Since the beginning of the year, the monthly trading volume of NFTs has not escaped the downward trend and has fallen by 97%. After hitting a record high in January at $17 billion, it rose to $466 million by the end of September, according to data from Dune Analytics. The drop in NFT volume comes in a generalized downtrend across the entire crypto market, which has seen 2 trillion in capitalization evaporate since the start of the year.
While some see NFTs as a major technological revolution to come, others see it as a passing fad. If the NFTs of certain collections have been resold for several million dollars, many people do not understand why some pay colossal sums for an image that they can simply save on their computer.
Source : https://dune.com/hildobby/NFTs
But what is it really? What does an NFT correspond to and serve?
What is an NFT
NFT means non-fungible token in French. Unlike a fungible good such as bitcoin, gold or a 5 euro note which will always have the same value, a non-fungible good such as a work of art, real estate, a collectible card or a jewel is unique and its value will depend on the buyer’s assessment of it.
NFTs are therefore non-fungible assets using the blockchain and precisely smart contracts to guarantee the authenticity of a work and a deed of ownership. It is a revolution because being based on the blockchain allows this type of asset to be easily resold, in a decentralized way and in a completely transparent way, because the transactions are traceable on this technology.
What are the different types of NFTs?
If you are still struggling to understand how this technology can be revolutionary, here are eight areas where NFTs can be an undeniable growth accelerator, for creators and brands alike:
- Art and music: this is the most classic form of NFT today. An artist can decide to broadcast his work digitally, by selling his paintings or his pieces of music directly to his fans via the blockchain.
- Video games and metaverse: this is probably the market where NFTs will have the biggest impact. If you play video games, you’re probably already familiar with buying skins and accessories for your characters. With NFTs, you will be able to resell them to another person when you decide to stop playing the games or change your style.
- Trading Cards: You play Magics or Yu-Gi-Oh! ? Do you collect Pokemon cards or Panini cards? Imagine being able to do all this digitally and make sure you can trace everything on the blockchain? With NFTs, it is possible.
- Certification of diplomas/driving licenses: the technology used by NFTs can also be used by schools or administrations to certify and guarantee the authenticity of certain documents.
- Domain names: it has also been possible for several years to register your domain name directly on the blockchain of your choice.
- Event tickets: In addition to going to a festival, imagine being able to hold an NFT that grants you access to the event and other exclusive benefits.
- Loyalty program: NFTs are also a great way to build customer loyalty. By offering NFTs certifying a consumer’s loyalty, brands have a new tool to create and maintain a community.
- Soulbound tokens, or decentralized identity: suggested in May 2022 by Vitalik Buterin, soulbound tokens are non-fungible, untradable tokens representing your “digital soul”. Still in concept stage, this technology could be the next major evolution in the world of NFTs.
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Brands and artists fond of NFT
With all these use cases and a potential multi-billion dollar market, it’s no surprise that more and more brands and artists are getting into NFT. This is one of the main reasons that has contributed to the rapid development of this technology in recent years.
Among the brands that have set foot in NFTs, we find:
- sports ones, like Nike who bought the RTFKT studio in December 2021 and Adidas with its “Into the Metaverse” collection which raised $23.5 million in a few hours;
- luxury ones, with Dolce Gabbana or LVMH which, through Tiffany, launched 250 NFTs;
- beverage and food brands such as Coca-Cola, McDonald’s, Pepsi or Starbucks;
- video game publishers, such as Epic Games or Ubisoft
Many artists around the world also seem to have been seduced by the concept of NFTs. Whether in France, with Booba or Sofiane Pamart, or in the United States with Snoop Dogg and Steve Aoki to name a few, many artists use this technology to strengthen their link with their community and obtain additional income.
How to buy an NFT?
Various blockchains have seen dedicated NFT marketplaces emerge on their technology infrastructure. The two main ones are Opensea on Ethereum or MagicEden on Solana, but today there are about ten different marketplaces.
To buy an NFT on the secondary market, all you have to do is go to a market place dedicated to NFTs, connect your crypto wallet like Metamask or Phantom and then choose the project you want to buy.
If you do not want to buy on the secondary market but be among the first NFT holders of a project, you will have to follow the news of the said project on social networks to know the official date of the “mint”. Mint is a term used by the industry to advertise the launch and creation of NFTs. This is when NFTs are saved on the blockchain forever.
You can also get an allocation on a collection of NFTs, by directly purchasing the digital token backed by the project. This method will both give you exposure to this type of asset and allow you to benefit from a more liquid investment.
Remember that everyone is able to create NFTs. Even if you don’t code the contract yourself, you can easily upload your images, videos or other files to marketplaces like Opensea to put them on sale.
Today there are thousands of NFT projects. It is therefore difficult to be able to follow them all without getting lost. As with the Stock Exchange, there are interesting projects that you can dwell on in more detail. If you are for example interested in “blue chip” NFTs, already achieving several million dollars in volume and having a strong community, you can take a look at projects like Bored Ape, Crypto Punks Where X-clone. If you prefer to hold collectible cards in the form of NFTs, several projects exist: football fans can get started on Sorarethose who prefer basketball on NBA Top Shot and fans of strategy games on Cross The Ages.
On the other hand, if you want to take your first steps in metaverses, it is possible to buy virtual land in the form of NFT in games like The Sandbox Where Decentraland. Or you can try to earn rewards with Play to Earn games like Axie Infinity Where Aurora.
If among all these categories, you have not yet found what you are looking for, you can turn to more atypical projects such as stepnwhich allows you to earn rewards in the form of tokens by walking or running, or register your own domain name on ethereum with ENS Domain.
While NFTs will likely play a crucial role in the future and grow more and more in our daily lives, the euphoria of 2021 is a long way off and projects often remain illiquid despite the headlines. Before buying your first NFT, ask yourself if this type of asset matches your investor profile, be careful, and always do your own research on the project behind it and the team behind it.
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