DeFi who? NFTs are the brand new scorching stars on the crypto block
The last bull run of 2017 was marked by the initial craze for coin offerings that deteriorated and had predictable consequences for overrated projects that had little more than a team and a poorly written white paper. While many useful ICO-era projects have flourished, including Ethereum and others, most have come and gone with the wind, leaving thousands of careless investors clinging to worthless bags of tokens.
One full market cycle later, and there is now another rally that appears to be spreading across multiple sectors of the crypto industry, particularly in the decentralized finance space. A lot has changed since 2017. Regulators have gone tough, investors have gotten smarter, and the space has matured.
Although ICOs are still relevant today and have morphed into other forms of fundraising – like security token offers, initial exchanges, and initial decentralized exchanges – DeFi and non-fungible tokens or NFTs are the popular kids on the block today.
NFTs seem to be the next hot topic in cryptography, and while the numbers are still relatively small, engagement and interest seem to be increasing rapidly. This shows that the sector has plenty of room for growth.
NFTs are another class of cryptocurrency tokens. Unlike Bitcoin (BTC) or Ether (ETH), they are used to represent different types of assets that differ in value from one another. These assets can be either digital or physical. Popular examples are works of art, land or real estate, and even people.
Trump-inspired artwork sold for $ 6.6 million
Inspired by the 45th President of the United States, an artist named Beeple created an NFT called “Crossroads”. The artwork, a holographic animation showing a defeated Donald Trump lying naked in the grass, originally sold for $ 66,666 in November 2020. However, it was recently resold to an anonymous buyer for $ 6.6 million, breaking the previous record of $ 1.5 million for a single NFT sale.
Beeple is also about to break another record: the highest sale of a single NFT through an auction house. His new piece – a work of 5,000 unique images on the somber aspects of technology, politics and wealth – will be auctioned until March 11th. The bids start at $ 2.2 million.
Cointelegraph Magazine: NFT ‘Art Revolution’: Beeple at his 5,040-day love affair
The latest developments are simply the latest in a series of intriguing headlines regarding the NFT space, and it’s not just artists who benefit from these types of tokens. Thanks to the independence and verifiable authenticity of NFTs, many celebrities, musicians and film producers are also involved.
Perhaps the most glaring example of this is the recently minted Pokémon-inspired NFTs released by Logan Paul, a popular YouTuber, that raised over $ 3.5 million in a single day. The release included 3,000 NFTs inspired by the Pokemon card game, and there were 44 limited-edition holographic versions in which Logan Paul himself appeared as a Pokemon.
Another record was broken on February 28th when well-known musician 3LAU sold the first NFT album for a whopping $ 3.6 million. Other notable examples include musician Grimes and Mike Shinoda of the rock band Linkin Park. Even legendary TV show Rick and Morty now has its own crypto art on the blockchain, which makes sense given the considerable overlap in the demographics of the show and the crypto space.
A real art movement or a money robbery?
The possible symbolism behind the bizarre dollar numbers that Beeple’s Trump piece was resold for ($ 6.6 million), along with the fact that the last buyer wanted to remain anonymous, leaves some questions unanswered about the legitimacy of the NFT art movement as a whole – especially when you consider how art is traditionally used by the rich to reduce tax costs.
While the value of NFTs comes from their scarcity, not all agree with the astronomical values, and many industry commentators are calling digital art purchases nothing short of nonsense.
Is NFT art used to launder money or evade taxes, a practice not uncommon in the traditional art world, or is it really the newest craze in the crypto and art world – one that may stay here?
Sébastien Borget, co-founder of NFT-based gaming platform The Sandbox, believes the NFT movement has substance and that the hype we are currently witnessing has been brewing for years. He told Cointelegraph that a new paradigm is emerging due to the limited supply of digital collectibles:
“Those who saw a large number of records in the industry earlier this year may not know how long this has been going on. A number of products have been cooked and built over the past three years and are now ready for mass introduction. “
The history of the NFTs
Almost as old as Bitcoin itself, the first experiments with NFTs were carried out back in 2012 and referred to as “colored coins”. These were originally issued on the Bitcoin blockchain via protocols like Counterparty and Omni and were sometimes as cheap as 1 satoshi, the smallest unit of account for Bitcoin. These should represent a variety of assets and have different use cases. Colored coins were eventually no longer used, but were instrumental in paving the way for the future of the NFTs.
When the market finally caught the mainstream public’s attention in 2017 with CryptoKitties, the virtual pet game became so popular that it was responsible for clogging the Ethereum network and setting a new record for transaction volume on the blockchain. Fast forward to 2021, and the entire infrastructure has become more robust and diverse.
A recent report by NonFungible shows that the volume of NFT transactions more than quadrupled in 2020, rising from $ 62 million to over $ 250 million. NFT’s art sales skyrocketed, surpassing every other category associated with the crypto sector. The number of active wallets also rose 97% between 2019 and 2020, an overwhelming number to say the least.
The report also suggests that NFTs will play an important role in the current thriving virtual economy over the long term as people will invest more money and time in virtual goods and experiences. The report also states that the current features are just the beginning of the various use cases of NFTs being integrated into different industries. It might not be long before the first NFT-supported financial service appears. Examples can be digital insurance and secured loans.
NFTs affect different industries
The art industry seems to be in the NFT’s spotlight right now. It has received the most attention and has seen unprecedented growth. However, it’s worth noting that other industries are following suit. Gaming is an industry that is perfect for NFTs. This was evident from the number of existing crypto trading card games as well as the investments made by renowned game companies like Ubisoft with the game Raving Rabbids and Atari with retro art collectibles.
As mentioned earlier, the entertainment industry doesn’t seem to be dipping its toes in NFT waters just for artists. Tickets for live events will soon be issued via NFT-based systems to alleviate the problem of counterfeiting that is widespread in the ticketing industry.
Finally, sports leagues: NFTs can easily be explained as a kind of “digital baseball card”. So it would make sense to see how major sports leagues start to roll out the technology. This is already happening with Formula 1 Delta Time, an official Formula 1 collectibles game, and NBA Top Shot, an officially licensed platform that makes it possible to own the best NBA highlights in the form of collectibles known as “Moments” are.
Wilhem Pujar, co-founder and CEO of Stacktical – a decentralized platform for service level agreements – shared an optimistic vision for NFT sports collectibles and told Cointelegraph, “Given that sports betting is a market of more than $ 200 billion we can expect large amounts of capital to be reallocated to NFTs that provide both emotional and financial protection against empty stadiums and arenas. “
While gaming, art, and sports collectibles are the top industries for NFT adoption, there is underlying potential in other markets. Yat Siu, co-founder of Animoca Brands – a platform for branded blockchain games including F1 Delta Time, MotoGP Ignition, and other sports-related projects – believes NFTs can leave their mark on many other industries, and explains to Cointelegraph:
“Right now we’re seeing NFTs have a huge impact on all forms of digital content like digital art, collectibles, games, and most recently music, but eventually everyone else will follow suit: medicine, fashion, finance, manufacturing, agriculture, insurance – you name you it, and it will have relevant uses of NFTs. “
NFTs: Just Another Trend?
NFTs and decentralized technologies altogether are changing the landscape for creators and consumers of digital content alike. They allow anyone to monetize their work directly by connecting with fans and removing cumbersome middlemen. This ensures transparent ownership for their creations, which can be any type of digital media, be it photos, memes, GIFs, videos, music, books, or even domain names.
While there is still a long way to go before mainstream adoption is achieved, there are already signs that large corporations are stepping forward and becoming NFT pioneers. It is very likely that more recognizable brands will enter the room. Ian Friend, co-founder of the DeFi Ferrum Network project, admitted that corporate mass adoption has already started and is likely to continue, telling Cointelegraph, “It’s already happening. Big brands that can’t adapt this year will catch up behind the first movers. “
It’s not just about hype: NFTs may be responsible for a significant paradigm shift in the exchange of digital content across various industries, including art, games, real estate, and more. They may even turn out to have a dominant presence in future virtual economies, particularly in the esports sector, where the biggest demographic transition appears to be among young, tech-savvy “geeks”.
Multiple industries are disrupted, and collectibles markets are forever changed by NFTs. JD Salbego, CEO of AnRKey X – a blockchain-based protocol platform that leverages DeFi and NTFs for the esports gaming industry – told Cointelegraph: “We are already seeing this in the form of a commitment where reputable institutions have recognized the value of unparalleled security, authenticity and traceability for non-fungible assets in a digital environment.”