NFTs are gaining a lot of popularity recently. The NFTs gained massive momentum in 2020, especially in the gaming and art space.
As cryptocurrency is seen as the replacement of fiat currency, the Non-Fungible Tokens are the digital replacement for collectible assets. NFT is proving to have huge potential, but what are NFTs?
What are NFTs?
NFTs, also known as Non-Fungible Tokens, is a type of digital asset. “Non-Fungible” in the NFT means the inability to exchange the assets with another similar one without losing any value.
NFTs are digital tokens that use a blockchain network to record unique transactions. Unlike cryptocurrencies, NFTs are non-fungible and can not be exchanged for other assets.
These unique tokens usually have digital assets tied to them, such as a digital art piece, song, video, gaming asset, etc. NFT is recorded on a distributed ledger like other cryptocurrencies, which means a record of who owns a specific NFT.
Most of the Non-Fungible Tokens nowadays are stored on the Ethereum blockchain network. Ethereum blockchain is the technology behind the cryptocurrency, Ether, and it also supports NFTs. Each token has a unique identifier and an owner. This information can be easily verified.
Some characteristics of NFT include.
Each NFT has a unique information tab, which can be treated as the certificate of authenticity of the NFT. This characteristic of Non-Fungible Tokens gives a feeling of ownership to the buyer.
These are a limited amount of tokens available for a certain NFT, which makes them extremely rare. Even though the developer can develop any amount of tokens, but they are usually limited to a certain amount to ensure rarity.
The NFTs cannot be divided into smaller parts, which makes them inseparable. This forces the buyer to buy the whole amount instead of a small part of the asset.
Why are NFTs gaining popularity?
Similar to a physical collectible or asset, NFTs also have a huge market and increasing popularity. The buyers right now are usually people who understand the technology and have admiration for digital artwork.
The NFTs had such a huge impact in the digital artwork market that the NFT market tripled in 2020 to a staggering value of over $250 million.
Many influential people are jumping into the NFT trend, which causes the gain in popularity. Twitter CEO sold the first for $2.9 million as an NFT. Kevin Roose, a reporter at the New York Times, sold an image from one of his columns as an NFT for $560k.
Another major NFT sale occurred when the Kings of Leon sold the NFT of his newest album for over $2 million. Above given are some of the influential people that made huge profits by accepting the NFT trend.
One of the major reasons for the gain in popularity of the NFT is its applications. Some of the applications of the NFT include gaming, collectibles, and digital assets. Another possible reason for the growth of the NFT market is its adoption in the music industry.
The NFT market is growing exponentially, which means that NFT will soon be a huge part of digital art, as it allows digital content creators to monetize their content.