NFT. Art and Million Dollar Investment
What is NFT and why are people willing to pay colossal sums for meme images? How can an artist make money with blockchain in the 21st century? We talk about this in a new article from Chatex!
Let’s rewind time. NFT tokens appeared at the beginning of 2010 along with the first cryptocurrencies. The first NFTs came out on the Bitcoin network. These were rare images of the famous PePe meme. Some of them were traded on eBay, and the rarest ones were sold at auction. So the usual meme on social networks, combined with blockchain technology, opened a completely new direction for the digital economy.
- Fungible and non-fungible assets
Before decoding the abbreviation NFT, you should see the difference between fungible and non-fungible assets.
Fungible assets include currencies. You can easily exchange currencies at the exchange rate, regardless of the bill number. And it doesn’t matter to you whether the currency is digital or physical. Money is divisible and fungible.
Non-fungible assets include in-game and collectibles, digital art, tickets, domain names, and nicknames. It can even be items in the stores of the gaming industry giants, such as the popular Fortnite and Call of Duty games. That is, each non-fungible token is unique and cannot be replaced by any other. So, NFT is a non-fungible token.
- Why are NFTs created?
There are tons of digital goods that we are used to buying, but to what extent do they become our property? Indeed, in fact, we own some digital goods only in specific conditions.
Let’s go back to the examples. The digital items in the Fortnite store are not 100% our property. We cannot legally resell or exchange an item. In the best case, any self-respecting marketplace will send you to ban when you try to do this.
A problem of “ownership” is solved by the blockchain or a specific product — NFT. Blockchain provides the coordination component, giving the user ownership and control. The smart contract adds unique terms that completely change the attitude of users and the market. And generally accepted token standards help other dApps to put in the code everything necessary to work with a token on a certain standard.
The main NFT market is on the Ethereum network, so most of the smart contract standards are also on it.
- Standards in the NFT ecosystem and why they are needed
Standards allow tokens to easily move across multiple ecosystems at once when a developer launches a new NFT project. Tokens are immediately available for viewing in hundreds of wallets.
Blockchain gives developers a whole new set of capabilities on which to build an application. Thanks to the blockchain-based standard, there is an understandable, consistent, reliable and legal format for reading and writing data. The standards are similar to file formats such as jpeg or png for images and http for Internet queries.
Smart contracts allow developers to set constraints that help enforce pre-set rules. These rules cannot be changed, and after the release of the NFTs they are of an auxiliary function. The developer can program a limited number of NFTs and a unique component that has already been applied in the field of digital art.
Progress did not stand still, and from the usual recording within the blockchain chain, the ecosystem came to the implementation of entire NFT projects, which became popular in 2017 during the first crypto mass adoption and the ICO hype.
The first success in the field of cryptoart was achieved by Dapper Labs and the Canadian-American studio Axiom Zen, which once released the sensational CryptoKitties project. It is worth nothing that it was implemented on the Ethereum blockchain. The rules of the game were stored in a smart contract, and Kitties were sold for ether. It was a great example of the dawn of a new blockchain economic model.
But at the time of 2017, the “network bandwidth”, or, as it is correct to say, “network scalability”, was not enough to handle the huge volume of NFT trades. At the same time, enthusiasts were ready to pay a commission dozens of times more than usual, so that their transactions would receive higher priority and go through first. By and large, such a seemingly frivolous and harmless toy like CryptoKitties was the first example of such a strong popularity of NFT.
- NTF development
The digital economy continued to develop. After CryptoKitties came MonsterBit, followed by the popular NBA Top Shot. It is interesting that already at this stage of the industry’s progress, the giants of the world market became interested in NFT developments and the whole world saw quite promising cooperation of NFT projects with associations and conglomerates.
For example, NBA Top Shot partners with the US National Basketball Association (NBA). With its help, basketball fans have the opportunity to store and sell tokens in the form of sets of rare gaming moments. Dapper Labs believes the NBA has a clear vision of how this blockchain technology can be painlessly introduced to the masses. The collaboration did not end there, and the same Dapper Labs announced a partnership with the Ultimate Fighting Championship (UFC), within which they were going to release collectible tokens for fans of mixed martial arts.
Another good example of the tokenization of the sports industry is the Sorare platform, where you can collect digital football cards, trade them and take part in interactive tournaments. Each of the cards is a digital asset that is officially licensed by a club or league.
- NFT market overview
The ability to trade NFTs leads to increased liquidity in many cryptocurrency projects. The market is open to any audience, from collectors and traders to crypto enthusiasts.
NFT can be seen as more than just part of a collection or something valuable in terms of emotional experience, nostalgia, or the ability to show off a unique purchase. The ability to resell NFTs inherent in smart contracts allows them to be considered as an investment.Thanks to the combination of the author’s ideas and the transparency of the system, many digital art objects have reached fabulous prices and popularity.
Previously, art was always viewed as a luxury, and most people could not own it. But blockchain technology is game-changing. After all, if we take into account the fact of the difficulty of finding a job for artists and many other problems associated with the high cost of work, it becomes clear that NFTs significantly expand the boundaries not only for buyers, but also for the authors. It has become easier to put up your work for sale and buy what you like. Now everyone can buy a piece of art.
An example is Christie’s auction, where 16 NFT CryptoPunks were offered $ 6.3 million. Forbes also sold the cover with the Winklevoss brothers as NFT on the Nifty Gateway platform for $ 333,333, and Coinbase CEO Brian Armstrong will soon release a collection of music in NFT format.
The digital economy continues to evolve every day and NFT projects take up more and more space in it. Their main idea remains unchanged — the user does not just buy a souvenir, painting or donate money to an idol, but receives a digital asset that can increase its value in the future. Our Chatex team, in partnership with TON Crystal, is trying to keep up with economic trends in the crypto space. We have actively studied the market, the successes and failures of industry giants and prepared our own NFTs for you called Chatex Robots! On April 21, we are launching a special challenge, according to the rules of which we will announce a new drop every day. Each time our like-minded people will be able to purchase from 9 to 99 NFTs. The challenge will end on July 29, 2021, and at the end of the challenge, the luckiest buyers will receive a unique prize.
Go to the chat to participate in the challenge and buy NFT tokens from Chatex to become the owner of new digital art, invest in your future and win the main prize — Tesla Model S!