Since the beginning of the year, the monthly trading volume of NFTs has not escaped the downward trend and has fallen by 97%. After reaching a record high in January at $17 billion, it rose to $466 million by the end of September, according to data from Dune Analytics. The decline in NFT volume comes with a general downward trend across the crypto market, which has seen $2 trillion in capitalization evaporate since the start of the year.
While some see NFTs as a major technological revolution to come, others see it as a passing fad. If the NFTs of some collections have been resold for several million dollars, many people do not understand why some pay colossal sums for an image that they can simply save on their computer.
But what is it really? What does an NFT correspond to and serve?
What is an NFT?
NFT means non-volatile token in French. Unlike a fungible commodity such as bitcoin, gold or a €5 note that will always have the same value, a non-fungible commodity such as a work of art, real estate, a collectible card or a piece of jewelery is unique and its value it will depend. in the buyer’s assessment of it.
Therefore, NFTs are non-fungible assets that use the blockchain and precisely smart contracts to guarantee the authenticity of a work and a deed of ownership. It is a revolution because being based on the blockchain allows this type of asset to be easily resold, in a decentralized and completely transparent way, because transactions are traceable in this technology.
What are the different types of NFTs?
If you’re still struggling to understand how this technology can be revolutionary, here are eight areas where NFTs can be an undeniable growth accelerator for creators and brands alike:
- Art and music: this is the most classic form of NFT today. An artist may decide to broadcast his work digitally, selling his paintings or his pieces of music directly to his fans via the blockchain.
- Video games and the metaverse: this is probably the market where NFTs will have the biggest impact. If you play video games, you’re probably already familiar with buying skins and accessories for your characters. With NFTs, you will be able to resell them to another person when you decide to stop playing games or change your style.
- Trading Cards: You play Magic or Yu-Gi-Oh! ? Collect Pokemon or Panini cards? Imagine being able to do all of this digitally and make sure you can track everything on the blockchain? With NFTs, it is possible.
- Certification of diplomas/driving licenses: the technology used by NFTs can also be used by schools or administrations to certify and guarantee the authenticity of certain documents.
- Domain names: it has also been possible for several years to register your domain name directly on the blockchain of your choice.
- Event Tickets: In addition to going to a festival, imagine being able to hold an NFT that gives you access to events and other exclusive benefits.
- Loyalty Program: NFTs are also a great way to build customer loyalty. By offering NFTs that prove a customer’s loyalty, brands have a new tool to create and maintain a community.
- Soul-bound tokens, or decentralized identity: suggested in May 2022 by Vitalik Buterin, soul-bound tokens are immutable, non-tradable tokens that represent your “digital soul”. Still in the concept stage, this technology could be the next big evolution in the world of NFTs.
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Brands and artists who love NFT
With all these use cases and a potential multi-billion dollar market, it’s no wonder that more and more brands and artists are getting into NFT. This is one of the main reasons that has contributed to the rapid development of this technology in recent years.
Among the brands that have violated NFT, we find:
- sports ones, like Nike who bought the studio of RTFKT in December 2021 and Adidas with its collection “Into the Metaverse” which collected 23.5 million dollars in a few hours;
- luxury ones, with Dolce Gabbana or LVMH which, through Tiffany, issued 250 NFT;
- beverage and food brands such as Coca-Cola, McDonald’s, Pepsi or Starbucks;
- video game publishers, such as Epic Games or Ubisoft
Many artists around the world also seem to be attracted to the concept of NFTs. Whether in France, with Booba or Sofiane Pamart, or in the United States with Snoop Dogg and Steve Aoki to name a few, many artists use this technology to strengthen their connection with their community and get additional income.
How to buy an NFT?
Various blockchains have seen dedicated NFT markets emerge on their technology infrastructure. The two main ones are The open sea in Ethereum or MagicEden in Solana, but today there are about ten different markets.
To buy an NFT on the secondary market, all you have to do is go to a dedicated market for NFTs, connect your crypto wallet, such as Metamask or Phantom, and then select the project you want to buy.
If you don’t want to buy in the secondary market, but are among the first NFT holders of a project, you will need to follow the news of the project in question on social networks to know the official “mint” date. Mint is a term used by the industry to advertise the initiation and creation of NFTs. This is when NFTs are stored on the blockchain forever.
You can also get a share of a collection of NFTs by directly purchasing the digital token backed by the project. This method will give you exposure to this type of asset and allow you to benefit from a more liquid investment.
Remember that everyone is able to create NFT. Even if you don’t code the contract yourself, you can easily upload images, videos or other files to marketplaces like Opensea to put them up for sale.
There are thousands of NFT projects today. Therefore it is difficult to be able to follow them all without getting lost. As with the Stock Exchange, there are interesting projects that you can dwell on in more detail. For example, if you are interested in “blue chip” NFTs, already reaching several million dollars in volume and having a strong community, you can take a look at projects such as Bored monkey, Crypto punks Where X-clone. If you prefer to keep trading cards in the form of NFTs, there are several projects: football fans can start Sororitythose who prefer basketball in NBA Top Shot and fans of strategy games Cross the ages.
On the other hand, if you want to take the first steps in the metaverse, it is possible to buy virtual land in the form of NFT in games like The Sandbox Where Decentraland. Or you can try earning rewards with games like Play to Win. Axie Infinity Where Aurora.
If among all these categories, you still haven’t found what you are looking for, you can turn to more atypical projects such as openedwhich allows you to earn rewards in the form of tokens by walking or running, or register your domain name on ethereum with ENS domain.
While NFTs are likely to play a crucial role in the future and grow more and more in our daily lives, the euphoria of 2021 is long gone and projects often remain illiquid despite the headlines. Before buying your first NFT, ask yourself if this type of asset matches your investor profile, be careful and always do your research on the project behind it and the team behind it.
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