Welcome to another lesson from the Run The Chain News Crypto Classroom. Today we’ll be talking about What are NFTs?
You may be wondering why you’re looking at a GIF of pimped out chickens. This is in fact an nonfungible token, or NFT, collection known as SolChicks. With 2021 Q3 NFT weekly sales in the hundreds of thousands compared to only tens of thousands in the first half of 2021 — around a 600% increase — chances are you’ve heard the term ‘NFT’ thrown around at some point. After all, celebrities such as Steve Harvey, Paris Hilton, Snoop Dogg and many more have been jumping aboard the NFT train.
What on earth are NFT’s?
NFT stands for nonfungible token, but what does that mean? Put simply, nonfungible is defined as something that is one-of-a-kind and cannot be traded for or replaced with another item. For example, there are many golden retriever pets in the world, but none of them are alike or can be exchanged for another. NFT’s are often used to represent forms of digital assets such as photographs, artwork and videos, to name a few. Although NFT’s can also represent physical collectibles, it is not common at the moment.
How did NFT’s come about?
The first NFT was created on May 3, 2014. However, the NFT’s didn’t really take off until the appearance of Cryptopunks and CryptoKitties a few years later, around 2017 to 2018. There was a sudden explosion of public interest into these NFT’s, and it even made it onto major news stations such as Fox News and BBC. With these CryptoKitties, users are able to collect, raise and trade them on the Ethereum network, and that is where the majority of NFT’s are stored these days.
Interestingly enough, the most expensive CryptoKitty was sold for 600 ETH, or over $2 million at the time of writing.
Fun Fact: If you’re a basketball fan, this may interest you. Renowned NBA player Stephen Curry recently spent 55 ETH (valued at $197,000 at the time of writing) in August 2021 to purchase his own Bored Ape Yacht Club NFT.
It’s important to note that NFT’s are not limited to the digital art we see above. In fact, there are many other applications including the ownership of physical items, collectibles like NBA NFT Trading Cards, and gaming items. NFT’s can even be domain/website names through the Ethereum Name Service (ENS). With NFTs, potential owners use an Ethereum address with a name that is easy to remember.
Where exactly are NFT’s held?
Although there are multiple blockchains that can store NFTs, the most widely used one is Ethereum. Since NFTs are digital files, you may be thinking that you could easily download a copy without having to pay. However, as they are held on the blockchain, it means that the ownership can be publicly verified and authenticated. In other words, anyone can download copies of an NFT, but just like physical artwork, there is only one original that exists.
Enough talking, where can I go to see some cool NFTs?
OpenSea is often regarded as the largest marketplace for purchasing and selling NFT’s. Here, anyone can create and upload their very own NFT’s. However, just because it’s easy to do, doesn’t mean it’s instantly profitable. There are a variety of factors that will influence the value of an NFT.
Besides OpenSea, there are a plethora of other platforms out there such as Rarible, SuperRare, Foundation, and NiftyGateway. These platforms are constantly working to introduce new features. Specifically, a large focus of new marketplaces has been to integrate multi-chain functionality which increases interoperability and exposure. Some examples of multi-chain marketplaces include: Refinable, NFTb, or NFTrade.
The rarity, utility and ownership of a certain NFT all play major roles in determining the value. An example of a high value NFT would be something that is innovative, perhaps the first of its kind, made by a high-profile creator in the digital arts industry or one that is created by an endorsed celebrity or athlete. Utility refers to whether the NFT can be used and applied to other applications. The best example of an NFT with high utility value is a game asset like vehicles, spells, or outfits that can be used within the game.
The concept and meaning of NFT’s is undoubtedly transitioning from a simplistic view of “digital art and collectibles” to a more developed view as a way to recognize digital identity, ownership and validity. The potential for the innovation of NFTs has only just begun and will only progress upwards from here. And with that I wish you the best of luck on your NFT journey.