What is this NFT thing?
Not a thing for sure!. Hardly anyone in the crypto-space could have missed the NFT millionaire trend in the years 2020 and 2021. While the world was battling the most widespread health crisis, this digital asset was helping make millionaires across the globe. Notably, cryptocurrency was going through a bear run while NFTs attracted millions and made millionaires.
Non-fungible tokens are assets in a digital form, to say the least. Any asset, tactile or virtual can be tokenized and hence made into an NFT. Non-fungibility, i.e. the single trait because of which NFTs enjoy their exclusivity in the digital asset space, makes each of them unique and yet tradeable like a traditional asset. The latest in the market is fractionalizing an NFT. This gives NFTs the capability to be sold/bought in parts and not just as a unit. This has resulted in an exponential expansion in the NFT commerce. Such NFTs that can be divided for trade are called Fractional-NFTS or F-NFTs.
Being based on blockchain NFT trade, by nature of its existence is trustless, permissionless, and decentralized. This has enabled independent artists to access the global market and collectors from across the world can access exclusive pieces which most certainly would have remained out of their reach if not digitized into non-fungible tokens. For the artists, NFTs have allowed exercising control and incentivizing every transaction that happens with the NFT. Thus, making way for continuous earnings even after the initial sale of the NFT. As a matter of fact, art in any form has suffered a lack of conscious recognition of the artist and uncredited reproduction. Hence art has been the first to welcome and leverage this asset class.
Read along to examine with us what turned NFT into a golden goose and how long can it sustain the status.
How did it begin?
Conceptualization of NFTs happened to prove the ownership and authenticity of an asset. The ownership chain of an authentic asset established through blockchain-based ledgers to record all transactions helped to trace an asset back to its origin. An overused but apt example in this space is Monalisa, there can be many copies of the original, but it’s the one Leonardo made that has value for the collector.
Quantum, the first NFT in the form we know NFTs today, to be ever minted by Kevin McCoy, was an experiment to devise a mechanism for the digital artists to be able to replicate and enjoy the dynamics of the physical art market. Although, it did not materialize immediately. He had to go out and explain to investors the what and hows of an NFT. Back then, smart contracts were alien to most investors and that they could form the executable backbone of an entire market was far from imagination. Today, it is evident that smart contracts can be tokenized and used as automatic transaction triggers for NFTs.
Three years later came Cryptokitties, the game that was created “to explore the concept of digital scarcity, implement a non-fungible token within smart contracts”, as stated by Axiom Zen’s spokesperson. That was the time when the world was warming up to the concept of digital wealth. The experiment showed promising results. Cryptokitties soared into becoming the first worldwide recognized blockchain-based game and its operations branched out to an independent game development studio with the name of Dapper Labs. Bringing about, widespread recognition of the prospects promised by NFTs.
What kind of NFTs make millions?
Until now, the art industry has reaped the greatest benefits of NFTs. NFTs sell exclusivity and uniqueness with the provenance of ownership. There is no domain where NFTs may stop being the rage they are. The art of any form music, painting, sculpture, or digital has suffered poor recognition and poorer effort compensation. Piracy and plagiarism have been prominent among the biggest of the biggest as well. NFTs came to the rescue of artists providing a way to copyright protection.
Going back to where this began, the year 2017 was the first ever to witness the standardization of tokens, i.e. ERC, for the Ethereum blockchain. This was when NFTs made their way into the mainstream. Although the one most common today, ERC20, came later that year. As a result, the following year rained NFTs. NFTs soared as blockchain fueled the launch of more digital assets like crypto cards, decentralized games, and digitized art in the form of “standardized” non-fungible tokens. A few examples include Crypto Cards, Etherbots, PepeDapp, and Crypto strikers. What made the trade convenient was the introduction of marketplaces like SuperRare, which due to a flaw, resulted in the stealing of NFTs. But, it did demonstrate the potential of a market that can encash the NFT trading needs of the masses. They charged a nominal fee to post a sale and some more at each transaction.
This was the time when artists gravitated toward NFTs. They had found a way to reach out to a bigger audience without the fear of losing the copyrights of their artworks. On top of it, every transaction involving the NFTs was ledgerized on blockchain and paid them off too! we are talking big royalties here. What more could they have asked for in a world where artists gain recognition generations after they have passed away.
Artists like Beeple, who has been the graphics designer of choice, for personalities like Justin Beiber, Sarah Zucker, an entirely digital artist, and the physical turned digital artist Matt Kane, began to digitize their art in the hopes that the crypto market will get them their due recognition and more than that reimbursement of the effort that goes into creating art.
The years to follow have been rewarding for the artists and disruptive for the markets. Other artists from the fields of music, voice, and fashion also dived into the digitization process. Paris Hilton, Shawn Mendis, Eminem, Lindsay Lohan, and even Elon Musk did not miss out on the rising NFT craze. They all dropped in their pieces of art, music, and video songs and took the market by storm.
The Making of Millionaires
During the years 2020 and 2021, people across the world were locked in their houses, doing whatever they could to get through the Covid-19 outbreak. Needless to say, the need for liquidity soared, attributing to the uncertainty of life and the fact that health comes before anything else. This reemphasized the need to remain prepared for the worst of the times. This drew fiat out of the crypto market, leading Bitcoin and cryptocurrency in general to an epic fall. But, the masses who had gained access to an open market and credibility assurance by the presence of eminent personalities ended up testing out the NFT market. A huge number of artists, designers, and game developers decided to put their works on the NFT marketplaces for sale and auction. For a few, a hobby just happened to be able to be tokenized, and the experiment had lucrative returns which captured them within the system.
The millennials who had already adapted to the digitized way of living found a home here. Art is something generally perceived as an experience, something to elicit emotion. But, there stood a way to materialize and monetize it. Moreover, there was an open market for the seller as well as the buyer.
Teens from across the world like Victor Langlois, Jaiden Stipp, Nyla Hayes, and Benyamin Ahmed were the earliest ones to explore the NFT marketplace, for their artworks and their experiences in the market were beyond what they had imagined. This was when Beeple played a masterstroke, with his largest digital artwork- “Every day’s: the First 5000 Days”, and auctioned it for $69 Million, the highest at that time. That was huge, even for the crypto maestros to digest. Even Beeple called it “hard to grasp” that a digital piece of art fetched such a huge amount in the auction.
Post that, artists of all statures have started tokenizing their work. This provides them with greater control and royalties for what they create. Let me remind you here that NFTs are selling the uniqueness of digital assets. And the buyer is buying the right to show it off. And that is what all the talk is about, owning and showing off exclusivity in the hopes that it is going to give extravagant returns on resale.
How long are NFTs going to make Millionaires?
By the end of 2021, many NFT millionaires had been produced, and many others had followed their path but did not attain those benchmarks. We stand today in the second quarter of the year 2022 and know of no one who has been able to get through the past two years without learning about the whole NFT millionaire phenomenon.
A naive understanding of economics can tell us that with the increase in available options, the buying capacity gets scattered. As a result, the number of NFT millionaires and the millions an NFT earns has already begun to drop. What is intriguing here is that the global personalities are still earning big bucks by selling a tokenized version of their skill. Be it a musician, or an actor, everyone is trying their hands at maximizing the returns from the NFT market, and the fanbase is not leaving them hanging too.
For the unsung artist though, it all boils down to marketing and outreach. These artists are sure not going to fade into oblivion, but making millions isn’t as straightforward anymore as it used to be in the latter half of the last decade. The year 2021 experienced an unprecedented rise in the NFT sales and the market hit a whopping $20 Billion, but the art market ultimately is dependent upon the collectors’ preferences.
Beyond Making Millions
Looking beyond the millionaire artists, NFTs have found a ton of more applications. The blockchain security and decentralized storage, combined with the tokenization capabilities for anything tangible, after the introduction of many standards across many new and older blockchains have led industry experts to explore what all this digital asset has to offer. Insurance, medicine, real estate, gaming, and many more industries have already started embracing the tokenization benefits.
As NFTs can be shared, sold, or bought with a cryptographically signed consent of the holder only, they are proving to be a boon for identity and medical record management, transaction tracking, supply chain tracking, and a lot more scenarios. These applications are not aimed at making millions but at simplifying the tedious back-end jobs that cause delays. NFTs instill in the systems trustless and permissionless sharing of data controlled by the owner.
There is no single domain where NFTs remain inapplicable. However, no one can accurately predict by when will they become the dominant mode of exchange.
All we can do is watch
The last largest disruption was caused by the introduction of mobile phones, which led to the digitization of almost every process throughout business functions. As process digitization has reached its peak, leveraging more from the emerging technologies demands digitization of assets as well. Tokenization of assets gives direction to the Internet of Value and accelerates the evolution of web 3.0. NFTs have put out major prospects on the horizon, for the tech world to resolve the issues in the existing systems. Blockchain technology has proven to be the driving force for web 3.0 and NFTs are proving to be the vehicle for the same.
Blockchain-centric organizations like ours are on a mission to enable businesses to leverage emerging technologies. PrimaFelicitas offers extensively customized solutions for all web 3.0 technologies, including NFT Marketplace Development and Consultation. Connect with us to know more. Who knows what turns out to be the next million-dollar idea?
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