One article to understand NFT past and present life and trading strategies

How did NFTs come about?

One article to understand NFT past and present life and trading strategies

To understand NFT, we also start with how NFT was born. The concept of NFT was formally proposed in 2017 by Dieter Shirley, the founder and CTO of CryptoKitties. That year, as BTC rose from $5,000 to $200 million in just 2 months, in this massive crypto bull market, a crypto cat game quickly became popular. Dieter put forward the concept of NFT, that is, the concept of non-fungible tokens. As a result, with the popularity of encrypted cats, the concept of NFT quickly entered the public eye. As a result, digital assets no longer just refer to cryptocurrencies, but are composed of homogeneous cryptocurrencies and encrypted assets represented by non-homogeneous NFTs.

1993: Crypto Trading Cards

The concept of NFT and its predecessor can be traced back to Crypto Trading Cards in 1993. The general situation is that in 1993 Hal Finney (the first senior cryptography expert to receive Satoshi Nakamoto’s Bitcoin, Bitcoin pioneer) shared an interesting concept, the gist of which is:

“I thought a little bit more about the idea of ​​buying and selling digital cash, and I came up with a way to show it. We’re buying and selling ‘crypto trading cards.’ Enthusiasts of cryptography will love these fascinating examples of cryptographic art. Note that it’s perfectly combined presentation form – a mix of one-way functions and digital signatures, and random blinding. What a perfect piece to treasure and show to your friends and family. “

Hal defines it as an encrypted card, and its expression is based on the presentation form of encryption and mathematics, and then randomly arranged to form a series of cards.

2014: Counterparty

The birth of colored coins has made many people realize the huge potential of issuing assets on the blockchain.Counterparty was founded in 2014 by Robert Dermody, Adam Krellenstein and Evan Wagner. It is a peer-to-peer financial platform with a distributed open source Internet protocol built on top of the Bitcoin blockchain. Counterparty supports asset creation and has a decentralized exchange, XCP contract currency and many projects and assets, including card games and meme transactions. What really promotes the emergence of NFT is the “Rare Pepes” created on Counterparty – the popular meme Sad Frog turned into an NFT application. Meme is translated as a meme, which is actually a kind of expression pack, picture or sentence, or even a video, animation, which can be simply understood as the “stalk” that we are familiar with.

June 2017: CryptoPunks

In 2017, when the Ethereum ecosystem began to exert its strength, two developers who were not in the cryptocurrency circle came to this ecosystem with more than 10,000 pixel avatars by chance, and developed the world’s The first NFT project – CryptoPunks. John and Matt, who were originally mobile app developers, made a pixel character generator in early 2017 and created a lot of cool pixel character avatars. When they were thinking about what they can do further around these avatars At that time, they paid attention to the blockchain and Ethereum, which was gradually gaining popularity by relying on the ERC20 token standard. So they decided to put these pixel avatars on the blockchain, so that these very personalized pixel avatars can be verified through the characteristics of the blockchain, and they can be owned by others or allowed to be transferred by others to others. .

October 2017: CryptoKitties

One article to understand NFT past and present life and trading strategies

As the innovative project CryptoPunks has been hyped up on Ethereum, this non-fungible token has also brought a new trend of thought. Inspired by CryptoPunks, the Dapper Labs team launched the ERC721 token standard specifically for building non-fungible tokens, and then based on ERC721, the Dapper Labs team launched a crypto kitty game called CryptoKitties, allowing every digital cat They are all unique, and their value cannot be replicated. “Scarcity can maximize value.” The innovation of CryptoKitties in the presentation of value shaping has made CryptoKitties quickly popular and become the mainstream of the market, so NFTs have become popular.

2018-2019 Return to Construction

2018 and 2019 saw massive growth in the NFT ecosystem, with over 100 projects in the space at this point, and many more in the works. Led by OpenSea and SuperRare, the NFT market is booming. While trading volumes were small at the time compared to other cryptocurrency markets, they grew at a rapid pace and made great strides. As Web3 wallets like Metamask continue to improve, it becomes easier to join the NFT ecosystem. There are now sites such as nonfungible.com and nftcryptonews.com that delve into NFT market metrics, play guides, and provide standard information about the space. This image from The Block is a good illustration of the current NFT ecosystem.

In 2020, the outbreak

After the epidemic, governments of various countries, including the United Kingdom and the United States, chose to issue currency to stimulate the economy. In the short term, traditional investment solutions have lost their attractiveness, and more people have become bold in venture capital, and then turn their attention to the seemingly blue ocean field. The FLOW public chain is launched, and the combination of NFT and DeFi realizes Gamefi — NFT welcomes It’s spring.

Digital artist Beeple has been drawing one image a day since 2007, eventually stitching 5,000 images into a 316 MB JPG file and selling it as an NFT. The work “Everydays: The First 5000 Days”, which took 14 years to create, was finally sold on the famous British auction platform Christie’s for $69.34 million.

After Beeple’s record auction, Zion Lateef Williamson, Takashi Murakami, Snoop Dogg, Eminem, Twitter CEO, Edward Joseph Snowden, Paris Hilton, Yao Ming and other celebrities and artists have released NFTs through various NFT platforms, once again pushing NFTs to public view.

2021, GameFi

In the middle of the year, the sales of NFT game Axie Infinity skyrocketed. According to CryptoSlam data, as of August 7, the cumulative transaction volume of NFT game project Axie Infinity exceeded 1 billion US dollars, ranking first in the NFT market in terms of transaction volume. The rapid rise of Axie Infinity has driven the rapid development of the entire NFT market sector.

One article to understand NFT past and present life and trading strategies

Development Status of NFT Market

Beginning in February 2021, NFTs began to grow explosively, with a weekly transaction volume exceeding $2 million. As of May, in less than three months, the total market value of large-scale NFT projects increased by as much as 2,000%, and the popularity even increased. Exceeding DeFi, it can be seen from the following set of data:

2.1 Google search volume will explode in 2021.

According to Google Trends, the global search volume of the keywords “NFT” and “Non-Fungible Token” will increase sharply in 2021, which also means that the attention of the NFT ecosystem is rising. This part is converted into supply and demand, and continues to expand the scale of NFT.

2.2 The number of NFT transactions and transaction volume in 2020 increased significantly year-on-year

According to the multi-party macro indicators given by NonFungible to analyze the NFT market trend in the past two years, first, “active wallet” defines the number of NFT smart contracts. Here, the same person can have multiple wallets at the same time; secondly, “buyers” It is defined as the number of wallets that have purchased NFT at least once within a year, and “seller” is defined as the number of wallets that have sold NFT at least once within a year; finally, “USD transaction volume” represents the total transaction volume of NFT.

From the perspective of market supply and demand:

In 2020, the number of buyers increased by 66.94% year-on-year, and the number of sellers increased by 24.7% year-on-year. The growth rate of demand is much greater than the growth rate of supply. This supply and demand pattern is expected to attract more people to enter the market and inject a boost for the continued recovery of the NFT market. The number of active wallets in 2020 increased by 97.09% compared with 2019, and the US dollar transaction volume increased by as much as 299%, mainly because more NFT projects entered the market, driving the double growth of transaction volume and transaction amount;

Following this logic, if more suitable new NFT projects enter the market in the future, the transaction volume/amount will also increase one after another, and the prosperity of the NFT market is also expected to remain stable or further increase.On the whole, the favorable market supply and demand pattern is superimposed on the inflow of funds by injecting more projects into the market in the future, and the development prospects of NFT are promising.

2.3 Total Trading Volume and Trading Platforms

At present, the NFT trading market has gradually formed, and the trading volume is mainly concentrated in the head projects and platforms. Projects such as NBATopShot and CryptoPunks occupy most of the NFT trading volume, while OpenSea and Nifty Gateway are absolutely in their respective market fields. lead. This situation is even more obvious in digital art NFTs, where top artworks and artists account for the vast majority of the turnover, while more NFTs are sold at low prices and are uninterested.

How to get NFT?

One article to understand NFT past and present life and trading strategies

First disassemble the NFT, you can get the most important features:

  • Depends on the blockchain. NFTs must be issued on the blockchain.
  • Some kind of protocol needs to be used, even a self-created protocol.
  • NFTs have known issuers, and although there are a large number of scammers trying to deceive, they can be compared by address
  • NFTs are not necessarily scarce. The circulation of NFTs can theoretically be unlimited. Of course, in current practice, an upper limit is often set.
  • NFTs can be traded in the same way as homogenized tokens, unless restrictions are added to the issuance contract.

Therefore, to get NFT, there are the following ways:

  • Create NFTs by yourself based on existing or self-created NFT protocols, which we will mention below.
  • Participate in the primary market issuance activities conducted by the NFT issuer, purchase with legal currency or cryptocurrency, and obtain NFT.
  • Buy NFTs from other NFT holders through NFT secondary trading markets such as OpenSea, Rarible, and AtomicMarket.
  • Participate in the community marketing activities of the NFT issuer team and get NFT airdrops.

We will introduce these four methods separately.

(1) Create NFT by yourself

Everyone can create NFTs, which brings flexibility. Of course, it also means that the quality of NFTs in the market varies. A large number of NFTs do not have collection or transaction value. This is something that needs to be paid attention to when participating in NFTs.

The NFT trading market also usually provides tools or tutorials to guide users to create their own NFTs, such as Rarible (supporting the ERC1155 protocol), OpenSea, MintBase, etc.

Taking the most common NFT collection as an example, the NFT creation process can be divided into the following steps:

In the early selection stage, choose the blockchain where the NFT is located, the protocol used and the market for transactions, as well as the theme of the NFT, the number to be issued, the audience and the gameplay (crowdfunding, free distribution, or as a mining reward) issued). NFT issuance is also a product creation process.

According to the NFT theme and audience, design corresponding pictures, copywriting, and even multimedia materials.For collectible NFTs, it is more important to consider different types of series, as well as the design and evolutionary gameplay (common, scarce, legendary, epic, etc.) corresponding to the scarcity of collectibles. If it involves in-game NFT assets, you also need to consider different types of NFTs and how to apply them in-game. This step is the most complicated.

You can use online tools to create NFTs, submit pictures, copywriting, scarcity, custom attributes, prices and other information, and then click submit to deploy the NFT contract on the blockchain.

Check and test your own NFT works to see if they can be traded and transferred. If some websites adopt the review system, additional NFT submission operations are required.

Finally, you can create an NFT store in the NFT trading platform to display and sell your own NFTs.

One article to understand NFT past and present life and trading strategies

There will be some differences depending on different NFTs or creation tools, but the general process is as shown above.As mentioned above, exchanges such as Rarible (supporting the ERC1155 protocol), OpenSea, MintBase, and trading platforms such as AtomicHub on the WAX ​​blockchain also provide their own creation tools, and interested readers can explore by themselves.

(2) Participate in the primary market issuance of NFT

Many NFT teams will adopt a time-limited and limited-edition method to conduct the first issuance of NFTs, which is called NFT primary market issuance.

New NFTs usually receive fiat currency or cryptocurrency as a payment method. Participants can get the corresponding NFT or a group of NFTs, and then unpack them, just like the little raccoon collection card they played when they were young. The fun of playing blind boxes.

It is worth reminding that NFT primary market participation is a high-risk activity.

Although many NFT teams will adopt a limited-time method to encourage users to participate in it and create FOMO, and participants in the primary market hope that they can buy and sell in the secondary market to earn the difference.However, the design mechanism of NFT itself is not attractive enough, the influence of the issuer is not large, and the audience is limited, which will affect the depth of participation in the secondary market and future expectations, resulting in the unsold NFT held by participants in the primary market. cause losses.

Like any emerging market, NFTs are full of high-risk transaction categories, and readers need to distinguish for themselves.

(3) Obtaining NFT from the NFT trading market

The third way to get NFT is to buy it from the NFT market. The commonly used NFT trading markets in the Ethereum community are Rarible, OpenSea, SuperRare, Collectables, etc., and the common trading markets on the WAX ​​blockchain are AtomicMarket, Myth.Market and other trading markets.

If you have used any e-commerce website, you will be familiar with how NFTs are traded, because the operations on the NFT trading market are not much different from online shopping.

First, browse and select the NFT you like on the market, and then click to view the details. If it is confirmed, you can click to buy.

I need to say a little more here. Since everyone can create NFTs, and most collectible NFTs only provide pictures, and the addresses of Ethereum are easy to confuse, you must keep your eyes open when participating in NFT transactions.Someone once did an experiment and made a NFT with the same parameters and the same picture on the NFT trading platform, and many users were recruited.

Although the NFT trading platform may impose restrictions on this, it is still necessary to follow the address information officially announced by the NFT project team to avoid buying Li Gui.

(4) Participate in the NFT community airdrop

Although the NFT airdrop can be regarded as a zero-drop, considering the handling fee required to trade or receive NFT in the future, if the handling fee of the wool is more than the value of the NFT wool, it will not be worth the loss.

Usually this kind of news will be published in groups on Twitter, Discord, and Telegram, but domestic WeChat groups will also be involved. If you pay attention to NFT airdrop information, you may wish to pay more attention to these channels.

Epilogue

One article to understand NFT past and present life and trading strategies

NFT and Metaverse are the trend of blockchain. Metaverse is also known as the next-generation network. Tencent, ByteDance, Facebook, and Nvidia have announced their strategies from abroad to China, and regarded the Metaverse as the future of the company. the key to success. But both NFT and Metaverse are still in the initial stage, the application is not mature, the ecology is not perfect, most NFTs will eventually be worthless, and the maturity of the Metaverse requires AR, VR, wearable devices, AI, big data The integration and innovation of other technologies will eventually give birth to countless real Metaverses.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/one-article-to-understand-nft-past-and-present-life-and-trading-strategies/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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