NFT stands for “Non-Fungible Token”. It is a digital certificate of ownership representing something unique on the internet, such as a collectable piece of digital art or even an item in a game. In contrast to cryptocurrencies like Bitcoin or regular money, which is fungible, Non-Fungible in NFT guarantees that whatever the owner has purchased is one of a kind. Once officially released in November of 2017, they changed the meaning of owning a digital asset forever. Using blockchain technology to verify and prove ownership of any investment was a real breakthrough, which made selling, buying and trading digital assets easier than ever before.
The first rise of NFTs
In December 2017 the game Cryptokitties was introduced. It boosted the hype around NFTs to the point in which a week after the game was released Etherscan reported a sixfold increase in pending transactions on Ethereum. Cryptokitties have conquered the Ethereum blockchain with its simplicity, the player is an owner of one or more “cats” and each of them is a unique NFT. Each of them has its own digital genome and is stored in a smart contract, which thanks to an algorithm, lets a player breed new cats mirroring real-life genetics. Newborn kitties had their own “cattributes” determined by their genotype in the smart contract, which let other players buy, sell or trade their unique virtual pets.
The year that changed everything
The biggest rise in NFTs took place in 2021 when the market exploded. In 2020 worth of the sold NFTs totalled roughly $82m, however, the next year experienced an increase of 21,000% and totalled $17,6bn. The biggest turning point in the world of NFTs was the sale of ‘Everydays’ for $69m in March of 2021 which to this day is the most expensive NFT ever sold. Until then, no one had seen NFTs as a legitimate market and many businesses were not willing to enter. Now with rapidly increasing interest and high-value sales, big companies like Nike, Gucci and Tiffany entered the market space.
“Value” of NFTs
As I’ve already mentioned, acquiring an NFT gives owner rights to the digital art they have purchased, however sometimes with owning specific tokens, there are some benefits. For example in 2023 a restaurant will be opened, where only owners of Flyfish Club (FFC) will be able to enter. Owners of these tokens can lease their NFT to others profiting on it, while still maintaining ownership. Another very popular club is Boared Ape Yacht Club. After purchasing one of 10,000 “Apes” there are several benefits, for instance, there are real-world events for the owners and they also get Free NFTs from both the Bored Ape Kennel Club and Mutant Ape Yacht Club.
Sources:
https://www.verdict.co.uk/the-rise-and-fall-of-nfts/?cf-view
https://cointelegraph.com/news/nyc-restaurant-claims-it-will-open-for-nft-holders-only
As of today, NFTs are a slippery slope due to their loss of value and lack of demand for their purchases. The benefits of being a club member definitely return only a fraction of the amount we previously had to invest in. At this point, in my opinion, the market for most NFTs is dead and a revolution would have to happen to resurrect it.