This article focuses on:
- Everything is NFT
- A brief history of NFT development
- Five platforms for NFT trading
- 2021, a breakthrough year for NFT
- NFT future market value expectations
- The rise of artistic NFT
- Three key factors and five criteria for evaluating the value of NFT
The full text is 5500 words in total. The content in the article is based on the collection of public information. Views are only for exchange and discussion, not as any investment advice. If you have any questions, please leave a message.
1. Everything can be NFT?
NFT is so popular, domestic and foreign giants have poured in one after another, star artists, and corporate NFT ideas are also emerging one after another.
According to public information, well-known artist Xu Jinglei is also an NFT entry. Her Instgram bear portrait has increased from 1.99 Ethereum to 25 Ethereum. According to Opensea (NFT trading platform) account, Xu Jinglei (Stitevoli) has 795 NFT works.
On September 12, Alipay released the “I’m Not Fat Tiger” series of NFTs. The series is sold in 4 time slots. Each time slot is limited to 8,000 copies of “The Tiger Going Up the Mountain” and “The Tiger Going Down the Mountain”.
On September 11, Legendary Pictures announced that it will launch its upcoming movie “Dune” theme series NFT collection “Dune: Future Artifacts” on September 22.
On September 10, the movie “Zero Contact” announced its first promotional film and announced that it will premiere on the NFT platform VUELE on September 24. The film will be cast into NFT and will be auctioned on OpenSea on September 24th . “Zero Contact” is starring Anthony Hopkins, who has just won the Oscar winner.
On September 1st, the famous NBA star Stephen Curry bought a pair of monkeys as the avatar of his social account at a price of 180,000 US dollars. As of press time, Sotheby’s Boring Ape NFT collection has been auctioned for more than $24.4 million.
Note: The picture comes from the Internet, and the copyright belongs to the original author
Before that, on March 11 , a 24*24 pixel “cryptopunk” avatar was sold for 4200 Ethereum, which was about 7.6 million U.S. dollars at the time. If calculated at the current Ethereum price of 3,300 U.S. dollars, this one The avatar is already worth $ 13.86 million
Note: The picture comes from the Internet, and the copyright belongs to the original author
In early 2021 , a set of works by digital visual artist Beeple, “Everydays: The First 5000 Days”, was sold at Christie’s at a price of US$69.35 million by way of NFT, which shocked the world.
2. A brief history of the development of NFT
In 2021, the most eye-catching and amazing thing in the currency circle is no longer Bitcoin , but NFT. There are various forms of NFT, and it can be said that everything can be NFT-like.
NFT (Non-fungible Token) is defined as a non-fungible token, which means that every token is not exchangeable. Unlike Bitcoin and other interchangeable cryptocurrencies, NFT is a very unique token.
The concept of NFT can be traced back to Bitcoin. In 2008, a peer-to-peer electronic cash system called “Bitcoin” was released in the name of Satoshi Nakamoto, which included a white paper on blockchain and distributed ledgers.
It is generally believed that the first batch of “NFT” is a kind of “colored coins”, that is, tokens made of small denominations of Bitcoin. In the early 2010s, NFTs were used to represent company stocks, property and other assets, or In some cases it is used to represent digital collectibles. However, these assets require all participants to agree on their value to be effective.
In 2014, based on the Bitcoin blockchain and network, a decentralized exchange that allowed the creation of assets emerged. Before 2017, Counterparty was the main platform in this field, but now it has been replaced by Ethereum , the most active blockchain .
Then, Ethereum developed an interface that can track the ownership and movement of each token on the blockchain, which is a key innovative means to form an effective NFT market.
In the early days of blockchain development, the main purpose was to trade card games, as well as some niche NFT transactions, such as pop culture/meme. The first publicity in NFT history was that it started to be active in 2017. CryptoKitties-a game that allows users to look after, breed and sell virtual cats. In early September 2018, a two-week-old NFT kitten named Dragon was purchased for 600 ETH ($172,000 at the time of sale).
Shortly before the release of CryptoKitties, Larva Lab proposed CryptoPunks, a project that released a set of unique NFT pixel avatars, and released a total of 10,000 CryptoPunks.
Data source: The Block
The image above clearly shows the surge in the number of cryptopunk, NBA TopShot, and other NFT platforms. In this year’s NFT boom, some ancient NFTs sold for more than US$10 million.
Currently, most NFTs are created and stored on the Ethereum network. NFT ownership can be easily verified and tracked, and the person or entity that owns the token can remain anonymous. Different types of digital goods can be “tokenized”, such as artworks, in-game items, and live stills or videos.
3. Five platforms for NFT trading
Users can buy, sell, trade and create NFTs from online trading platforms. NFT trading platforms mainly include:
1) OpenSea: This is one of the earliest and largest markets. It provides a series of NFTs based on artworks, domain names, transaction cards, collectibles, etc.;
2) Nifty Gateway: An art-focused market that usually cooperates with famous brands, athletes and creators. This platform is a milestone platform for multi-million dollar auctions and NFT sales. It is the best place to find a limited edition NFT one;
(3) Rarible: The focus of the offer is artwork NFT, but the platform requires the use of the platform’s own RARI token to purchase it and it allows you to mint your own NFT! It includes books, digital art, film and music albums, photos, domain names, music, Meme, games, etc.;
(4) SuperRar: If you are interested in buying or selling a single version and unique digital artwork, SuperRare is the place you should go! A relatively new market that focuses on planning and providing digital art;
(5) Fundation: is a community-planned NFT platform that combines hidden locals, collectors and digital creators. It is an invitation system. When the NFT is traded in the market, the artist will receive 10% of each future sale or resale.
4. 2021, a breakthrough year for NFT
The NFT gold rush occurred in the first quarter of 2021.
In January 2020, the average selling price of NFT was US$30, and in January 2021, only one year later, it soared to US$195. By mid-February, the average price of NFT reached 4,000 US dollars and made history in March, completing the first transaction for the first pure digital art collection “Everydays” sold by a large auction house. This set of works was created by digital artist Beeple (formerly Mike Winkelmann), and is a collection of his daily digital artwork. This series of works sold for US$69 million and was sold as an NFT.
During the period from February to April this year, the average price of NFT dropped by 60-70%, from more than $4,000 to about $1,500. However, the fall in prices means long-term stability, which shows that the NFT market is not a bubble about to burst. The decline in NFT prices may be due to the decrease in peripheral sales such as Beeple’s “Everydays”, but at the same time, this has also pushed up the overall average price.
The volume of NFT transactions continued to rise in February to double, from 20,000 transactions per week to 40,000 transactions per week. According to the data platform NonFungible.com, there were more than 80,000 NFT transactions every week in March.
During the flu pandemic, this kind of exponential growth has occurred in the blockchain space.
As of the end of the first quarter, the value of the NFT market was approximately $250 million. In the first half of 2021, NFT sales exceeded 2.5 billion U.S. dollars and reached 1.2 billion U.S. dollars in July alone. The market is expected to rapidly increase to 20 billion U.S. dollars in 2021. The NFT market hit a new high in the second quarter, with sales of $2.5 billion so far this year. This is almost 20 times the $13.7 million in the first half of 2020.
Legend: TOP 10 of NFT transaction volume, source: nonfungible.com
According to the latest data from OpenSea, the world’s largest NFT trading platform, the number of NFT traders has recently exceeded 500,000 and hit a record high. The current total transaction volume is US$5.57 billion.
Not only that, but experiencing the integration of the Internet of Information and the Internet of Value, NFT is attracting a large amount of investment from multinational companies, funds, and venture capital companies to enter the market. Since the first half of this year, more than 80 NFT projects around the world have been favored by capital, with a total financing of more than US$780 million.
Five, NFT future market value expectations
How big is the NFT market? Some people say that this question is difficult to answer because NFTs can represent many different asset types.
Chart source: netfreeman.com
As shown above: securities such as bonds, real estate, and other financial products; decentralized insurance and token liquidity, etc. Collections include: art, music, in-game accessories, name services, renewable energy, historical relics, etc. Both can be represented by NFT.
NFT is the only encrypted token that exists on the blockchain and cannot be copied. NFT can be used to represent real-world items such as artworks and real estate. “Tokenization” of these real-world tangible assets enables them to be bought and sold more efficiently, while reducing the possibility of fraud.
NFT can also be used to digitally represent people’s identity, property rights, etc. NFT can also be used to remove intermediaries, connect artists with audiences, or use for identity management. For example, a set of Beeple NFTs sold for more than $69 million, setting a record for the most expensive digital art sold to date.
At present, most of the NFT market is concentrated on collectibles, such as digital art, sports cards and treasures. For example, cryptopunks can be regarded as art and historical artifacts because they are one of the earliest collections of the Ethereum NFT. For example, the cryptopunks recently purchased by Visa for $150,000 are called historical commercial artifacts.
And the most popular NBA Top Shot, an NFT of iconic NBA moments collected in the form of digital cards, some of which have sold for millions of dollars. Recently, Twitter CEO Jack Dorsey (Jack Dorsey) posted a link on Twitter to the tokenized version of the first ever tweet, the first ever NFT version of Twitter. Was bid up to 2.5 million US dollars.
NFT was only played in combination with an art or meme at the beginning, and then integrated into the game as an object or avatar. A report released by the Worldwide Asset Exchange stated that more than 75% of online gamers want to exchange their virtual assets into currencies that can be used across multiple platforms.
In the past few decades, video games have developed greatly. In fact, the global game market is valued at US$173.7 billion in 2020 and is expected to reach US$314.4 billion by 2026, with a compound annual growth rate of 9.64% from 2021 to 2026. Considering that there are still many immature developments in this part of the game field NFT, this part of the future will bring more market valuation expectations.
In general, securities NFTs may constitute a huge market, but the required infrastructure and supervision are still in the early stages of development. In contrast, the collectible NFT has rapidly grown into the top ten markets in billions of dollars this year, and recently, the daily transaction volume has exceeded one billion dollars.
Some people believe that the NFT market is saturated. Cryptopunk, artistic building blocks, and boring apes have been hype for too long. But compared to the number of unexplored markets, for example, in 2020, the global art market has 500 billion US dollars in sales. However, the transaction rate of non-digital artworks is not high, and the artworks purchased by buyers are usually not resold in the same year. Therefore, the figure of 500 billion US dollars does not equal the total value of all artworks.
Assuming that the artist Picasso owns 50,000 works, his artwork is estimated to be worth tens of billions of dollars. If you add artists such as Monet, Rembrandt, Pollock, and Basquiat, there is obviously more room for the value of this art market, which also means that the scale of NFT is still relatively small.
One way to measure the size of the NFT market is a bottom-up approach. You can view the current market value of Topshots, CryptoPunks, and Artblocks, and predict their growth. According to blockchain analysis platform Nansen, the market value of these top NFT series is more than 40 billion U.S. dollars. As more and more major investors begin to pour in, the already booming NFT market will experience huge transaction volume growth in the next 12 months.
Six, the rise of artistic NFT
NFT is like a part of the financial revolution phenomenon. Although NFT is blooming everywhere, it is the digital art market that really drives the amazing growth of NFT value.
According to the 2021 mid-term survey report “Art Dealers Resilience” from Art Basel and UBS, a survey was conducted on more than 700 art and antique dealers from 54 countries and regions around the world, and integrated Arts Economics and UBS Investor Watch’s survey and data analysis of 500 high-net-worth (HNW) collectors in five markets: the United States, the United Kingdom, Hong Kong, Germany, and Switzerland show that: interviewed high-net-worth collectors Among the works owned by collectors, 16% are digital artworks, images and video artworks. In the first half of 2021, digital art purchases accounted for 12% of the median spending by high-net-worth collectors, while paintings, sculptures and paper works accounted for 31%.
Note: Nonfungible website
According to the latest data, the NFT platforms with the largest transaction volume in the world are all art NFT-based platforms.
According to data from the NFT tracking website Nonfungible, NFT sales in 2021 will expand from US$17.4 million in the first half of 2020 to approximately US$1.3 billion in the same period of 2021, of which approximately 25% (or more than US$324 million) of sales come from artworks. At the end of the second quarter of 2021, the number of buyers in this market also increased from more than 9,100 to 53,198, while the number of sellers more than doubled to 18,429.
In addition, in 2020, most art-related NFTs are related to primary market sales, accounting for 65% of sales and 71% of sales.
Note: Source Nonfungible.com
The logic of artwork NFT is: use scarcity, traceability and immutability to store and circulate the artist’s works on the chain, and write the sharing agreement into the smart contract in advance to increase the liquidity of the artwork, while also enabling the artist It can be divided into countless subsequent resales and enjoy the growth value brought by its artistic creation.
Compared with the collection and circulation of traditional artworks, NFT is more flexible and still retains the uniqueness and authenticity of artworks. This is the core of the highly sought after cryptocurrency’s new favorite NFT.
Participants of the early art NFT were still very limited, and many people have now regarded it as the new frontier of income generation. It can be said that the hottest NFT markets in the world are concentrated in the art circle.
NFT broke out in 2021. Although popular, the concepts behind them may still be confusing. After all, as a new format, it is difficult for ordinary users to understand why they are valuable. For speculators, they may use the “hype cycle” to predict the future trend of the NFT market. The NFT market is still young and highly speculative and should proceed with caution.
7. Three key factors and five criteria for evaluating the value of NFT
Although NFT becomes more and more popular in 2021, the industry continues to develop and introduce more technology applications. This means that creators and developers will continue to build different ways to deliver and protect value digitally.
According to public information, the following three key factors can be considered when evaluating the value of NFT:
1. Is it rare?
That is, how rare or hard to obtain NFT? Like traditional art, the value of NFT is based on: the artist who made it, the technology involved in making it, and the impact it may have on users. What attracts people or the intrinsic value of NFT, this differentiated characteristic determines the premium of NFT.
2. Financial utility
Some NFTs are adopted because they can be used in other applications. Such NFTs are not just collectibles, for example, they can be used as tokens in games. In this case, owning a given NFT can help players gain a key advantage on virtual land. They can be used to enhance the power of a character or introduce new skills, and NFTs can also be traded in the secondary financial market.
3. Tangible value
Some NFTs are associated with real-world objects, which provide value in terms of the tangibility supported by the immutability of ownership. The potential value of such items will depend on their usefulness, scarcity and personal satisfaction to users.
For example, the NBA NFT market, the NFT collection of NBA TopShots. The value of this type of game depends on the players involved, the stage of the game, whether it is a final, etc.
In addition, shorts Howard, a North American NFT art collector NFT analyst who is a guest at the European Union Intelligence Agency, pointed out that there are 5 criteria for measuring the value of NFT collections:
1. Scarcity: The more a certain work exists, the smaller its value.
2. Ownership: If the owner of a certain NFT is just hodl (holds firmly for a long time) and does not trade their own collections easily, this will also affect the value of the NFT. For example, Pak’s Cube, which many people hold in large quantities for a long time, and the giant whales are also constantly buying, which makes the price of Cube soar.
3. Influence: By observing other works held or sold by NFT sellers, people will be able to roughly judge whether this person has a better investment vision, which will affect their judgment on the NFT works being sold.
4. Market hype: The popularity of a certain work will attract investors to rush in, lest it fall. Such herd behavior will further raise the price of this NFT.
5. Fungibility : Digital artist Pak launched the NFT destruction platform burn.art. On this platform, burning NFT can earn ASH tokens. In this way, NFT (non-homogeneous token) becomes FT (homogeneous token). Pak’s other paintings can be purchased using ASH tokens, so this forms an independent economic model. In addition, more and more artists are influenced by Pak to accept this model, so this ecology is becoming more and more perfect.
Shorts Howard reminds investors that the NFT market is very large, and digital collectibles, games, etc. are just a few components of this market. Therefore, it is impossible to make a general judgment on the entire field and should be analyzed in detail. Some projects have risen wildly, which can be hundreds of times in just a few months, but 99% of them may not be able to preserve their value. These projects can bring short-term benefits, but they cannot be held for a long time. There must be bubbles in this part of the market, but the remaining 1% has long-term value.
In summary, NFT is a brand new vertical product that caters to market needs. To participate in the current NFT market, it is necessary to expect that some NFTs on the market will be worthless within a few years, and which ones will be worth a lot of money. Just like the situation of the early Internet sites in the 1990s and 2000s, the key to success and failure is to be able to choose winners and avoid losers in this turbulent market driven by fast-changing trends and tastes.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/movies-paintings-avatars-meme-games-talk-about-the-future-of-the-nft-market-and-key-points-of-evaluation/
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