Non-Fungible Tokens: The Future of Virtual Property
Since NFT tokens (Non-Fungible Tokens) are unique and are not sold on classic crypto exchanges, traders and crypto investors often lose sight of it. In addition, the virtual property market has its hard-core users, it is vibrant, and expanding.
Where Are They Sold and What Are the Most Popular NFTs?
The largest market for NFT is OpenSea. As of January 2018, the sum of 90,000 ETH (~ $ 35M) has been traded on the OpenSea platform, accounting for a third of the total market for this virtual asset. Users mostly buy digital art, WEB3 domains, virtual reality items, and games and collectible digital assets. NFT assets are kept in crypto wallets (just as, for example, money earned from gambling on casinos that accept cryptocurrencies, that are ranked by the link, is kept), such as cryptocurrencies.
Metrics in these markets are based on grouping into categories (e.g. Art) and are further broken down into niches (e.g. platforms/curators or individual artists). On the OpenSea site, you can see the average price of a work by a curator/platform or artist and the niches are ranked based on the weekly volume of the trade.
The Rarible platform leads in the “Arts” category with a $ 130,000 weekly trade volume (at the time of writing the article). At the top are the SuperRare platform, as well as artist Josie, whose works have an average price of 1.81 ETH (~ $ 700). Also worth mentioning is MakersPlace, which features popular artists such as Frenetic Void, José Delbo, Javier Arrés, and Katy Arrington.
The Rarible platform has also released its management token – $ Rari. It is not NFT, but an ordinary ERC-20, which serves to reward art dealers. The goal is to use it to encourage liquidity on the Rarible platform, as well as to one day turn it into a DAO (Decentralized Autonomous Organization) managed by its users. Rari can be earned by participating in the functioning of the platform, which includes actions such as buying and selling, curating works, making decisions about changes in the commission, as well as the appearance and functionality of the platform.
This type of rewarding active participants was called Market Liquidity Mining, in order to bring the concept closer to current crypto trends. Rarible also plans to enable Fractional Shared Ownership of a piece, as well as the purchase of NFT index, i.e. baskets of works of art that are most promising. This index could be of great help to investors who are not art experts and want it in their portfolios. $Rari has been listed on Coinmarketcap since July 20, 2020, and can be bought and sold on crypto exchanges, including the decentralized Uniswap exchange. Its price jumped from $ 0.43 to $ 9 in the short term.
Well-known artists can also be found in the NFT markets, so on July 23 last year, a record was broken on the Nifty Gateway platform, selling a piece for $ 55,555 by artist Trevor Jones. It is a unique work called “Picasso’s Bull”. Among the artists at Nifty Gateway are Jon Burgerman, Kenny Scharf, and Cey Adams.
Gemini Stock Exchange, i.e. the Winklevoss twins (the unsuspecting creators of Facebook) own the Nifty platform. On that platform, NFT art can also be bought in fiat currencies, so due to the insecurity of such a way of buying, they are often criticized by the crypto industry.
The popularity of digital art is growing rapidly. While the traditional art market fell by 5 % in 2019, it is estimated that the digital art market will be doubled by 2024.
Tokenization is a tempting solution for this fast-growing industry because it incorporates a certificate of origin into a transparent and immutable code. Provenance and ownership are obvious. Ownership of the work belongs to the person at whose blockchain address the work is located. Transactions are instant. There are no geographical boundaries that can affect the artist or the buyer on this market which is open 24/7. The same technology that prevents the ‘double-spending’ of cryptocurrencies, prevents the duplication of the original work of art, or more importantly, of the hash associated with that work.
Because of the speed of trade to which crypto users are accustomed, some NFT artists, such as John Guydo, have seen the price of their work rise more than 10 times in a month. And the CryptoPunks creator, who is a programmer by profession, was surprised by the exhibition of his work at the Kate Vass Gallery in Zürich (Switzerland), in addition to the work of famous artists such as Ai Weiwei.
Although the volume of trade on the NFT market is currently smaller than at the time of the popularity of CryptoMac, since then the range and quality of the offer have significantly expanded.
CryptoKitties are not just collectibles. Many consider them art made with the help of an innovative ‘genetic algorithm’. They’re probably the most fascinating example of efficient machine learning and AI. How do CryptoKitties work? To find a new kitten, choose a mother and father based on pedigree and appearance – and then click a button. The new kitten then appears in the wallet, bearing some of the parents’ characteristics. Each cat has a unique look. The rarity of the characteristics of the new kitten significantly affects its price. Those that have mutated, or have a genetic mutation, but have not yet mated, are the most costly. So virgins are at a price.
CryptoKitties was inherited by Axie Infinity, which now leads the “Collectibles” category at OpenSea. Axies are used in games that offer earnings in cryptocurrencies.
Sports collectible games are also in high demand, such as Sorare, whose team secured the rights to use images of players from Atlético Madrid, Juventus, West Ham, the Korean and Japanese leagues. There are cards of players sold for more than $ 200.
Decentraland is the first in the category of “Virtual Worlds”, with a weekly volume of 190 ETH. The average price of Decentraland products is 6.44 ETH, and they have cost an astounding 21 million dollars to acquire. Currently, most are spent on plots in this virtual reality.
MegaCryptoPolis has the most buyers (26,000), but its products are less expensive and do not fit into the Decentraland item store’s scope.
In this category, the most popular are ENS – Names on Ethereum Blockchain. ENS allows you to map blockchains and other resources, names that people can easily read, thus selling names for Ethereum addresses, IPFS hashes, or URL pages. Some domains are quite expensive, such as discord.eth ($ 10,500) or logistics.eth ($ 12,320).
In addition to ENS, Unstoppable Domains names are also popular. It is a platform called WEB3, which means that its domains cannot be censored or taken away from the individual who purchased them. The owners keep the ‘password’ for accessing the WEB3 domain in their crypto wallets.
Tokenization of Everything
Experiments in the field of application of NFT technology are taking place at a high speed, which is reflected in the changing popularity of various categories and the addition of new ones. The growth of the average value of purchased goods in the NFT markets may also indicate changes in the popularity of categories. Currently, art is raising the price of items.
Hundreds of startups, traditional corporations, as well as enthusiasts, are working on tokenization. The tokenization of physical property is subject to experimenting by some of those startups. Still, property as a type of real estate, significantly complicates the possibility of real application. Real estate tokenization, for example, necessitates changes in state laws as well as notaries that will serve as a verification link between the physical and digital worlds.
The situation is different in terms of smaller assets, i.e. items that are not tied to complicated laws and on which sensors or QR codes can be placed, such as fashion products. Products are easily tokenized, and a variety of technological solutions are being created to reduce the risk of the physical tag being destroyed. Tokenization of items is typically performed for the purposes of tracking and proving their provenance. In addition to physical things, solutions for tokenization of invoices, debts, insurance, etc. are being worked on quickly.
NFT innovations have made possible something previously impossible in the areas of product tracking, type of ownership, proof of ownership, speed of change of ownership, and ownership control. Even if the site or platform on which the NFT token was made or sold collapses, that token will continue to live as long as there is a blockchain on which it was issued.
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