The Nyan Cat, a 2011 gif-turned rare NFT, sold in an auction for nearly $600,000 U.S. dollars, while NBA Top Shot NFTs generated over $500 million U.S. dollars in sales by March 2021; following this, a single LeBron James sports moment NFT sold for more than $200,000 U.S dollars.
From November 2017 to 2021, Coindesk notes that approximately $174 million U.S. dollars worth of NFTs were exchanged in digital asset marketplaces. Note that any obtained total sales volume estimates can considerably vary depending on the included NFT transactions, as there are on-chain and off-chain transactions. Off-chain transactions must be eternally manually and are not always offered in transaction data.
DappRadar tracks sales across multiple blockchains and claims volumes of NFT sales reached slightly under $2.5 billion U.S dollars in the first half of 2021. NonFungible.com also claims $1.3 billion U.S. dollars, excluding roughly $8 billion U.S. dollars of DeFi (decentralized finance) NFTs.
NFTs have been around since 2014, though they are now encountering a revitalization thanks to various elements.
The world headlines and normalization of NFTs have caused quite a stir around digital assets, and the underlying blockchain frameworks are the foremost and possibly the most obvious reason. Aside from the complex technology also lies economics, fandom, royalties, and scarcity statutes. Many forward thinkers desire to partake in an opportunity to acquire unique digital content and potentially retain NFTs as an investment.
When individuals purchase an NFT, they gain ownership of the content. Replicas still arise, and the owner has legal rights to the metadata and content within the original NFT embedded in the smart contract. They can boost their privilege and claim ownership over the NFT and content. For the ‘clout factor,’ NFTs have gained popularity; the more value materializes.
The initial NFT developer is smart contracted aftermarket revenues with each sale when the asset sells eternally. The marketplace also gains a percentage, while the selling owner gains the rest of the earnings. Therefore, there is the prospect of endless revenue from favored digital assets as they are purchased and sold over time.
Genuineness is a vital aspect of NFTs. Digital collectibles contain distinguishing information that makes them distinct from any other NFT and easily verifiable, thanks to the blockchain. Creating and circulating fake collectibles does not work because each item can be traced back to the original creator or issuer. Furthermore, unlike cryptocurrencies, they cannot be directly exchanged (like baseball cards in real life).
With this in mind, NFTs have provided a forgery-proof means of authenticity and ownership for the first time in history. This effectively translates to a viable means of stamping out an insidious enterprise that has plagued the world of art and collectibles for millennia. Of the estimated $200 billion U.S. dollars annually spent on art, approximately $6 billion U.S. dollars is illicitly filched from collectors’ hands for fraudulent works. NFTs provide a sensible means for collectors not to be victimized by such costly scams.
Alas, the advantage of NFTs exceeds this significant feature, extending to increased benefits for artists. NFTs carry with them the exciting effect of removing intermediaries from the process of digital publishing and the marketplace. Artists from all genres are empowered to market and sell their works directly. Celebrities, including Grimes, Paris Hilton, and Snoop Dogg, have joined in on these advantages while releasing art and other content as NFTs.
NFTs make possible the scenario of discovering artists early and financially benefiting from their future acclaim. Patrons may invest time and energy in building the artist’s reputation and consequently profiting from the works’ rising value. The community surrounding a particular artist and their work now has a greater voice to impact the cultural milieu. In some cases, communities are organized to reward the most valued members with tokens and other benefits for adding an appreciable degree of respective value.
Future use cases for NFTs are fascinating, with some influential thinkers suggesting uses including a chip for governance power in future virtual states. The diversity in the range of what NFTs represent is already staggering. NFTS can be issued for virtual real estates like those found in the blockchain-based game CryptoVoxels to real-world tickets for conventions and concerts. Although cryptocurrency alone has tremendous promises, including a radical transformation of the financial system, NFTs offer the possibility of causing a seismic shift in the organization and structure for the road ahead in society and culture.