Sales of NFTs (Non-Fungible Tokens) surged in August, as interest in the token increased significantly.
An NFT is a digital token that’s a type of cryptocurrency, much like Bitcoin or Ethereum. This means that it is a collectible digital asset, which holds value as a form of cryptocurrency and as a form of art or culture. But unlike a standard coin in the Bitcoin blockchain, an NFT is unique and can’t be exchanged like-for-like (hence, non-fungible).
As to how they work, NFTs are part of the Ethereum blockchain so they are individual tokens with extra information stored in them. That extra information is the important part, which allows them to take the form of art, music, video (and so on), in the form of JPGs, MP3s, videos, GIFs, and more. Because they hold value, they can be bought and sold just like other types of art – and, like with physical art, the value is largely set by the market and by demand.
Although NFTs were created in 2015, they became very popular in early 2021, leaving many people bewildered at the idea of spending so much money on items that do not physically exist.
The frenzy, brought about by the niche crypto asset, has now reached new highs. Sales volumes recorded on the largest NFT trading platform, OpenSea, have hit $1.9 billion so far this month, more than ten times March’s $148 million. In January 2021, the monthly volume recorded on the platform was just over USD 8 million. DappRadar recorded 32 known NFT sales above USD 1 million in the past 30 days.
According to OpenSea, the increase was boosted by secondary market sales. “What we have seen are a few NFT collections popping up in the last few weeks that have been very successful at launch and sold out. That activity has then filtered over to OpenSea where buyers look to flip their NFTs for a higher price,” said Ian Kane, a spokesman for DappRadar, which tracks the market.
With the advent of the pandemic, many individuals have turned to the internet to take advantage of the digital opportunities it provides to make money, NFTs being one of them. Individual NFT artworks are among the most popular and valuable non-fungible tokens created so far in terms of profitability. Clothing and fashion brands are also increasingly benefiting from the NFT trend by releasing a digitized limited edition of their outfits with a collection of iconic celebrity pieces or design signatures. Individuals also make money through tokenizing collectibles, the most popular of which are sports cards. Other people have seized the opportunity provided by NFTs to make money by investing in the non-fungible tokens; they buy NFTs and sell them later at a profit.
NFT marketplaces are quickly rising to prominence in 2021 and NFTs are becoming the new asset class to care about in the crypto space. While the world is still in the process of fully accepting cryptocurrency, many people, organizations alike, have already moved a step ahead by delving into NFTs. With NFTs one thing is certain so far, authenticity issues are addressed and the possibility of counterfeits is eliminated.