Many people are familiar with the term cryptocurrency, especially with the rave around bitcoin in the last few years. Recently, trading cards and the art market has had a hand in the digital marketplace. Digital trading cards and art are being sold at strikingly high prices in the form of non-fungible tokens. Non-fungible tokens simply mean that they are unique and can’t be directly exchanged with one another, unlike bitcoin and other cryptocurrencies, which can be traded.
CoinDesk defines NFT’s as “… digital assets that represent a wide range of unique tangible and intangible items, from collectible sports cards to virtual real estate and even digital sneakers.”
While NFT’s have gained popularity in the last few years, there seems to have been an extraordinary amount of hype around the market during the past few weeks. According to CNBC, “One investor, Sheldon Corey from Montreal, Canada, told CNBC he paid $20,000 for one of the thousands of computer-generated avatars called CryptoPunks.”
So, what items are a part of the NFT market?
According to The Verge, “NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.”
It should be known that the items bought and sold as non-fungible tokens are digital assets and typically transfer ownership from producers to investors. Digital assets are purchased using cryptocurrency and rely on blockchain technology to make smooth transactions.
These tokens are represented using a code that is added to a digital wallet once it has been purchased. Uniquely constructed pieces of art and other items can be viewed using technology with a screen, such as a laptop, phone, tablet and in virtual reality.
Memes, digital landscapes and virtual characters have also earned considerable popularity in the market. Digital items are being sold for hundreds to millions of dollars.
For instance, back in 2017 CrytoKitty, the Canadian blockchain game on Ethereum that allows people to breed, sell and purchase cats was selling some cats for over $100,000. Also, recently a video clip created by digital artist Beeple sold for 6.6 million dollars. Other digital artists are leveraging the market to sell their digital artwork for video games amongst other things.
Why are so many people interested in NFT’s?
Many people have begun to actively participate in the market as buyers and artists or producers. Depending on the role you assume, the market determines your reason for interest in these digital items. As an artist or creator of digital items, the NFT market offers a platform to earn both recognition and commerce. While buyers earn bragging rights to products as well as the right to re-auction items.
As the creator of digital products sold in the marketplace, some sites offer artists the rights to take a percentage of future resales. This ultimately has created a platform for placing a monetary value on digital products.
Many individuals are still befuddled by why people are purchasing digital products at such striking prices when they can be captured as a screenshot and viewed online.
Well, as reported by Bloomberg, “The multimillion-dollar hype around it isn’t necessarily revolutionizing art, the collectibles industry or the concept of property. More likely, a specific community whose members have amassed fortunes thanks to cryptocurrency windfalls (or those who are trying to get in on the game) is spending some of this wealth to advertise the blockchain technology so that the money rain never stops.”
People like William Shatner are utilizing the marketplace to sell digital trading cards. Fans have reportedly bought 125,000 non-fungible trading cards featuring the Star Trek actor. Shatner has actively been advocating for blockchain technology for a while now.
NFT’s have gained extreme popularity, however, they are not new to the world of cryptocurrency. In 2012 the idea of colored coins was introduced by Yoni Hesse, CEO of Toro, which he discussed on his blog. Colored coins allow investors to transfer assets on the Bitcoin blockchain. The coins can represent anything, for example, other cryptocurrencies, commodities and stocks.
Colored coins are a way to distribute and manage coupons or vouchers, which can be redeemed for tangible goods.
While non-fungible tokens are certainly not new, they are of growing interest and possibly present a new way for artists to gain recognition and claim ownership rights to the content that is often freely posted on the internet.