The term ‘cryptocurrency’ instilled doubt among the general population some years back, but now that is in the past. Cryptocurrencies have now gone mainstream in 2021 with popular celebrities, social media influencers and news channels promoting the next generation of technology that is taking the world by storm. However, from the immense popularity of the cryptocurrencies, one particular area has seen a massive surge above many others.
Non Fungible Tokens or popularly known as NFTs have emerged as a sensation this year. It is grabbing headlines everywhere and introducing the world to a brand new era of digital art and collectibles. Undertaking a course in Blockchain or a cryptocurrency course can give people a really good idea about digital assets. People around the world are extremely overwhelmed with NFTs and the insane level of opportunities this new technology has opened up for them. They are now interested in truly learning NFT. But why are NFTs becoming so popular? And, what exactly is happening in the NFT space that is driving such excitement?
What makes NFTs such a big thing?
For the uninitiated, NFTs are digital assets which are unique in nature and are represented through the ERC-721 tokens which basically serve as a verifiable and undeniable proof of ownership of these digital assets. NFTs can vary and come in different forms such as videos, images, music and other types of media and different artwork.
What are the use cases for NFTs?
To put it mildly and simply, the word ‘Non Fungible’ means that which cannot be duplicated or replaced with anything else. Inherently an NFT is a unique item unlike any existing in the market. As a result they are primarily used as collectibles which can be traded on various NFt marketplaces.
The primary point of difference between traditional collectibles (such as sports memorabilia or classic trading cards) and NFTs is that NFTs are digitized and they can serve a whole range of other functions other than just serving as collections meant for trading. Users can actually unlock their verifiability and immutability owing to the benefits of the blockchain technology. In addition to that, they can even earn rewards based on DeFi capabilities. IT is important to note that the blockchain here provides the much needed proof of authenticity as it holds the link that would point out where the NFT is stored, rather than holding the actual contempt of the NFT itself on the blockchain.
Nowadays owing to the decentralized nature of the popular marketplaces such as OpenSea or Rarible, anyone can possibly create and even mint an NFT. What this means is that there is universal access now for users, giving people an equal opportunity in terms of making money from their digital artworks.
What led to the huge surge in NFTs in 2021?
It was during the month of January in 2021, when NFTs started gaining immense traction, even though it could not be pointed out for certain as to what led to this incredible boom. However, studying the market, there could be a few reasons which contributed to this growth.
- Bitcoin prices started rising during the first quarter of 2021 and it sent a hype across the entire crypto ecosystem and throughout the market. This surge further attracted a host of retail investors and general crypto users.
- NFT space witnessed the emergence of innovative and unique characters and avatars, such as Cool Cats or Bored Apes, which helped create close knit online communities that gave people a compelling sense of purpose and enough reason to purchase these NFTs.
- Also, a lot of buzz was created surrounding Elon Musk in relation to Shiba Inu and Dogecoin which drew the attention of millions of people worldwide.
According to the experts, this intense hype somehow translated and seeped in through every corner of the digital assets ecosystem, including that of the NFTs and contributed immensely to its hype.
Gradually decentralized marketplaces such as OpenSea and Rarible started attracting a lot of attention as they were providing a lot of convenient ways for artists and creators to mint, view, share and collect their own NFTs among a group of like-minded individuals interested in the same revolutionary technology. In addition to that, the applicability of Decentralized Finance (DeFi) helped in enhancing the way they used NFTs and gradually artists and content creators started earning handsome passive income for their work. Eventually when these earnings reached ludicrous amounts of money by selling top NFT tokens, word began to spread out like wildfire and everybody wanted a taste of how all this works. This resulted in a rapid boom of the NFT space leading to the creation of some of the best NFTs.
Some key statistics to put things in perspective:
Let’s look at some of the data to understand how rapid and massive the NFT boom has been:
- The amount of NFT sold in 2020 amounted to a staggering $250 million, which was a staggering jump of 82% from the $141 million sales during the previous year of 2019.
- During the first quarter of this year itself, the sales reached a volume of over $2 billion.
- ‘Everydays: The First 5000 Days’ by Beeple was the most expensive NFT ever sold for a price tag of $69 million.
Conclusion: The future of NFTs
Some believe that the craze surrounding NFTs is nothing more than an ephemeral bubble. But no matter what they say, it is pretty evident that NFTs are here to stay for the time being as we have seen multiple luxury brands, racing car manufacturers and really big companies like CocaCola all dipping their shoes in the NFT space.
This is one technology that is revolutionizing the way we perceive the need and usage for art in our lives. For the first time in history, the art and collectible market is being fully digitized and not just that, some companies and platforms are even making it possible to stake one’s own NFTs to earn interests on them. So the technology much like cryptocurrencies themselves are evolving and with it, the concepts and the necessities are also going through a transformation.