This is the second in a series of posts explaining the concept of cryptocurrency, NFTs and the future of money.
What is an NFT? Stands for non-fungible tokens. Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value—one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain.
NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible).
An NFT is a digital asset that can come in the form of art, music, in-game items, videos, and more. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. Hence, they become embedded on a blockchain.
NFTs have been around since 2014, generally to buy and sell digital artwork. The market was worth a staggering $41 billion in 2021 alone. Since then the market has dropped for different reasons the main one being that crypto prices have fallen significantly since the start of the year. In the crypto world everything rises and falls on Bitcoin which is the number one decentralized (no one owns or controls it) crypto currency in the world.
Many NFT's are placed on the centralized (owned and controlled) Ethereum (ETH) blockchain network, which generally follows the ups and downs of Bitcoin. There is volatility with Bitcoin because it is still tied to US and world financial markets. Within the next decade it will decouple from those influences and become its own value system, which if the predications are correct will far surpass the fiat systems that have been used for hundreds of years.
But even with the NFT downturn, they are still selling by the millions, despite the lower price point and declining ETH value. In fact, that number is rising lately, with some 8.78 million NFTs transacted in September—up from 7.68 million NFTs sold in August and 5.89 million sold in July.
NFTs are generally one of a kind, or at least one of a very limited run, and have unique identifying codes. Think of it as a limited edition print that is digital, not on paper. However, there are different types- Multi-Edition NFTs, 1/1 NFTs, Generative Collections, Autonomous NFTs, Dynamic NFTs, Music NFTs.
So they can be one of kind pieces or variations on a theme. Some of the art and music can evolve over time so it is never the same from the time you bought it!
Purchasing an NFT allows the buyer to own the original item. It contains built-in authentication, which serves as proof of ownership. Sometimes, collectors value “digital bragging rights” almost more than the item itself!The artist known as “Beeple,” crafted a composite of 5,000 daily drawings to create perhaps the most famous NFT of 2021, “EVERYDAYS: The First 5000 Days,” which sold at Christie’s for a record-breaking $69.3 million.
Award-winning rapper, Snoop Dogg has been a part of NFTs with his music for years. One of his first NFT collections called “Journey of the Dogg” saw one token sell at auction for over $100,000. He plans to turn Death Row Records, a record label that he acquired from Blackstone into an “NFT label."
Even TIME magazine released five NFT collections. TIME has made over $10 million in profit from its NFTs alone revitalizing its analog brand.
NFT collectors are mainly men and in the younger age groups. However this dynamic is always changing. The bottom line is that the NFT market is not going away and will only get larger and more sophisticated along with its collectors.
One of the goals of some NFT artists is creating a community around their brand. Some have chat rooms and offer buyers in their club access to specific experiences or perks.
OpenSea and SuperRare are two marketplaces known for art and music. There are others and more opening all the time. Some are more specific, for instance, Pianity focuses on music.
Here is a list of some of the best NFT Marketplaces for different categories.
I feel that NFTs will become an invaluable resource for art career sustainability and also offer collectors and patrons more options to support their favorite artists. NFTs can be an investment which I will write about in the next post.
I will be dropping my NFT in collaboration with the singer song/writer SEAY on OpenSea. Stay tuned!
Here is an article from Forbes that gives a pretty good overview if you want to dive in more.