The market for NFT assets – unique tokens that are used to acquire rights to digital objects – is showing explosive growth this year. According to the DappRadar service, in the third quarter of this year, the volume of the NFT market increased 8 times and exceeded $ 10 billion. Experts expect that the NFT asset market will continue to develop and expand into new areas next year.
What is the essence of the NFT mechanism
The essence of NFT lies in the fact that this token is a non-fungible unit in the blockchain, a unique instance of what has been digitized, Viktor Pershikov, a leading analyst at 8848 Invest, commented to Finam.ru.
“Conventional cryptocurrency market tokens are fungible, that is, they do not represent value in terms of uniqueness, although they contain a lot of other valuable aspects. Simply put, if you own an NFT token, then you own a digital version of something unique that exists. in a single copy, like a work of art, or some kind of digital rights. At the same time, if you look at the NFT technology more broadly, it makes it possible to digitize any services or goods from the real world, creating their digital version, which is especially useful in the framework of the metaverse “, – said Mr. Pershikov.
NFT tokens are issued by people, companies and projects who work with the blockchain and understand the basic principles of issuing digital assets. Now you can find many examples of how media persons, popular people or brands also release their NFTs, referring to the services of specialists, the expert notes.
“Moreover, a lot can now be wrapped in an NFT token: from pictures of” crypto punks “, the cost of which is now rarely lower than $ 10,000 for one NFT, and NBA cards, which are so popular among collectors in the West, to music, pictures of famous artists, and even real estate within the metaverse (for example, in the Decentraland project, where users can buy virtual real estate for a future digital version of themselves), “Mr. Pershikov gives examples.
NFTs can be bought on major NFT exchanges such as OpenSea, Rarible, or elsewhere. “After the purchase, you can leave the NFT on the exchange, or you can withdraw the token to your crypto wallet, however, you will not see its visual representation on your wallet, since it will be stored as a record in the blockchain, and not as a picture or music. it is worth paying attention to whether the NFT is verified on the exchange in order not to become a victim of scams: there are many NFT exchanges, and there are plenty of NFT tokens created by scammers. Therefore, before investing big money in NFT, you should consult with a specialist in the field blockchain or NFT technologies, “the analyst warns.
Anyone can release NFT, technically everything is quite simple, Gleb Kostarev, director of Binance in Eastern Europe, told Finam.ru.
“The Binance NFT marketplace supports JPG, PNG, GIF, PDF, MP4, MP3, MPEG, AVI, WAV and SVG formats. To list an NFT for sale, you need to upload the materials, and then the marketplace team approves the content, usually this process takes 4- 8 hours. After successful approval, the NFT is posted on the marketplace and, depending on the options chosen, is exhibited in the format of an auction or a sale with a fixed price, “he stressed.
Some creators tied to NFT the ability to get something physical, for example, when a buyer purchased an NFT painting of an artist, and the artist gave the NFT buyer a physical copy of this work, added Mr. Kostarev.
NFT – a new form of collecting?
“In fact, NFT is just another way of using the technology of creating cryptocurrencies. If a state, corporation or a torrent client can issue its token, then why can’t a musician or writer monetize his work, especially given the serious problems with plagiarism and counterfeiting?” in these areas, “- Alexander Kuptsikevich, a leading analyst at FxPro, commented to Finam.ru.
According to him, NFT, in fact, is the crystallization of one of the important properties of cryptocurrencies – uniqueness. “The limited emission of cryptocurrencies attracted the attention of those who were trying to get themselves a limited version of the product, the demand for which occasionally grows many times and is clearly far from saturation. NFT further increases the uniqueness: each” product “is in a single copy, which is like collecting paintings and other items art, “says Mr. Kuptsikevich.
FG FINAM analyst Leonid Delitsyn agrees with this comparison.
“The NFT market can be likened to selling collectibles. For example, in American books you can often read how the protagonist in his youth was proud of his collection of baseball cards. They are not very popular here, although many used to collect stamps, coins, and now the younger generations collect different toys, and, of course, collecting artifacts is popular in various games. By themselves, these cards, artifacts or works of art, of course, are not particularly useful. They are valuable because there is a subculture in which they are valued, “the expert says.
According to him, in order to be expensive, such items must be rare, ideally unique. They are protected from reproduction, unlike reproductions of paintings, which anyone can hang on the wall.
“In the case of reproduction, we simply contemplate the picture itself, but in the case of an original or at least a copy, the value of the image is given by the fact that it is rare. In the case of NFT, the authenticity is certified by the blockchain mechanism. just like documents signed by one or another type of electronic signature. The blockchain was created for this. NFT is the next demonstration of the possibilities of this innovative technology after cryptocurrencies, “explains Mr. Delitsyn.
Big NFT sales
So far, the most expensive NFT asset sold is a digital collage by artist Mike Winkelmann titled “Everydays: The First 5000 Days”. The collage was collected from 5 thousand works of the artist, which have been published on the Internet since 2007. The deal, which took place at Christie’s in March 2021, was worth $ 69.3 million.
This sale far outstripped the others in value, but there are other major examples. In particular, today, December 10, it became known about the sale of a rare NFT # 4156 from the CryptoPunks collection for $ 10.3 million.
In general, the most significant transaction amounts are often associated with collecting unique digital objects. The mentioned project CryptoPunks, created in 2017, is a series of 10 thousand different images of “punks” with a size of 24×24 pixels.
The communities around these projects are turning into rarities gatherers’ clubs of sorts. Another famous example is the Bored Ape Yacht Club project, which includes images of monkeys.
NFT market dynamics in 2021 and forecasts for the next year
According to various estimates, the volume of the NFT market in 2021 exceeded $ 11 billion, and the trend for growth in market volumes will continue in 2022, Viktor Pershikov emphasizes.