What are NFTs?

There is no denying that the crypto industry has been able to garner an insane amount of mainstream traction in recent years, as is best highlighted by the fact that between Q1 2019 and Q1 2021 the total market capitalization of this fast-evolving sector increased by an astonishing 1600+%.  

Even though this unique space has given birth to a whole host of future-ready technologies, Non-Fungible Tokens (NFTs), in particular, seem to have really captured the imagination of the masses worldwide. In their core essence, NFTs are cryptographically secured entities that are designed to have their innate values pegged to a real-world physical/digital asset. Due to their unique monetary/ownership proposition, they are fast being used as mediums for facilitating deals related to a wide array of things ranging from art and music to real estate. 

To put things into perspective regarding the immensity of this space, it would be best to look at the amount of money that has continued to make its way into this domain. In this regard, conservative estimates seem to suggest that up until Q1 2021, a little over half a billion dollars entered this market. And while this figure may sound a bit outlandish at first, it is worth remembering that Beeple, a digital artist/illustrator, was able to sell one of his creations for nearly $70 million. Similarly, Twitter CEO Jack Dorsey too was able to rake in a cool $2.9 million in exchange for an NFT version of his genesis tweet on the social media platform. 

A closer look at NFTs and their unique value proposition

To better understand what the concept of a Non-Fungible Token (NFT) entails, it would be best to first make sense of what the word ‘fungibility’ actually means. In its most basic sense, fungibility refers to the unique attribute of an asset that makes it easily exchangeable for something else. For example, an overwhelming majority of the fiat currencies that have become accustomed to using on a daily basis — such as the Dollar, Pound, Euro — can seamlessly be traded in return for a wide array of goods, services, thus showcasing their fungible nature. 

Even Bitcoin, for that matter, features a high degree of fungibility, since it can quite easily be exchanged in place of various digital tokens — such as Ethereum, Litecoin, Bitcoin Cash, amongst many others — with the touch of a button. 

That being said, when we talk about an asset being ‘non-fungible’ in nature, it basically talks about the intrinsic property of that entity wherein it cannot be traded/swapped for something else directly. To better illustrate this, we can think of an example wherein, say, for example, a musician issues an NFT for one of his/her songs. This token can now never be traded directly for another NFT since each separate coin holds an entirely original piece of data.

What’s so special about NFTs?

Straight off the bat, probably the most striking feature of an NFT is that it comes with a host of unique distinguishing markers that make them not only verifiable but also easily differentiable in relation to other NFTs. Not only that, owing to the fact that every last piece of data associated with an NFT is immutably maintained using a public ledger system (i.e. blockchain).

Thanks to this unique operational setup, there is not even a sliver of doubt when it comes to establishing ownership of a particular NFT. And even in the off-chance that some dispute does arise, these tokens can quite easily be traced back to their owners fairly seamlessly due to the decentralized aspect of blockchain tech.

Finally, as pointed out earlier, though most cryptocurrencies are designed to be mutually interchangeable with each other, the same notion does not hold any credence when it comes to NFTs, since they are not designed to be swapped amongst themselves even though they can reside and co-exist in a totally friction-free manner within the same ecosystem.

How to buy NFTs?

For traditional investors, it may be a bit of a challenge to get started with NFTs, however, the acquisition process related to these tokens is fairly simple, especially after a large number of NFT marketplaces cropped up in 2020. Depending upon the trading platform a person chooses, he/she can gain exposure to a diverse range of offerings such as music, collectibles, etc.

At press time, there are a number of digital marketplaces that users can choose from, with some of the prominent one’s being:

• Opensea: There is no denying that Opensea has transformed into one of the largest NFT trading ecosystems in existence today. The platform is extremely easy to navigate can enables users to exchange a large number of cryptocurrencies in return for a variety of nonfungible tokens. That being said, to make use of the system, users need to know how to deploy a web3 crypto wallet like MetaMask.  
• Rarible: Along with Opensea, Rarible is probably the second-largest NFT marketplace in the world. It allows content creators to quite seamlessly “issue” as well as sell their data without any interference from transactional middlemen.
• Binance NFT: It was only a matter of time till crypto giant Binance made its way into the NFT market. In this regard their latest offering seeks to help rope in a large number of well-known artists, creators from every corner of the planer, allowing them to host their very own exhibitions as well as collaborate with one another. Not only that, another key aspect of the platform is that it features amazing liquidity as well as charges little to no transaction fees.

Here are some of the most expensive NFTs in existence today

(i) CryptoPunk #3100: Though a lot of people may not be familiar with the term ‘CryptoPunk’, in their most basic sense, they are 8-bit-style pixel art images that have gained a lot of traction recently. For example, character #3100 was recently able to sell for an insane $7.58 million due to the fact that it has a blue-greenish skin tone along with a specially designed headband that only 333 other punks come with.

(ii)  CryptoPunk #7804: Much like the aforementioned entry on our list, character #7804 was also able to rake in an astonishing $7.57 Million thanks to the fact that it comes with a total of 3 accessories — including a baseball cap, dark glasses, and a smoking pipe. 

(iii) Axie Infinity Genesis Land: Being one of the world’s best-known blockchain-based video games, a number of items within Axie Infinity have sold for a high value. For example, ‘Genesis Land’ is an extremely rare item within the game but despite its high value, a player recently bought nine of these items for a combined total of $1.5 Million.
(iv) Lebron James NFT: A few months ago, a digital collectible of Los Angeles Laker’s superstar LeBron James was able to sell for $200,000.