NFT or Non-Fungible Token is booming and continuing to explode. The most expensive NFT was created by Beeple and sold for $69 million in March 2021. Another crazy sale is Nyan cat that was sold for 300 ether that is equivalent to $587,000 USD in February 2021. And if you look at the picture, it is just a running cat fart with a rainbow!
So are NFTs just hyping and bubbling along with crypto hype? Before we dive in, we want to know what NFTs really are.
What are NFTs?
It is short for Non-Fungible Token or Nifty is an indivisible token compared with a divisible token such as Ethereum. Each divisible Ethereum is the same as others but NFTs make each one unique compared to the others.
What is ERC 721?
NFTs run on the top of Ethereum Network or ERC 721. Simply, it is a network that gives token features.
Think of each NFT as a smart contract, or like an RPG or Role-playing Game, when the game starts, you have the basic features of the character but you need to upgrade your level in order to gain more power and obtain more powerful weapons or gears.
Where did the NFT idea come from and its little history?
NameCoin was the first NFT-like idea coin that stores personal information or data into each coin in order to make it unique. No to mention that Satoshi Nakamoto joined the discussion in the BitcoinTalk forum in December 2010!
The creator of Ethereum Vitalik Buterin got the idea that he wanted to build real-world assets such as real estate on a blockchain. The project called “colored coins” was born. However, it runs on the Bitcoin blockchain.
It was not until 2014, Counterparty, a peer-to-peer smart contract platform that allows people to write a smart contract on the Bitcoin blockchain and later crypto gaming that converts game assets on a blockchain via Counterparty platform.
Then, CryptoPunks launched the world's first marketplace digital collection market in June 2017 on the Ethereum blockchain that was marked as a truly NFT.
In December 2017, CryptoKitties was born as a collectible game with virtual cats that buy and combine to obtain rare collections of digital cats.
With the craziness of CryptoKitties hype, OpenSea, an NFT marketplace was opened in December 2017.
Then, the crypto market crashed in 2018 that brought the hype into the deep sea.
The NFT market was quiet from 2019 until May 2020 NBA Topshot was created by the creator of CryptoKitties.
Until NFT starts to be unstoppable in 2021 and beyond.
Current art market condition:
I will just highlight some problems of the art world today: subjective, exclusive, and fraudulent.
Subjective:
The value of art is very subjective and speculative. There are no clear rules to determine the value of each piece of art but it depends on curators. However, curators are subjective who work on specific organizations that support certain art types.
Exclusive:
Art can be very expensive and that excludes everyone from entering. The market can be so exclusive that certain types of investors can bid on the art. Also, the majority of arts may be controlled by only a handful of organizations.
Fraudulent:
No matter how professional your organization is, you may not prevent fraud. Technology has advanced and makes it easier to replicate another masterpiece.
The digital solution from NFTs
Since NFTs are cryptos, they are speculated assets. Arts are speculated too. Using speculated tokens to back speculated arts is perfect because both valuations are speculated and fluctuate with uncertainty. The price of art will rise along with the worth of crypto that backs them up.
Everyone who has crypto will have a chance to bid on the art. It makes the market more democratic.
NFTs prevent any fraudulent use of its unique cryptographic technology to create a signature that cannot be forged. It makes art unique and more valuable than the traditional arts which can be easily forged.
In conclusion:
NFTs are definitely the future of the art marketplace. It brings opportunities for artists to sell their work uniquely and securely. It also creates more opportunities for buyers. Even if the crypto market crashes, the crypto art industry will continue evolving to become its own unique marketplace for artists to share their works.