What are NFTs? Stripped to its bare minimum, the term NFT can be broken into two parts: “non-fungible” and “token.” The non-fungible bit means it’s unique and can’t be duplicated. The “token” part signifies the proof of ownership.
NFTs are like digital collectibles that include things like event passes, virtual land, website names, art pieces, and even social media posts. They can come in many forms, such as music, videos, images, or a mix of all three. The deeper I delve into NFTs, the more they transform my understanding of the internet. It’s akin to deciphering the matrix. Imagine owning not just a video of a moment but the actual moment! It’s truly an awe-inspiring concept. The Infinite now has a limited edition.
A Brief History These tokens first became a thing in 2014, following Kevin McCoy’s creation of the first NFT dubbed “Quantum.” However, it was not until 2017 that NFTs became more commonplace, with several collections coming out of the newly created Ethereum blockchain.
They have since made dramatic progress, with key moments including the emergence of prominent initiatives like CryptoPunks and CryptoKitties and their incorporation into metaverse concepts. 2021 saw a remarkable increase in the NFT market, as the trade volumes skyrocketed to $13 billion, partially fueled by the art sector’s fascination with digital tokens. That year, the Bored Ape Yacht Club caught the public’s eye, becoming a symbol of the NFT era. Other well-liked collections included Azuki, Pudgy Penguins, Cool Cats, Mutant Ape Yacht Club, Doodles, and Moonbirds. Further significant instances involve the Ethereum Name Service (ENS), which employs NFTs.ETH domains and NBA Top Shot, a marketplace for digital memorabilia aimed at NBA enthusiasts. Before their creation, it wasn’t easy to imagine selling digital creations. They’re intangible and easy to copy and send. So why would anyone pay for a digital file? Turns out, people are willing to pay millions for these tokens.Current State of the NFT Market More recently, the NFT market has been a whirlwind of change, and I think this trend will continue. We’ve seen rapid growth, intense volatility, and quick changes that can be overwhelming for both new and seasoned investors. In this terrain, research is your best friend and ally. Supply and demand are among the most significant factors in the NFT market. We’ve seen several projects tank due to an oversupply of similar art pieces without distinctive utility beyond their aesthetic appeal. For example, numerous 3D art collections have entered the market simultaneously, each demanding a significant mint price. Such trends saturate the market, making it challenging for all to thrive, particularly those artists who just gained fame through NFTs.
My Advice for NFT Enthusiasts When looking at NFTs, your primary focus should be the team behind the project. A dedicated, communicative, and transparent team significantly increases a project’s chance of success. If a project goes silent after selling out, it’s a red flag for me. Regular communication, even about minor issues, shows that a team actively works to ensure their project’s success. Furthermore, understanding an NFT project’s origin is crucial. Who’s the founder, and what have they accomplished before? Who’s on the team, and what’s their track record? Are there known investors? Who are the advisors? How does the team handle adversity? These factors give an insight into the project’s potential and whether it’s worth considering.
The Future? Looking towards the future, I see immense potential for NFTs within the gaming industry. Play-to-earn (P2E) games, where players can earn money while playing, are set to revolutionize the gaming industry. Another exciting proposition is the prospect of NFTs representing a “share” in a business, thereby democratizing business ownership. As for tokens and staking, these have potential, too, but only for projects that understand basic tokenomics. Many investors have been burnt by tokens plummeting in value. Furthermore, communities form the backbone of successful NFT projects. A robust and active community can propel a project to new heights. Similarly, profile picture (PFP) flex NFTs, and Decentralized Autonomous Organizations (DAOs) with no central authority also have great potential if implemented correctly. In conclusion, the NFT market is a dynamic, volatile landscape that’s not for the faint-hearted. Understanding supply and demand, researching the teams behind projects, and keeping an eye on emerging trends will go a long way in charting a successful course through this exciting new frontier.