As of May 1st, 2022, Chainanalysis reported that investors have spent $37 billion on NFTs. Now what is an NFT and why are people spending so much money on them? Non-fungible tokens or “NFTs,” have become one of the most prominent assets during the growth of web3 over the last couple of years. Non-fungible tokens are simply digital collectibles, but in more detail, they are cryptographic assets on a blockchain that has a unique ID code attached to distinguish them from each other. The name “non-fungible token” suggests each NFT is different from another, unlike traditional money or cryptocurrencies that are fungible. Fungible means they can be exchanged evenly for one another. For example, 1 Bitcoin will always equal the value of another Bitcoin, and one $20 US bill will always equal $20 US.
Because of the unique ID code of an NFT, we can tie the unique ID of an NFT to the real world and virtual assets. Because of the NFT, smart contract creators, like artists and musicians, can claim ownership over and validate something they have created. For example, Beeple is a digital artist. By making his art into NFTs, he was recently able to sell an NFT for $69 million dollars [source].
Other well-known NFT projects such as Cryptokitties, Bored Ape Yacht Club, and CryptoPunks are available for NFT owners to buy, sell, and trade on marketplaces, such as OpenSea.io and Rarible.
NFTs as an industry, have a very successful future ahead. Below contains a list of a few projects that are being worked on for NFTs.
- Gaming: The gamer owns a gaming skin as an NFT, as opposed to the gaming company.
- Live events/concerts/sporting events: NFTs as Tickets.
- Real Estate: NFTs as Deeds and/or Titles.
Healthcare, personal identification, music, film, and others are all areas that are either using or are looking at using NFTs.