NFTs, also referred to as non-fungible tokens, are taking over the cryptocurrency market, mainstream finance, and digital media ownership all at once. These unique, one-of-a-kind digital assets are protected cryptographically and live on the blockchain, but they are nothing like the “traditional” crypto assets like Bitcoin and Ethereum.
Although there’s no relation, without Bitcoin and Ethereum, NFTs wouldn’t exist. We’re exploring the origins of NFTs, why there is suddenly so much hype surrounding them, and why even major finance executives expect the NFT industry to see a “massive increase” over the next twelve months and more.
What Are NFTs?
NFT, as we previously mentioned, are non-fungible tokens typically minted using the ERC-721 standard on the Ethereum blockchain. The relationship has caused even mainstream investors to start trading Ethereum and it has contributed to the price growth due to constant demand for ETH. ETH is required to mint tokens, send them, and is often the currency used to purchase such tokens.
Bitcoin and other cryptocurrencies are fungible tokens, which means that every BTC is exactly like every other BTC in existence. Non-fungible tokens are unique tokens that often represent things like digital art, music, and other collectibles.
It might seem that NFTs have come out of nowhere and now suddenly everyone is talking about them. However, CryptoKitties, a decentralized application popular during the 2017 bull market, relied on such technology.
It wasn’t until NFTs again regained popularity thanks to influential figures like Beeple, the explosion of prices in CryptoPunks, and the involvement of all kinds of celebrities ranging from Jay-Z to Paris Hilton, Snoop Dogg, Ellen Degeneres, and many other popular and beloved celebrities.
Why Are NFTs Suddenly So Popular?
Today, NFTs are in a full blown mania phase, where JPEGs are being sold regularly for as much as hundreds of ETH. These digital art pieces represent “Apes,” “Simp Mermaids,” “Vampires,” and even “Rocks.”
Crypto investors love to challenge gold and silver as little more than useless shiny rocks, then turn around and purchase digital cartoon rocks for the equivalent of hundreds of gold bars – it doesn’t make any sense. However, it is making these investors money as the trading volume on the popular NFT marketplace has been ballooning in recent weeks.
The majority of NFT fever is related to user-generated digital art pieces that trade for high value, such as CryptoPunks. The trend has become so strong, that even VISA purchased a CryptoPunk for more than six figures to mark the milestone change in the way individuals transact.
VISA and others have only recently begun to support Bitcoin, Ethereum, Litecoin, and others, but are already getting involved in NFTs at lightning speed. It was recently revealed that Marvel was getting into the NFT space by releasing Spider-man related NFTs, and nearly every other brand is exploring using the technology to interact and engage with fans in unique ways.
NFTs lend to the potential for exclusive fan art or collectibles that act as proof-of-fandom, which can be important to those that love to wear their favorite brands on their sleeves.
deVere CEO Nigel Green Says NFTs Are Just Getting Started
Nigel Green, chief executive and founder of deVere Group, says that NFTs will see a “massive increase” over the next year, suggesting that although the trend is booming with the mainstream, big finance is also paying attention.
“The market for NFTs hit new highs in the second quarter, with $2.5 billion in sales so far this year. This is almost 20-times more than the $13.7 million in the first half of 2020,” the deVere CEO said. “With soaring interest from major investors like payments giant Visa, who understand and value that the future of almost everything is geared towards digital, demand is set to explode,” he continued.
Green sees other financial giants getting involved, which could legitimize NFTs. “As the big hitters pile in, their capital, expertise and reputational pulling power will attract a growing number of other investors – both retail and institutional- looking to get into the market,” he revealed.
He claims that demand “will also be fuelled by a growing number of NFT marketplaces where you can make purchases, as well as there being more and more artists, musicians, sports, fashion, entertainment, gaming and retail brands producing digital assets to engage with consumers, clients and fans.”
Green also thinks NFTs are only just getting started despite the mania we’re already seeing in the market. “This is a market which is just getting started. There’s been a surge of interest this year but I believe 2022 will be the breakout for NFTs,” he explained, continuing that he expects
“there to be a massive increase in volume in the market over the next 12 months.”
Millennial and Gen-Z Investors Are Driving The Trend
As beneficiaries of what Green called the Great Wealth Transfer to Millennial and Gen-Z demographics, their interest in the digital ownership rights will be paramount to growth in this industry.
Nigel Green concludes that “with NFTs, we are experiencing the meeting of an internet of information with an internet of value, which is drawing in large investments coming from multinationals, funds, and VC firms, amongst others, into the market.”
Despite the positive outlook, Green warns that the “market remains young and highly speculative and caution should be exercised. It can be expected that some of the NFTs on the market now will have little value in a few years. But some will be worth a fortune. It’s a similar situation to websites in the early days of the internet.”
Pick Winners In Any Market With PrimeXBT
He adds that “with any kind of investment, the key is being able to pick the winners and avoid the losers in what is a volatile market driven by fast-changing trends and tastes.”
Learning how to pick winners is possible. To learn more about the growing trend on NFTs, visit the PrimeXBT blog – the official blog to the award-winning trading platform – for an in-depth guide on NFTs and other important crypto market education and tips.
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