What exactly is an NFT?
An NFT is a non-fungible token a unique digital asset. NFTs are one of a kind and cannot be replaced with something else. You've heard of Bitcoin, right? Well Bitcoin is fungible. One Bitcoin is exactly the same as another, you could trade any Bitcoin for another, they won't be any different.
An NFT however, is a one-of-a-kind trading card. If you swap or sell it for another NFT you will have something completely different.
How exactly do NFTs work?
Most NFTs are part of the Ethereum (ETH) blockchain. Most purchases and trades of NFTs are done in ETH. Ethereum is a cryptocurrency, like Bitcoin, but the ETH blockchain also supports these NFTs, and stores extra information which is why most NFT transactions are done in Ethereum. For more details see our previous post – NFT for Dummies.
Ethereum is widely accepted these days in comparison to the past and partly due to the expansion of the market for NFTs, Ether is now the second biggest cryptocurrency in the world.
Which NFTs have made money so far.
Over half of NFT sales made in 2020 were related to video games, and only 8% of NFTs related to digital artworks – but in the last year it was the digital artworks that made the most headlines round the world.
Digital artist Beeple sold an NFT artwork "Everyday the first 5000 days" for $69m at Sotherby's, NFT artist Pak sold rotating 3D cubes for $17m at Sotherbys in April, and collectibles like CryptoPunks, and Bored Ape Yacht Club have grown exponentially to have sales volume of over $3m a day, and some CryptoPunk tokens are valued at over $600K each.
That's past success, where's it going in the future?
Everyone is looking at inter-active gaming NFTs. Axie Infinity and Sandbox are created digital meta-verses for NFT owners to battle, collect and earn. Both are in alpha stages and volumes of sales are especially high, in particular for Axie, with $24.1m in the past 24 hours – (dated 23rd Nov 2021). Another game able NFT platform which combines the artworld with gaming is Crocs League. It is a collection of animated crocodile tokens which sold out their first edition of Crocs in less than a day for $500,000. The next stage of the development for 2022 is for collectors to be able to breed and fight these tokens, and at that point it's expected that the tokens will increase in value by over ten times.