NFTs, or non-fungible tokens, are a cryptocurrency-based digital asset. Each one is unique (non-fungible) and embedded in the blockchain with ownership records – making it cryptocurrency-based (usually held on the Ethereum blockchain) so that ownership of this type of digital asset is backed by a public digital certificate.
NFTs have become very popular in the last few years since they were created in 2014, reaching record highs and making headlines in 2021. That year, celebrities joined in and started creating NFT collections, NFTs broke into the mainstream media with some very prominent sales and world leading auction houses began “dropping” (the marketing term for the release of NFTs) and selling these assets with great success. Some of these sales were in the millions of dollars – with a major sale occuring almost weekly for a time, some of the more notable sales were Beeple’s collage selling for $69.3 million, and Pak’s art piece “Merge” for $91.8 million. 2021 is generally regarded as the peak of the NFT trend (so far).
In 2022, due to the unstable cryptocurrency market, the crash of a major exchange (FTX) and other global trends – the NFT market declined greatly to a fraction of the popularity in 2021.
Currently, in 2023 – NFT are making a comeback and we recognize a very strong trend and a new wave of opportunities coming to fruition. We anticipate unique opportunities in this market that is expected to grow to even greater heights than it reached in 2021.
So, what are NFTs?
One may think of them as baseball cards or comic books, but for digital things like pictures, videos, music files and even tweets. NFTs are in a way collection pieces in the digital realm. Just like a baseball card – they are worth more if they are rare or unique, and just like baseball cards – they can be in a limited edition, or even one-of-a-kind. Each NFT has a unique digital file attached to it and is worth more if it is associated with a famous person or event.
However, when someone buys an NFT, they're not actually buying the digital item itself – the digital item is accessible to anybody as it is saved in the public blockchain. They're buying a certificate that proves they own the NFT. For example, if someone buys an NFT of a funny cat video, they don't actually own the video file itself. Anyone can still watch the video online. But the person who owns the NFT can prove that they're the official owner and can sell it to someone else for more money later on.
What are NFTs good for?
NFTs are a digital asset that is here to stay and is expected to develop in new and interesting way in the future, creating massive and extensive opportunities, and intertwine with our more and more digital lives. It is a new way to support and interact with artists, brands, celebrities and other creators – via sale of digital creations in an open, direct, public marketplace.
For artists, this means a new medium to expand to and create in, finding new ways of artistic expression.
For galleries and auction houses, a new market that is estimated to be $20 Billion worldwide – that is nearly 40% of the art & antiques market – which means incredible opportunities for new sales and interactions with new audiences as well as existing ones.
For investors, investing in technologies, infrastructure, galleries, artists or even buying specific NFTs all hold unique opportunities with massive returns.