NFTs, are digital assets that exist on a blockchain, representing unique items such as art, music, or collectibles. But over time, their use cases have grown out of these typical representations. NFTs are now widely used in gaming, decentralized finance, and even in investing instruments.
But how did NFTs come onto the scene? Let’s explore the entire process in detail.
Understanding NFTs
Unlike cryptocurrencies, which are fungible and interchangeable, NFTs have a unique identification code and metadata that sets them apart from other tokens. These digital tokens are now used to tokenize real-world assets to establish ownership, including digital collectibles, artwork, and financial assets in DeFi.
The Emergence of NFTs
Colored Coins, the first NFTs, were introduced on the Bitcoin blockchain in 2012. Although the term “colored coins” is now obscure, the concept laid the groundwork for NFTs. The first non-fungible token, Quantum, was created by digital artist Kevin McCoy in 2014 on the NameCoin blockchain. However, it wasn’t sold until years later, eventually fetching $1.47 million at a Sotheby auction.
Spells of Genesis (2015), Etheria (2015), and Rare Pepe (2016) were among the early NFT collections. While they didn’t gain much traction initially, they paved the way for popular NFT projects that we know today.
NFT Evolution
The history of NFTs doesn’t end here. Now, more projects are evolving and more NFT art pieces are being created.
The following popular NFT projects are the following ones.
CryptoPunks, 2017
CryptoPunks was launched by Matt Hall and John Watkinson in 2017 as one of the first collections that represent generative art. It inspired many subsequent similar collections such as Bored Ape Yacht Club. Considering this, we can say that CryptoPunks is the collection that has impacted the NFT markets immensely.
The main feature of this NFT art is that each NFT is generated algorithmically and is 100% unique. For now, CryptoPunks are among the top traded and expensive NFT art collections, and their price may climb to millions of USD.
CryptoKitties, 2017
CryptoKitties is one of the first NFT collections built on the Ethereum blockchain by Dapper Labs. And it was the first digital art project that attracted the attention of mass media.
In the world of technology, CryptoKitties played their role, too. They inspired the ERC-721, a standard that allows building your Kitties on blockchains compatible with the Ethereum virtual machine.
The project enables you to breed, raise, and trade virtual cats each of them is unique and has a different rarity level.
Axie Infinity, 2018
Axie Infinity is one of the first blockchain-based games that use NFTs. Its popularity has grown immensely in the past years and continues growing. In the game, players breed, raise, sell, and buy Axies — creatures that are used for the game: battling, exploring, building, and other activities.
These NFTs can be exchanged, bought, and sold on NFT marketplaces, including the platform’s NFT marketplace, and bring profit to their owners.
This is the first game that gave NFT ownership to players and enabled people to earn on their gaming efforts. There is nothing surprising that now, Axie Infinity is highly valued in the NFT world.
Decentraland, 2020
This browser-based NFT game enables users to own, buy and sell virtual real estate. Along with land plots and buildings, everything can be sold in this digital space. Avatars, wearables, and other items — all can be traded on NFT marketplaces for profit.
Decentraland is also considered one of the earliest metaverses which increases its value.
NBA Top Shot, 2020
NBA Top Shot is an NFT collection created by basketball fans to incorporate in this way the most memorable events in the life of basketball players. Thanks to the NBA brand’s popularity, this collection helped to drive mainstream recognition for blockchain technology and NFT technology.
All the NBA Top Shot collectibles can be purchased on the proprietary NFT marketplace.
Art Blocks, 2020
This collection made generative art even more popular. Art Blocks uses scripts to generate unique works. Even though it sounds simple but the project founders take care of the quality of each generated digital art piece to provide the best generative artworks.
Bored Ape Yacht Club, 2021
This project is known for cementing NFT as a pop-culture phenomenon. It is among the most valued NFT projects also money-wise. Many celebrities own Apes, and having one is considered to be cool.
Current status of the NFT space
Earlier, NFT art pieces were not valued as they shall be. For example, in 2019, an artist named Coldie sold an NFT for $1,000, and it was an event of such importance that collectors dubbed Codie “Kind Codie.”
Now though, things have changed. NFTs are sometimes sold for millions of dollars. So, the creations by Pak, Beeple, and a couple of other artists are known to create the most expensive NFTs that were bought for millions of dollars.
The rise in NFT sales in 2021 was incredible. NFT exchanges were flourishing, the number of NFT transactions was growing, and the popular NFT collections were available for big money.
So, the cost of one Ape has soared immensely. Initially, an NFT minted recently was worth about $300, but in 2021, the price of a Golden Ape soared to millions of dollars, in additionally to the expenses needed to mint NFTs
Popular NFT marketplaces
Many marketplaces to trade NFTs were developed, from the simplest ones, such as OpenSea, to more advanced auction options, such as Nifty Gateway.
OpenSea
OpenSea was launched in 2017 and is the first platform that enabled trading NFTs that live on the Ethereum blockchain. This platform supports a number of blockchains. It focuses on art, music, collectibles, trading cards, and similar types of NFTs.
OpenSea is considered the mainstream platform for those who are just starting their way in the world of NFTs. But before starting using it, one shall consider that for every deal, the service charges a 2.5% commission which may be something too high if we speak about thousands of dollars.
Also, security breaches and allegations of insider trading are the details that may impact your decision to choose a marketplace.
Magic Eden
Magic Eden was launched in 2021, and since then, it has managed to become the most popular marketplace for Solana-based non-fungible tokens. This is the right place for those who are interested in new tokens.
Rarible
This marketplace was launched in 2020 and supported all popular blockchains. This marketplace is the best option for collectors and is focused on art, collectibles, gaming, and virtual worlds.
The platform uses its token RARI which enables its holders to vote on what tokens to list and decide on how the service is going to develop.
Nifty Gateway
It is a place typically used by artists to sell their works. It focuses on collectibles, art, and gaming, among other NFT types. This platform works only with Ethereum-based NFTs.
The platform charges a 10% fee for each transaction which may be an obstacle to those who are just starting their way in the NFT world.
reNFT Marketplace
The rapid growth of the metaverse and Web3 games has been particularly instrumental in helping the NFT market evolve and mature. The key takeaway from this trend is that NFT ownership and use-cases are likely to be on an upward trajectory over the foreseeable future. And as you have probably already noticed, NFT rental marketplaces have a big role to play in it.
Enter reNFT… Marketplace, a platform where you will find all kinds of NFTs including in-game assets, digital art, collectibles, and more. reNFT is the leading rentals protocol and its contract enforces the terms of the rental agreement between the lender and the borrower, making the whole process transparent, decentralized, and independent of third parties.
NFT art market during the crypto winter
When the crypto winter started, the NFT scene didn’t change much at first. The majority of digital assets existed on the Ethereum blockchain, the Bitcoin blockchain was abandoned by digital artists, and NFT holders were still confident in their investments.
The first half of 2022 was marked by a slow decline in the sales volume of the created NFTs but still, the market stayed strong.
But in September, the trading volume on OpenSea collapsed by 99% compared to May of the same year (from $405M to less than $10M). But even though the sales dropped, the Web3 community has always been optimistic regarding NFTs. Now in April 2023, sales volumes are slowly recovering and picking up the pace.
NFT digital market now and beyond
Despite a decline in sales, NFTs have remained in the spotlight, and thanks to the support of celebrities, the NFT’s popularity is growing. Big video game publishers, artists, ticketing platforms, luxury brands, among many other verticals are currently testing and launching their own NFT collections. The future of NFTs is expected to expand beyond gaming, music and art and into various sectors.
So, what does the future hold for digital art and other NFT types?
One thing stays clear: NFTs are here to stay. Check out our previous article where we explore the potential of NFTs and dive into several use cases.
As security, scalability, and other issues are addressed, NFTs have the potential to revolutionize financial, educational, legal, and art systems. With unlimited growth potential, NFTs could impact various aspects of life in the future.