NFTs have become a widely discussed phenomenon. Almost everyone looks interested in them right now. Bitcoin recently turned into a legal tender in its first country, exchange rates rise and plummet, new initiatives are regularly proposed. However, it is the enormous popularity of NFTs that seems to be advancing the blockchain industry ahead.
What are NFTs? Is it just another wave of useless hype or a legitimate segment of the crypto-world? Do they have anything to do with cryptocurrencies at all? And how can Evercode Lab help you with the NFT world — in case you are willing to enter it? These are the questions we are going to cover in this post.
The Definition of NFT: Non-Fungible Token
NFT stands for “non-fungible token.” But what does this term mean? Investopedia, for example, views NFTs as “cryptographic assets” based on blockchain. Their main properties are all about the fact that they possess “unique identification codes” coupled with “metadata” separating them from each other.
Well, it seems promising enough, especially against the background of the modern world possessed by the notions of authenticity and uniqueness. At the same time, one cannot still comprehend the true reasons behind their enormous capitalization. After all, as Forbes reminds us, NFTs have penetrated countless industries, ranging “from art and music to tacos and toilet paper.”
If one tries to put it another way, NFT can be seen as a digital file certifying the ultimate authenticity of a thing, be it a virtual object or a real-world object. As such, it is being stored by the means of a specific blockchain network. As an outcome, the “digital ownership” of this or that item or virtual object is protected by a universally visible and verifiable global network and “logged in public”.
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!