Quantum definitely isn’t the only NFT that’s been sold for a lot of money, with the most expensive sale to date reaching heights of around $69 million USD. While the world definitely didn’t know what an NFT was back in 2014, you now can’t go a day on the internet without running into a celebrity buying into them, a collection launching, or a new astounding sales figure.
NFTs have become so popular that even the CollinsDictionary – yes, the actual dictionary – have named ‘NFT’ the word of the year. While some might see that as ridiculous (and others might point out that NFT is an acronym, not a word…), it’s undeniable that non-fungible tokens have taken the world by storm in recent months.
In this article, we’ll be discussing why NFTs have risen to fame so quickly, examining the main reasons why they’re taking the world of blockchain by storm. Let’s get right into it.
How do NFTs work?
An NFT – commonly known as a Non-Fungible Token (something that cannot be reproduced) – is a digital commodity that’s minted on the ERC-721 token. These tokens, which are digital assets themselves, are points of information that are stored on the blockchain.
When someone buys an NFT, whatever it is, their name is sent to the blockchain, where they’re listed as the owner in an information file. If you’re not too familiar with the blockchain, you can consider it like a continuous data pathway, with each new stepping stone being a permanent record of the data it holds.
When a transaction is made, it’s noted down and stored on the blockchain. Essentially, the blockchain is a huge data filing cabinet where the ‘owner’ of the NFT is stored. That’s why although people like to make jokes about print screening NFTs online and then supposedly owning them, the real ownership is firmly locked away on the blockchain.
This is where the real value in NFTs lies, as ownership can be sold or exchanged for money. While the NFT is a digital medium, once you trade it and cash out your crypto, the money you’re left with definitely isn’t just digital.
Why are NFTs becoming such a big deal?
Even in the first months of 2022, we’ve seen additional utility being added to NFTs. For example, Twitter has now launched an NFT feature that allows users that register an NFT on the platform as their profile photo to get a different basic photo shape. This marks their profile as different and ensures that they stand out from the crowds.
But, even with usage aside, the NFT market has been steadily growing for quite some time now. Examining this form of digital asset, there are three main reasons why they’ve exploded onto the scene:
- Medium for artists
- Uptake Results in Uptake
- Trading and finance
Medium for Artists
NFTs and art are now fairly inseparable concepts, with many artists turning to this digital space in order to sell their works. This technological medium is one of the easiest ways for artists to quickly sell their art online, with large-scale platforms allowing them to upload (or ‘mint’), auction, and sell their art in a matter of hours.
Considering that there is no geographical limitation on NFTs, anyone in the world can take an interest in a piece of art and then buy it from an artist. The days of only getting local sales are over, with this technology firmly bringing digital art into the mainstream through its accessibility.
One artist, Rossener, suggested that before NFTs, there “wasn’t a convincing way for offering the work to collectors” if you were a digital artist. For them and many other artists, NFTs represent a potential avenue for them to put their art online, get collectors to see it, and make sales to their global audience.
Moreover, NFTs represent a direct challenge to the monopolies that private galleries have on the world of art. While physical art is often judged by a select group of people who deem what’s good and what’s not, digital art that’s seen by an international audience is a whole different ball game.
Not only has this allowed artists to start making a living online, turning what is notoriously a difficult career to launch into something very lucrative, but it’s also allowed walls to be broken down in the art community. Instead of a monopoly on this world, now anyone can become a player in the game.
Uptake Results in Uptake
While the early adopters of NFTs didn’t make much of a buzz, the same can’t be said for users in 2021, with NFTs now being a concrete part of the mainstream online. This new media attention has caused an influx of even more new users. As pillars of the financial, DeFi, and auction worlds turn towards NFTs, more and more people are exposed to them, making even more platforms issue features to support them.
This cycle of popularity has exploded NFTs, ensuring that they’re an asset class that almost everyone has now heard of. Even the famous auction house Christie’s is now trading NFTs – being the facilitator of the biggest NFT sale in history. With this new fame, many cryptocurrency platforms are creating platforms for their users to buy and trade in this digital medium.
While there are designated platforms like OpenSea, even sites that are dedicated solely to cryptocurrency have opened their doors to NFTs. Most recently, Coinbase, Blockchain.com, and Binance – three major players in this market – have turned to NFTs, releasing gateways that their users can trade and collect NFTs on.
As popularity increases and more platforms start to accommodate NFTs, they will only further become part of our digital world. Considering how far they’ve already come, it’d be hard to stop this transformation in its tracks at this point.
Trading and Finance
Finally, another reason that NFTs have reached their current popularity is due to people that have turned to this digital asset as a way of investing and trading. Instead of trading stocks of cryptocurrencies, people have started to buy and sell NFTs of all sorts to make a profit.
In fact, many people are achieving rather insane profit margins from doing this. One user bought a GIF for $3,600 and sold it for $16,300. For those not up to scratch with mathematics, that is a 352.78% increase in price. Many platforms have cropped up that allow users to trade NFTs with ease.
One of these said platforms is NAGAX, which is a social trading platform that focuses on all things crypto. As NFTs are an extension of the functionality of cryptocurrencies and blockchain, they fit neatly into this umbrella. On NAGAX, users are able to create a storefront for their artwork, minting their own NFTs and then selling them to the community.
If you’re looking for trading, you’ll also find that on NAGAX, with live auctions being held, which help connect sellers and buyers. Users will also be able to construct a profile on the platform, which then shows off all the different NFTs that they have collected. This social form of displaying NFTs further inspires a community around the projects, with the NFT community growing every single day.
What Do You Think?
Whether you despise the concept of NFTs or think they’re the next step in digital assets – they’re certainly hard to ignore, and seemingly here to stay. With the NFT global market reaching over $41 billion in 2021, we’re likely to see these digital drawings and videos continue to accumulate interest and investors.