NFT (non-fungible tokens)—or scarce digital content described as tokens—is pushing a new wave of crypto adoption.
Thanks to the Ethereum blockchain, musicians, gaming companies and content developers use token specifications that allocate origin to uniquely distinguishable properties. NFTs made headlines for the first time in 2017 when the Dapper Labs game CryptoKitties accounted for 95 percent of Ethereum’s network use at its peak. Although anyone paying $170,000 for a digital cat seemed like an anomaly, what’s going on today blows the headline out of the water.
Platforms such as Nifty Gateway, SuperRare, Foundation and Zora are increasingly emerging as the leading innovative players to monetize work in the digital world.
The estimated total valuation of crypto art has now risen to $100 million according to cryptoart.io/data—just one vertical of the rising NFT ecosystem.
Just like we’ve seen an alternate asset class shape around physical collectibles like Pokémon cards, NFTs are beginning to show what this universe of rare brands looks like online.
NBA Top Shot has seen up to $10 million in 24-hour amount, according to CryptoSlam, with more than $100 million in “moments” being sold in less than one year of existence. The parent company behind NBA Top Shot, Dapper Labs, is said to have raised $250 million in a $2 billion valuation, as reported by The Block.
Niche collectibles like CryptoPunks—or 10,000 exclusive collectable characters with scarce features and qualities—now have a base floor of around $18,000 a piece. Just recently, Punk 4156 sold 650 ETH, approximately $1.3 million at today’s rates.
Crypto art paradigms
Graphic designs and 3D designers are seeking new outlets to showcase their work, with marketplaces such as Nifty Gateway enabling Supreme Style Drops for exclusive digital art.
Mad Dog Jones recently set a record for $3.9 million worth of art sold in one auction, beating the previous record held by beeple for its $3.5 million “Everydays 2020 Collection” drop. No wonder some of the top art galleries like Christies are calling to team up.
With Bitcoin and Etherium hitting all-time high prices and investors searching for new ways to allocate money, the crypto art revolution has given control back to the makers.
Vibrant collector communities like FlamingoDAO are emerging around these drops, while protocols like Zora are fast starting to support NFTs of all different verticals.
Musicians including Mike Shinoda of Linkin Park and Fort Minor have released NFTs as part of their plan for his latest single “Happy Endings” featuring pop star Iann Dior. EDM DJ and producer 3LAU record his debut album “Ultraviolet” and Grammy-winning musician RAC broke the SuperRare record for the highest NFT primary selling with his piece “Elephant Dreams.”
I also sold a blog post for 2 ETH (or around $4,000) using a crypto media publication named Mirror!
Why should I care?
NFTs also revealed an innovative side of crypto that is not only fun to play, but also digestible and open to new users. When larger names host their first NFT fall, for the first time, they bring a new wave of exposure to their millions of crypto fans.
This leaves people in a unique place to recover and discover this growing wave of scarce digital content. Showtime is aggregating NFTs to deliver Instagram-like experience, and the new NFT music-specific marketplace catalogue is building a digital record shop.
As Nifty Gateway’s drops begin to sell out in seconds, thanks to credit card purchases and free transactions, new collectors are finding ways to acquire their favourite artists and brands—a trend that is likely to take better shape over the coming years.
Areas of improvement
While the sales figures show a strong market for NFTs, this is not without hiccups.
Today, the vast majority of NFT platforms need users to be familiar with Ethereum wallets like MetaMask. This means that collectors need to buy ETH from an exchange like Coinbase and send it to a non-custodial address consisting of a long string of numbers and letters to get started.
Once there, they need to pay more than $100 worth of fees to make a transaction and position a bid. The same goes for artists making NFTs, leading collective funds like MintFund to spring up to cover the running costs of releasing their first NFT.
Luckily, channels like Audio answer these pain points head on. With 2 million active monthly users—most of any Ethereum application today—Audius replaced MetaMask with an email and password login wallet called Hedgehog. By eliminating key management and transaction costs, users are able to enter the amazing world of crypto without high start-up costs.
What is happening in the NFT ecosystem today is nothing short of a paradigm change for a mature cryptocurrency market. As ardent collectors frame their digital art using companies like Infinite Artifacts, there is no doubt that the overwhelming majority of buyers are here to speculate. This increased demand signals interest, but it is highly reminiscent of the 2017 ICO boom that caused the market to collapse a couple of years ago.
However, a powerful wave of foundational companies and products like Uniswap and Compound, which are here to stay, emerged from that multi-year bear market. It’s this writer’s bet that the same thing is going to happen with NFTs.
Until then, note that digital content has meaning, and crypto collectors flock to lay their names on tomorrow’s largest collections.