But on the first day of March, Jack Dorsey, the co-founder, and CEO of Twitter, decided to make your Sci-fi joke come true. Dorsey put up his first-ever tweet, “just setting up Twitter” on a digital goods marketplace called Valuables. As of March 6, the tweet’s bid had gone up to $2.5 million.
The price for that tweet might sound excessive and frankly, to many people, unreasonable. But wait till you hear about NFT or Non-fungible tokens, the tech behind the sale of the tweet.
What are NFTs?
Whether you like it or not, you will probably hear about them. For weeks now, they have dominated the headlines. From sports cards to collectible art, NFTs are booming. In the month of February alone, they doubled their trading volume.
So, what are NFTs?
Like the Dollar and other currencies, cryptocurrencies are fungible, meaning they can be traded and exchanged for one another. The fungibility of cryptocurrencies like Bitcoin and Ethereum makes them a secure medium for transactions in a digital economy.
However, NFTs are different. NFTs or Non-fungible tokens are digital goods that are non-fungible, meaning they can’t be exchanged and are entirely unique from other digital tokens. Unlike Bitcoin, where 1 BTC is equal to another 1 BTC, each NFT token minted is unique and can’t be found anywhere else. The tech is tied to the Ethereum blockchain, and it allows sellers to sell images, videos, artworks, and music that are minted as tokens for buyers who might be interested.
Think of it as the Mona Lisa. If you reproduced it and hung it on your wall, it wouldn’t still be Leonardo Davinci’s, Mona Lisa. Nor would it have any value. That makes the Mona Lisa non-fungible, a one-of-a-kind piece of art. If it’s minted as a digital asset, it becomes a token.
Like cryptocurrencies, NFTs contain ownership details for easy identification and transfer of tokens between the holders. Each digital asset can be easily tracked. Owners or artists can even sign their digital signatures on their digital artworks in the metadata.
A large number of NFTs were built on two Ethereum token standards, ERC 721 and ERC-1155. These are blueprints created by Ethereum to allow software engineers and developers to easily deploy NFTs with the broader cryptocurrency network.
Since the start of 2021, NFTs have been thriving. Everyone is talking about them. But how big is the market where a tweet or a unique art can be sold?
How Big is The NFT Market?
The NFT market has been around for a number of years. However, it’s only recently that the trading volume of this kind of digital asset increased.
The history of the marketplace can be traced to 2017. Early NFTs called CryptoPunks and CryptoKitties are much credited with starting the NFT faze. CryptoPunks were digital images of 10,000 human and animal characters in cutesy, 8-bit-style animation. While CryptoKitties were a collection of fancifully drawn felines.
At first, they were given out for free. Now, the most expensive CryptoKitties sell for over $100,000 and CryptoPunks for over $1 million.
Three years ago, the entire NFT market was worth no more than $42 million. In 2020, over $250 million in NFT volume was traded. Even though NFT rose 66% in 2020, the recent boom saw the traded volume skyrocket. According to NonFungible, $189.5 million worth of NFTs has been traded in the last 30 days. During that time, a total of 130,802 tokens were sold.
What is the driving force of each NFT? It’s the same as what drives the value of other assets. The demand and supply are the key market drivers for price. The scarce nature of NFTs is pivotal to gearing the price of each token. Rare artworks have collectors and investors who are ready to pay a lot of money for them.
Artworks are not the only things exchanged. Digital sports trading cards are becoming more and more popular. In fact, fans of basketball have already spent $230 million trading NBA Top Shot cards.
In addition, the price is driven by the well-known fact that NFTs can’t be destroyed, deleted, or duplicated. They are also verifiable. The tokens exist solely on the blockchain they were created on. This helps keep the minds of artists at rest.
Who Has Jumped on The NFT Train?
It’s important to note that the use case of NFTs across different industries is different. For digital artists, it can be used to sell artworks. For musicians, it has been used to sell albums and even tickets. For gamers and sports fans, collectibles and in-game features.
Here’s a list of people who have cashed out big on the booming NFT industry:
In the early last decade, virtual real estate by the name of Club Neverdie in the online game Entropia sold for $635,000. Ten years later, not much has changed. Atari, the gaming and entertainment software company entered the NFT market with plans to start an online casino that will include Atari-themed games and Atari NFTs. The company is gunning for $150 million in revenue from bets alone by the end of the year.
Following Jack Dorsey’s footsteps, American rapper, Soulja Boy, sold five of his tweets as NFTs for a few thousand dollars. One of his tweets that read, “I was the first rapper to release a NFT” sold for $200.
In the music scene, many are cashing out with album sales. 3LAU’s auction for the unique NFTs of his Ultraviolet album sold for a total of $11,684,101.
Grimes, the Canadian singer and record producer, sold a series of ten digital works of art—some were one of a kind and others with thousand copies—that went up on Nifty Gateway, a digital marketplace for NFTs, on February 26. They sold for about $6 million. The highest selling piece was a one-of-a-kind video called “Death of the Old.” The video shows flying cherubs, a cross, a large sword, and glowing light set to an original song by Grimes. It sold for $388,938.
Digital artists are cashing out big from the gold rush. Digital artist Mike Winkelmann, also known as Beeple, recently sold a $6.6 million video artwork on Nifty Gateway. Currently, the famed 254-year-old auction house, Christie is auctioning Beeple’s “Everydays: The First 5,000 Days” as its first digital art sale. The current bid is at $13.2 million. Bid is supposed to close March 11.
An artist who illustrated for the DC comics’ Wonder Woman in the 1970s, José Delbo, made $1.85 million from selling his drawings in an auction. The most expensive piece sold for $136,000.
Even Taco Bell is having a go. The popular fast-food chain has sold out its first set of taco-themed non-fungible tokens.
NFTs are investments. They offer a store of value that art collectors, investors, and music and sports fans are ready to pay for. While the market is still relatively new, it might be difficult to say where it’s headed.
However, as artists, musicians, and sportsmen continue to adopt the digital goods marketplace, it’s expected that the demand for value increases. The attention which has been given to cryptocurrencies will be directed toward the digital asset world.