The NFT movement
Our introduction to an expanding universe
The variety of blockchain-related digital assets is growing exponentially, day by day. Next to the increasing number of cryptocurrencies (FT, Fungible Tokens), we have been witnessing, in the last year, the uprising of Non-fungible tokens (NFTs).
In contrast to banknotes or FTs, which can be exchanged one for another if they hold the same value, no two NFTs are alike. NFTs are assets that incorporate consistent information recorded in smart contracts, i.e. contracts expressed as a piece of code that performs a set of instructions. Nothing but this stored data makes each NFT unique and irreplaceable.
Since they are linked to digital (less often, physical) objects, NFTs can easily work as proof of ownership. Many digital contents have been turned into NFTs: visual art, music, movies, and in-game items. Nevertheless, anything with limited supply can be represented by NFTs; in the future, they could provide deeds to property, qualifications, licenses, and even death/birth certificates.
Going back to the present, let us touch on some of the most significant numbers and facts regarding NFTs during 2021:
trading volume for NFTs hits $10.67 billion in Q3 2021 (+700% from Q2)
in March, digital artist Beeple sold an NFT collage of his work for $69 million (3rd most expensive living artist at auction)
in August, top NFT marketplace Open Sea registered a trading volume of more than 75M $ in a single day (more than the entire 2020)
on August 23, VISA acquired CryptoPunk #7610 for 49.5 Ethereum (~165k $) as part of its collection of "historic commerce artifacts"; holding a CryptoPunk is the demonstration of membership in a private fraternity
following the trend of the profile pictures (PFP) set in motion by CryptoPunks, the Bored Ape Yacht Club collection brought up the attention of celebrities and traditional investors, leading to the creation of even more exclusive groups (known as DAOs, Decentralized Autonomous Organizations)
Well, now you are probably wondering: how are non-fungible tokens used?
Stated that they can represent everything from virtual land parcels to artworks (auction houses Christie's and Sotheby's have embraced NFTs and crypto payments in '21), NFTs smart contracts allow for detailed attributes to be added. By permanently associating the owner's identity, rich metadata, or secure file links to an NFT, individuals would be able to directly exploit their rights of ownership without further evidence or third parties. This is a milestone for artists' independence: NFTs offer more control and the capacity to profit directly from their production.
Non-fungible tokens are also firing up in one of the most intriguing and innovative spaces, decentralized finance (DeFi): a distinctive kind of financial product that promotes the removal of any central institution or third party above all else. NFTs are also expected to be crucial within the metaverse, a steady, shared virtual world where users can interact as 3D avatars: companies such as Meta (formerly Facebook), Samsung, Nike, and Adidas have already ventured into the metaverse, and more brands will follow. However, given the purpose of this paper, we are not going into detail about these two fields of application.
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