Knowledge

What is NFT and how does their ecosystem works?

4 min read 24.12.2021

Intro

We believe that the top trending blockchain keywords in 2021 are Metaverse and NFT. This year, NFT sales have increased more than a hundred times. According to Strategy Analytics, a market research company, the global Metaverse market is expected to reach US$6.16 billion in 2021. It is also estimated that it will reach US$41.62 billion by 2025.

In this year, many traditional brands show their interest in the NFT market, including Adidas, Visa, Nike, etc. Adidas announced its entry into the Metaverse from November 18 and will soon release POAT (Proof of Attendance Protocol) NFT; Nike also announced on November 19 that it will cooperate with online game platform Roblox to create a virtual Nikeland. With the increasing numbers of artists and brands that have taken part in NFT, more and more people grew interest in investing in crypto.

About NFT

NFT is the abbreviation of non-fungible token, that is, each token is unique and cannot be replaced. On the other hand, fungible tokens like ETH are tokens that each ETH has no difference and interchangeable with another ETH.

On Ethereum blockchain, the format of NFT tokens are ERC-721 and ERC-1155, while the format of fungible tokens are ERC-20. NFTs can be presented in many forms, such as pictures, audio, videos, and video games.

Although NFT and fungible tokens are different in format and use cases, both of them can be transferred and received with a crypto wallet.

The Use Cases of NFTs

NFTs have a lot of use cases including digital art, digital identity and blockchain based games (GameFi).

  • Digital Art: Usually called Cryptoart, it is also one of the fastest growing NFT markets. Musicians, designers, and painters can all create and issue their own works through NFT platforms.
  • Digital identity: Some NTFs are sold with a copy of physical artwork. With the unique code on blockchain of the NFTs, it can serve as a certification of the physical artworks.
  • GameFi: NFTs are also usually used as in-game items,such as land and buildings. The concept of play-to-earn model of blockchain games such as Axie Infinity, The SandBox and Star Atlas is getting more and more popular. In the future, playing games is not just playing games, but also making a living.

Major NFTs Events

NFT sales on Sotheby’s

A NFT sales event held by Natively Digital and Robert Alice was held on Sotheby’s website from June 3 to June 10, 2021, showing many early NFT artworks on Ethereum blockchain. This sale is a landmark event, bringing curators and artists into the new world of NFT.

The Bicycle Company issued its first NFT collection

The Bicycle here is not a bicycle company, but a card manufacturer established in the United States since 1885. On December 9, 2021, it launched the first “Genesis Series Brand Logo” NFT. Bicycle have been at the forefront of poker cards over the past 135 years. This release is particularly significant to them, because the initial logo is made into NFT, which represents the integration between the old era and new generations. It also means that the brand will continue to keep up with the new generation, but do not forget its where it started from.

10,000 Co-Owners of NFT Art

Former Christie’s executive Loic Gouzer cooperated with cryptocurrency experts in May 2021 to purchase Banksy’s 2005 artwork “Love in the Air” for US$12.9 million, and plans to divide this work into 10,000 NFTs to sell. For Loic Gouzer, his goal is to lower the access to NFT artwork by owning NFT artwork together. This artwork opened the whitelist registration on particlecollection.com on December 13, 2021, and will be available for sale on Avalanche blockchain in the week of January 10, 2022.

Blockchain and NFT Markets

Besides the well-known Ethereum, there are many blockchains that support NFTs creation such as Solana, Polygon, Tezos, Flow and Avalanche. Although most NFTs projects now still exist on Ethereum, due to the jammed and high cost transactions, more and more NFT projects are moving to other chains.

OpenSea currently is the top adopted NFT secondary market, but there are still many competitors. CoinBase is building its own NFT market, and FTX is also building an NFT market with Ethereum and Solana.

Ethereum

Solana

Tezos

Avalance

Flow

BSC

Polygon

The Future of NFT

(‘Everydays: The First 5000 Days’ is a 21,069 × 21,069 pixel JPEG format digital image collaged by the Daily series of images created by American artist Mike Winkelmann (Beeple).)

Is NFT a real use case or just a bubble? According to the current transaction volume in various NFT markets and NFT ecosystems on multiple blockchains, it seems that people are still positive about NFT. In Christie’s auction last year, the digital artist Beeple’s artwork “Everyday: First 5000 Days” was sold for an insane price at US$69.4 million. Since then, the NFT market has greatly risen. Not only retail investors but also institutions are venturing into the NFT market.

Risk Warning:

You should be aware that cryptocurrencies are subject to high price-volatilities. You are solely responsible for determining whether any investment, investment strategy, or related transaction is appropriate for you based on your personal investment objectives, financial circumstances, and risk tolerance. ABCC reserves the right to rescind and terminate our services to users in countries and jurisdictions where relevant laws and regulations apply.

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