Non-fungible tokens or NFTs are unique digital assets based on blockchain technology representing digital asset ownership. These digital assets represent ownership of real-world objects such as artwork, video clips, video games, music files, and more.
Unlike cryptocurrencies that also use the blockchain network to verify ownership, NFTs cannot be directly transacted with another NFT. Each NFT can be bought and sold like a physical asset, but the blockchain tracks the ownership and validity of each NFT. This information makes each NFT unique, so a non-fungible token (NFT) cannot directly substitute for another token.
The cryptocurrency bear market saw an increase in NFT trading. According to Chainalysis, NFTs moved ahead in 2021, with $26.9 billion worth of crypto traded on two popular Ethereum smart contract types linked to Ethereum NFTs.
Another analysis stated a 230X Jump – Transaction worth $100million in 2020 touched $23bn in 2021.
All said and done, NFTs are selling like hotcakes in the crypto world, and it seems to be growing day by day.
Volume story from Marketplace perspective
From a marketplace perspective, OpenSea’s Ethereum (ETH) non-fungible token (NFT) marketplace exceeded $3.5 billion in monthly trading volume, breaking all previous records.
Other significant markets for NFTs include Magic Eden, Axie Infinity, and CryptoPunks, with over $3 billion in sales on OpenSea alone. An important emerging market for NFTs is the creation of digital collectibles: like physical trading cards, as they gain value due to their scarcity.
Transactions at the NFT Category level
Different categories of NFTs influence the size of the NFT market. It is important to note that the strength of NFTs is different from the total number of sales on NFTs.
Founded in 2017, well ahead of the current NFT craze, CryptoPunks was the most popular collection of NFTs during the study period, with over $3 billion in transaction volume as of March 2021. The transaction breakdown by popular NFT category shows that early sales were dominated by collectibles such as CryptoKitties and CryptoPunks. As of mid-July 2020, market volume was dominated by NFTs classified as art, which contributed ~70% to the total volume, followed by 10%-12% representing Collection assets.
While Terra Virtua creates NFTs inspired by big brands and Hollywood, other NFT markets are related to the arts, another important NFT industry. One NFT brand that posted robust growth in the third quarter was Art Blocks, an American project that sells NFTs of digital images generated by algorithms.
SouljaBoy (American rapper), Steve Aoki (DJ), and Rob Gronkowski (football player) are some prominent names that have entered the NFT space. It is also anticipated that there is a list of other celebrities that belong to mainstream media. They would be seen grabbing headlines related to NFT like Paris Hilton, Eminem, and Stephen Curry.
Before we conclude, let’s look at the Top 3 NFTs contributing to these enormous transaction volumes.
- ‘The First 5000 Days’ fetched around $70 million. Mike Winklemann, the man behind this, created a giant collage of 5000 images known as ‘Beeple.’
- ‘Bored Ape Yacht Club’ collection of 10,000 NFTs was bought for around $26million
- ‘CryptoPunks’ – another collection of 10,000 unique collectible characters. It is said that this project inspired the modern CryptoArt movement.