Non-fungible tokens are a widely-discussed phenomenon. It seems that there is not a single unaffected industry left. More than that, NFTs look like the main growth engine for the entire web3 industry. We at Evercode Lab, for instance, added an advanced NFT functionality to our crypto wallet and see it as one of the competitive advantages.
What are non-fungible tokens all about? Is it just a sort of temporary fashion? Are they already a legit component of the web3 landscape? Can crypto investors rely on them if they want to boost their crypto wealth? These are the questions the Evercode Lab team will attempt to address today.
Definition: Non-Fungible Token
NFT means “non-fungible token.” But what does this word imply? Investopedia, for instance, defines NFTs as blockchain-based ‘cryptographic assets’. In other words, what makes them one-of-a-kind is their ‘unique identification codes’ and ‘metadata’ distinguishing them from each other. As such, these unique tokens, in Forbes’ words, NFTs have entered numerous sectors, ‘from art and music to tacos and toilet paper’.
Thus, an NFT can be viewed as a file proving the authenticity of any possible thing, whether it is a virtual or a real-world object. They are stored on a special blockchain network. As a result, that ‘digital ownership’ is secured, tracked, and can be accessed by a verifiable network. Once again, NFTs do not contain artworks, music videos, pictures, digital images, treasure maps, documents, etc. All they are responsible for is making a simple statement, something like: “the holder of this NFT is entitled to hold the digital file he or she owns.” This file, in turn, may contain links to other files.
That is the main difference between an NFT and, say, BTC. Bitcoin is, by definition, a fungible asset. That is to say, any Bitcoin equals any other Bitcoin, while an NFT is unique, single, and one-of-a-kind.
NFT Market Landscape
Just in case, NFTs are generally understood as unique digital blockchain-based assets that cannot be interchanged. Simultaneously, they can be traded, i.e. sold and bought, by using cryptocurrencies.
Therefore, an NFT is intended to serve and serves as a kind of digital authenticity certification. As such, an NFT is used as a code linked to a particular file. Thus, it enables users to differentiate between the primary and genuine files on the one hand and countless copies made and distributed on the Internet.
The origins of the NFT market can be traced back to the period between 2015-2017. In fact, 2017 marked the year when over 1000 NFTs were traded on a single day. In 2020-2021 the NFT sales skyrocketed. The following figures illustrate such an astonishing upsurge:
- Back in 2020, the aggregated value of all the NFTs sold reached $250 million.
- H1 2021 saw a much greater watermark, with the “NFT sales volume” surging to an incredible $2.5 billion.
- On top of that, the market grows not only in terms of total value but also in terms of quantities. As Statista reports, “as of September 15, 2021, the aggregated number of sales over 30 days reached approximately 94.5 thousand” in the art segment alone. It is more than impressive, if one compares this threshold with April 2021, when the corresponding figure was “just” as high as “23.7 thousand NFTs.”
As for the number of wallets, one cannot help observing another tremendous growth trend: the amount of “active wallets transacting with NFTs” increased by almost 100% between 2019 and 2020 (that is to say, it rose to 222,179 from just 112,731).
Finally, if one dives into further details, it is no surprise that NFTs are mostly associated with and related to the virtual economy. The latter must be viewed quite literally in this context: as an emerging economic segment — with its cash flows, highs, and lows — that exists purely in the digital and virtual domain. Previously, one thought of it as the world of gamers and MMORPGs. However, with the ascendance of NFTs, it has gone well beyond that limit.
As of 2020, the number of NFT transactions made by segments looked like this:
- Gaming with 629,553 transactions
- Collectibles with 363,412 transactions
- Metaverses with 111,773 transactions
- Sports with 103,109 transactions
- Art with 64,485 transactions
There can be no doubt that at the end of 2021 we all will see a much-expanded picture. In fact, we can already see it. This what the first six months of 2021 communicate:
- Collectibles with 367,129 transactions
- Sports with 299,684 transactions
- Art with 124,188 transactions
- Utility with 75,378 transactions
- Gaming with 72,796
NFT Prospects: Everocode’s Perspectives
One should stress that the NFT market might be overheated. A similar story happened to the cryptomarket last decade. However, as this very story tells us, the new digital economy is not a bubble. Quite the contrary, it is here to stay. The blockchain segment of crypto assets and NFTs may plummet. But after that it will rise again. It just cannot be otherwise in the world of virtual economy.
As L’Atelier, a technology and innovation tracking unit working with BNP Paribas, states, “the virtual economy generates a total income of $66.2 bln” and is visited, with varying levels of activity and immersion, by 2.5 billion people.
The following factors contribute to its growth:
- Almost universal availability of the Internet
- Distributed ledgers
- Blockchain, i.e. cryptocurrencies and NFTs
- Previously unseen computing capabilities
None of these factors is going to disappear. Therefore, NFTs will stay with us. And you can benefit from and capitalize on their presence if you add a NFT capability to your crypto business. We at Evercode Lab are already working on several relevant projects with our enthusiastic customers. You can be sure that with our experience in everything related to wallets, tokens, coins, and exchanges you will obtain a state of the art solution!
That is why do not hesitate to contact us!