, a piece of art or a video) and the unique bit of information about that artwork, including its Smart Contract, is stored on the blockchain, proving that you own it. To put things into perspective: anyone can search for, find, download, print and hang up a piece of digital art, but only a few can actually say they own that particular element.
More and more people are making digital purchases – be it books, movies, music, software, games, etc – especially during the pandemic, while working or relaxing from home. However, it’s worth noting that we don’t actually buy those items, we only pay for a license to use them. And here’s where the particularity of NFTs comes into focus: they are “cool” because they provide a way to certify and authenticate ownership of certain things.
Burning a Banksy artwork, then selling it as NFT
These days, everyone seems to be talking about NFTs. A person paid $6.6 million for a video by Beeple, while NBA has generated $230 million in sales of baseball video clips across its Top Shot marketplace. A group of “art and NFT enthusiasts” bought a Banksy piece, set it on fire, then sold it as an NFT for almost $380,000.
Pieces from Steve Aoki’s limited art collection “Dream Catcher” have sold for $4.25 million, and many pieces are still up for sale. Lindsay Lohan sold her first NFT – a piece called “Lindsay ‘Lightning’ Lohan” – for around $50,000, while Rob Gronkowski – an American football tight end for the Tampa Bay Buccaneers of the National Football League – sold limited edition Championship NFT trading cards, netting over 1 million dollars.
The NFT market is booming
According to a study from NonFungible and L’Atelier, the non-fungible token (NFT) market tripled in 2020, with the total value of transactions increasing by 299% year-on-year to more than $250 million. The number of digital wallets trading them went beyond 222,179, almost double compared to the previous year. NFT traders have also experienced huge financial performance, with profits of up to $500,000 in a single year, and certain traders made annual profits in excess of $100,000 from trading NFTs.
More and more well-known brands are entering the NFT space, creating lucrative NFT-based consumer goods and services. To name just a few: Nike, Louis Vuitton and Breitling; Turner Sports, NBA, Formula 1 and PSG; BBC, Warner Music, and Paramount; Ubisoft and Atari. The growth of the NFT market comes as a result of increased online activity during the Covid-19 pandemic and shows that many people are spending their money online, buying goods, experiences and services.
Not only musicians, painters or sports personalities are getting themselves involved in the NFT “revolution”, but luxury brands, too. On April 4th, ArtGrails has auctioned off a one-of-a-kind NFT created by Jacob & Co.’s internal design team in an event billed as the “first-ever NFT luxury watch launch“. The highest bidder will receive all the physical elements that come with a high-end watch, like a certificate of ownership and a case. The case will contain a hard drive with the NFT, a digital rendering of a Jacob & Co. watch.
Modex offers a new trademark technology designed to solve the last mile adoption problem of blockchain. Our software solution aims to make blockchain technology user-friendly for every single organization or company. At Modex, we innovate thanks to our incredible team of experts, and by integrating cutting-edge technologies we evolved into a leading Blockchain Database provider offering real-time data protection, immutability, and data security for companies, institutions, and organizations.