In 2020, NFTs – or Non-Fungible Token – became one of the most talked about topics in the blockchain, and apparently, nothing is going to change in 2021 – just take a look at the news about NFT recent purchases and sales!
As the name implies (Non-Fungible), NFT cannot be replaced by another of the same token, and this variant of the cryptocurrency is a unique digital asset.
Therefore, if Bitcoin can be replaced with another one of the same, it won’t work with NFT. In fact, these unique “coins” are something like pieces of digital art – some may seem very similar, but even in this case, each token is different from another if we’re talking about blockchain.
NFTs appeared on the market in January 2018, since the ERC-721 “subject” token standard was created. However, for quite a long time NFT remained mostly unknown – until the second half of 2020, when sales of this cryptocurrency jumped 200% up, exceeding $9 million.
Since then, sales of non-exchangeable tokens was growing with incredible speed! According to the Dapp Radar report, in February 2021, NFT trading volume was $340 million, which is more than the same volume for the whole of 2020.
Cryptocurrency already firmly entered the lifes of the “the mighty ones”, and if you add their traditional love for unique works of art, the combination offered by Non-Fungible tokens attracts them like a magnet. And what is the easiest way to make money on a new trend? Create your own token!
Canadian singer Claire Elise Boucher, known as “Grimes”, who gave birth to Elon Musk’s son last year, for example, earned $5.8 million in 20 minutes when presented her own collection of NFT on Nifty Gateway platform on the first day of March. Tokens were tied to four drawings created together with the singer’s brother, artist Mac Boucher. The main character of the series was a certain goddess fighting the apocalypse in the universe created by the authors.
One hundred copies of each image were put up for sale, starting at just $20. As a result, more than 13 thousand people decided to purchase each lot, and each of the 400 lots was sold for an average of 100 thousand dollars. The highest price was set for the painting called “Death of the Old” – the interest of bidders skyrocketed after the news that an exclusive demo track from Grimes was attached to the painting, and the final price was 389 thousand dollars.
This case is far from being a simple one. On February 25 American DJ 3LAU, for example, became the world’s first musician to sell an album using NFT. The trades were held on the Origin Protocol platform, and upon completion they were named “historical” – which is not surprising at all if you’ll take a look at the amount of money earned. By putting up 33 tokens with associated tracks for sale, 3LAU raised $11.6 million, setting a new record!
💥 History has been made! The auction for the world's first tokenized album has finished.
This is a new record in a single #NFT auction. 🎉
— Origin Protocol (@OriginProtocol) February 28, 2021
The most expensive token was the one, which allows the new owner to order a track from 3LAU to his taste personally – the buyer who paid $3.66 million for the token also received several “bonuses” like 11 vinyl records, all songs from the new album and previously never released DJ’s tracks.
By the way, it was this case that the owner of the Mega file sharing site Kim Dotcom cited as an example to Paris Hilton. He said that she would easily earn more than 30 million with help of NTF. And judging by Paris’ tweet, she didn’t mind it at all! Interesting point: despite the fact that Miss Hilton announced the imminent release of her first tokens, last year she already sold a “trial version” of her token on the NFT Cryptograph site. But there was no talk of millions then – they managed to bail out about 17 thousand dollars.
Today I am auctioning off my @Cryptograph of #Munchkin to benefit 3 amazing charities: @LAFoodBank @MealsOnWheels @BB4Homeless. The auction is live now for the next 72 hours at https://t.co/rCroea8vCg pic.twitter.com/XP18LGtHsi
— Paris Hilton (@ParisHilton) August 13, 2020
The speed record so far belongs to Mike Johnson, the former star of the American Major League Baseball (MLB). After leaving the Durham Bulls in 2018, Mike started to spend a lot of time on his hobby, the art. And by placing several NFTs for trading on the Nifty Gateway at the end of February, Johnson earned a million dollars in the first minute!
The total revenue from the issued token was two million, the auction ended in 28 hours. The most expensive lot was a cast resin sculpture called “AKU: The Moon God”, for which the buyer paid $305,000. In interview to Cointelegraph after that Johnson said that the main thing he wanted to do was to demonstrate to everyone the opportunities offered by using NFT.
Perhaps most clearly the growth in demand for NFT was demonstrated by the Nifty Gateway platform, which resold Mike “Beeple” Winkelmann’s digital video CROSSROAD on February 25. This is a unique changing token, which was supposed to take one form or another depending on the outcome of the recent presidential elections in the United States – at the moment the ten-second video from the token represents the former President Trump, covered with not the most pleasant phrases and lying naked in a heap of garbage. But if the Republicans would be the ones to win, CROSSROAD would have turned into crowned Trump, rising from the flame.
In December 2020, Beeple sold this token to Nifty Gateway for $582,000, and two months later, collector Pablo Rodriguez-Fraile bought CROSSROAD for $6.6 million.
The #1/1 from beeple's first NG drop has just resold on the secondary market for $6.6 million.
History has just been made.
— Nifty Gateway (@niftygateway) February 25, 2021
However, the collector didn’t lose anything. Around the same time, he sold a token with another ten-second video EVERYDAYS: THE FIRST 5000 DAYS for the same $6.6 million – he spent a little less than $67,000 to make this token in October 2020. And by the way, the author of EVERYDAYS: THE FIRST 5000 DAYS is Beeple as well!
But the international community reacted ambiguously to an event held by a blockchain company called Injective Protocol. According to CBS News, in early March, the company bought the work of English underground artist Banksy from New York’s Taglialatella Gallery for $95,000 in order to… destroy it. After that, NFT with the purchased painting was released, and it will be put up for auction soon.
The destroyed artwork is one of 500 copies of “Morons”, the painting making fun of art collectors. It is black-and-white stencil with an image of art collectors during the auction on it. Selling lot is painting with “I can’t believe you morons actually buy this shit” phrase on it. Mirza Uddin, representative of Injective Protocol, noted that although Banksy doesn’t take part in all of this himself , “he knows about the event with the token”. He also said “We view this burning event as an expression of art itself“.
As you can see, the popularity of NFT really skyrocketed lately. And although skeptics, who believe that soon all this will burst like a soap bubble, still remain, most of the forecasts indicate otherwise. In particular, a significant growth in the Non-Fungible Token market in 2021 was predicted by the Canadian analytical company NonFungible. According to the NonFungible report, by the end of 2020, NFT’s total market capitalization reached $338 million and will continue to grow.
This opinion is shared by Messari Research analyst Mason Nystrom, who said that according to his forecasts, in 2021, the capitalization of NFT could increase two, three, and probably even four times.
2/The overall Ethereum NFT (ERC 721s only) market capitalization currently sits around $338 million and IMO will easily double if not quadruple in 2021.
Note: this just includes NFTs by project and doesn’t include tokens of NFT projects or NFT marketplaces like AXS, RARI, etc. pic.twitter.com/SIZGWatyQh
— Mason Nystrom (@masonnystrom) February 21, 2021
And finally, the numbers speak for themselves. According to a report from DappRadar, February 2021 was the best month for Non-Fungible Token in the whole history of this technology. DappRadar, NBA Top Shot and OpenSea are currently the top three brands in the world of NFT, and their overall sales went 381% up this month.
The NFT sector had its best month in February 2021.
— DappRadar (@DappRadar) March 4, 2021
So why are NFTs so popular at the moment?
Some experts believe that the main reason is that it is a relatively new but rapidly developing industry that promises serious dividends. But we must admit that this definition turns out to be rather vague…
It’s better to “dig a bit deeper” and take a look at generally accepted reasons of cryptocurrency popularity overall. The main reasons were identified by experts a long time ago. First comes the anonymity. If you want, you can remain anonymous, regardless of how much money you spend. In addition, there is no such thing as “center” for those “coins” – it’s not some national currency, which can only be dealt with by the national bank. And finally, it is complete independence. You don’t have to ask someone for permission to make transactions and get minimum commission for any transfer.
All of this goes for Non-Fungible Token as well. And here comes the detail we talked about at the very beginning of this article: the love of people with money for art objects. For many centuries, connoisseurs and collectors have hunted for these “artifacts”, and NFT can be confidently called its “new incarnation” – the digital one. As a result, putting the given conditions together we get the only correct answer, the highest demand for NFT.
Some also believe that the Covid-19 pandemic played an important role in popularity of this cryptocurrency format – people still have money, but there is nowhere to spend it in conditions when you spend much more time on the network than in reality. But this is more of a catalyst, and no one can suggest that NTFs will lose its popularity when the disease will be eradicated and life will return to normal.
By Alexander Kurikh