Surviving the period of ridiculous hype that came from Beeple’s $69 million NFT art sale, non-fungible tokens have become a mainstay of the blockchain and crypto universe. Although there are some who invest in NFTs simply to sell them at a higher price as the market heats up, the breadth and complexity of NFTs are increasing by the day, bringing in those new participants who are acquiring NFTs for a range of different reasons.
As a whole new frontier in popular culture:
- Musicians are experimenting with NFTs as a way to regain control from the streaming platforms and give something unique to hardcore fans;
- Digital artists can be rewarded for exciting visual creations;
- Decentralized gaming participants can design, use, and trade NFTs as part of elaborate virtual universes.
We are at the very start of a movement that is full of vitality and exploration, which is incredibly exciting. Want NFTs explained? In this blog post we will look at NFTs’ popularity and how they are being utilized in popular culture. We will also examine some of the projects and NFT marketplaces that are exploding in popularity.
What are NFTs?
In simple terms, NFTs are code on a blockchain representing a particular digital or real-world asset. Non-fungible refers to the asset’s uniqueness; it is one of a kind. In comparison, Bitcoin is a fungible asset, as it can be replaced by another identical Bitcoin.
If you look at an NFT token list, you will see that almost all of them are currently coded into smart contracts built on the Ethereum blockchain, produced according to either the ERC-721 or ERC-1155 token standards. We will not go into the technical aspect of NFTs here, but if you would like to read more on this, we talk in more detail about how NFTs work, and what ERC-721 and ERC-1155 mean in our other recent blog.
Read more – NFTs: a game-changing mechanism for ownership
As mentioned in the introduction, while there is undoubtedly the hype element that is driving high prices for some NFTs, there are many reasons why these digital assets are increasing in popularity.
Status symbol and self-promotion
Like fashion, cars and the latest digital gadgets, owning NFTs has now become a status symbol. This is exemplified by the trend of putting the CryptoPunk you own as your social media profile picture. Even Jay-Z does it. When a buyer makes his Twitter avatar an image from a new N.F.T. club, it’s a sign of allegiance, and also a signal to other buyers in the club to follow them on social media.
This is the obvious one. Many people buy non-fungible tokens so they can resell them at a higher price. It’s not hard to see why, when the top NFTs are going for millions of dollars. Investing can also be with the goal of control over the direction of a project. With NounsDAO, each NFT purchased also acts as a governance token, which can be used to vote in decisions affecting the future of the protocol.
NFTs are not always static collectibles — increasingly they are being created for use in metaverses. As we will see below, different types of NFTs, from characters to weapons, can be designed and used within virtual gaming environments.
Closely linked to the point above, owning an NFT is to become part of an exclusive community. A recent article in the New Yorker puts it best when describing the appeal of Bored Ape Yacht Club (BAYC):
BAYC is a mix of gated online community, stock-shareholding group, and art-appreciation society.
By owning a Bored Ape NFT, you get membership access to the club itself, including to the bathroom, which is a graffiti board that the club’s members can contribute to. This sense of community aims to take the concept of NFTs beyond the idea that it is simply an asset to be flipped. As Matt Galligan, a Bored Ape owner says: “If a club’s only purpose is ‘number go up’, well, that’s kind of lame.”
Proximity to innovative ideas/ public figures
Why do people feel the need to own Jack Dorsey’s first tweet? It is human nature to want to be somewhat associated with popular figures, whether this is for inspiration or reflected glory that can be used as bragging rights. If you have someone you really admire, why wouldn’t you want to have a verifiable and unique connection to them? This sentiment is what some of the top non-fungible tokens tap into.
NFTs and popular culture
NFTs are so exciting because they are capturing cultural trends in almost real-time. Artists, celebrities, sportsmen, and popular memes are all tied up in this ecosystem.
Digital art is one of the main areas where NFTs are prominent. Artists are pleased that they can find a way to monetize their online creations in a straightforward way, while collectors get to verifiably own a piece of the artist’s work. While some scoff at the idea of paying vast sums for an item that can be seen by anybody and easily copied, there are a couple of arguments to refute this:
- We have been conditioned by big tech platforms to believe that we can enjoy journalism, music, art and film for free. This is only a very recent phenomenon. Why shouldn’t we have to pay for work we admire?
- As argued in Time Magazine “For some collectors, if they know the original version of something exists, they’re more likely to crave the “authentic” piece.” Think about the revived trend in Pokémon cards; there are many Charizards, but the little insignia that denotes the 1st edition gives it a current market value close to US$100,000.
- While the headlines are always of eye-watering prices, in fact, many creators sell their NFT artworks for far more reasonable sums.
- Lastly, while people are happy to comment on speculation of over-inflated purchases when selling NFT art, they ignore that the connection between artistic skill, aesthetics, and value was severed in the traditional art market a long time ago. It’s the reason why a piece entitled “Untitled” (1961) by Mark Rothko sold for US$28 million. Through this lens, NFT commentary seems less about artistic merit and more about technophobia.
One blockchain-related development that also should be mentioned here is the idea of fractional ownership. Here, an individual can buy part of a digital or physical artwork they desire. For physical artworks housed in galleries, this could be a way to attract funding from investors. The gallery could retain the artwork, but investors would get some of the proceeds when the artwork is lent to another gallery or sold.
Rock n’ roll artist Jim Heath, better known as Reverend Horton Heat, started performing in the late 70’s, with a long touring career and over 10 studio albums. At age 62, he’s not a person you would expect to be releasing NFT music; however, in March he released a statement via Facebook announcing the release of his new single as an NFT, complete with a PDF of the liner notes. In the comments he wrote: “Just remember, if a band gets 100,000 streams on Spotify they only make $400.”
Many have spoken out about the tiny sums Spotify offer to musicians. For those with millions of plays, Spotify can be lucrative, but for many others, they feel exploited. NFTs are a way for artists and fans to connect, redistributing the share of power back towards the artist, and for this reason, it has become popular.
Through a music NFT market, artists can also offer more, including an NFT digital track, front row concert tickets, meet-and-greets, and more.
Museums / Galleries
Museums and galleries commonly exhibit and preserve past works, but of course, they can be used to curate innovative contemporary creations. Galleries and museums can be created in both digital and physical spaces to house NFTs. In the physical realm, we have news of an NFT museum that is planned for New York. Even the building itself will have significance, serving as an antenna to facilitate decentralized communication between various blockchain networks.
Then there are museums in the metaverse. Digital museums can be even more powerful and inclusive as they are accessible by anyone, anywhere.
Similar to collecting baseball cards, customers can now buy a unique NFT token of their favorite athlete, be it from football, boxing or Formula 1. NBA Top Shot by Dapper Labs is the most well-known in the field, having full endorsement from the NBA and passing over $700 million in sales.
Popular NFT collectibles
As new NFTs (and their creators) are coming into popularity every day, combined with the subjectivity involved, it is impossible to compile a definitive list of the best NFT tokens. While we encourage you to explore widely, here are some of the most famous collectibles to check out.
The undisputed king of NFTs at the moment, CryptoPunks’ popularity continues to skyrocket. Christie’s, founded in the UK in 1766, has spent the better part of 250 years cultivating an image of refinement and snobbery, so it came as a shock to many when the auction house sold a collection of 9 CryptoPunks for US$16.9 million in May. This has not dented CryptoPunks’ credentials, remaining extremely popular; so much so that it has had a record US$900 million month.
Established very recently, Nouns DAO is interesting in that it plans to release just one NFT per day (they are up to Noun 21 at the time of writing), and that each NFT gives the holder governance rights to influence the future direction of the decentralized protocol. Noun 1 went for just a bit under US$2 million.
In terms of collection net worth, Art Blocks sits at #3, behind Axie Infinity and CryptoPunks, according to CoinMarketCap. An Ethereum-based project, Art Blocks is one of the best crypto art sites so far, generating digital artworks through an algorithm on the blockchain. One of the recent works, Fidenza 313, “The Tulip”, was sold for 1,000 ETH ($3.15 million USD at the time of writing).
Similar to CryptoPunks, ApeGang is a series of 10,000 NFTs, algorithmically generated from over 149 possible traits. Although not commanding prices nearly as high as the top NFTs at the moment, the project is quickly gaining followers. Interestingly, included in the roadmap is money to be given to the Rainforest Foundation, a charity that fights against habitat destruction. Is this the start of more social-conscious projects?
Popular NFT universes
While collectibles are a large part of the market, NFTs can be used as assets within a digital world. Here are some of the most popular metaverses.
Alien Worlds is a decentralized metaverse that runs on Ethereum, WAX, and Binance Smart Chain. The unique items used in the games are NFTs that can be bought, earned, and traded in the marketplace. This project is unique in that each world that can be explored is a separate DAO. Theoretically, the different spaces can drastically differ depending on decisions taken by the players. With staking and access to complex financial products, Alien Worlds is, according to Sarojini Mckenna, one of the founders, much more than a play-to-earn vehicle, but an ecosystem “converting people to mass adoption of crypto through strategy and governance”.
Decentraland is a space where different virtual experiences can be built and experienced. Rather than being a passive participant, you are encouraged to create scenes, artwork, challenges, games, applications. Like other decentralized applications, you have decentralized governance, where regular users can have a say in the running of the platform.
In Decentraland you can create and trade NFTs, one of which is LAND, purchased to house your digital galleries, restaurants, or epic fantasy worlds. Users can also mint NFT wearables, which can be worn by your character or sold in the marketplace. Corporations are sensing a flourishing market here, which is why Coca-Cola has launched its own NFT wearables on the platform.
My DeFi Pet
Similar to Axie Infinity, My DeFi Pet, based on Binance Smart Chain and KardiaChain, is a universe where players can collect, breed, trade, and battle fantasy creatures. As of August, there have been 3m+ transactions with expanded features coming in Q3 to add to governance and staking within the virtual universe.
Popular NFT marketplaces
Lastly, we get to some of the popular platforms that are used to trade NFTs.
Rarible is a user-owned marketplace, which rewards those who buy and sell on the platform with RARI governance tokens, which can also be traded and used to bid. With a focus on art, you can find NFTs for the music industry, games, memes, photography and much more.
Housed on Binance Smart Chain, BakerySwap is not just an NFT marketplace but an Automated Money Maker (AMM) and Decentralized Exchange (DEX) as well. Minting your NFTs and putting them up for auction is an easy process. Users can pay in the native BAKE token.
Calling itself the largest NFT marketplace, OpenSea reports having more than $1 billion in transaction volume in August alone. Users can buy and sell all manner of ERC-721 and ERC-1155 assets, which can be minted for free. All the most popular NFTs, such as CryptoPunks, Bored Ape Yacht Club, and Decentraland wearables are available on OpenSea.
Getting started with NFTs
It’s a brave new world, where any physical or digital asset is able to be tokenized. There are even near-Earth space rocks that are being traded as fractionalized NFTs. As with any cultural movement, there are some that are trading on the craze for a quick buck, but as the market matures, people see NFTs as something that could help change and further culture as we know it.
While some may feel threatened, bewildered, or offended that pixelated artwork can be sold for millions of dollars, they may be forgetting it is the job of art in the first place to capture and represent new forms of culture through innovative mediums. There is undeniable value in the fact that NFTs have given people a window into digital youth culture, and greater cause to speculate on what makes something valuable. In a social experiment/ piece of performance art, Natasha Che is doing just that, by buying a physical diamond, creating an NFT of it, and then destroying the diamond. What will happen to the value of the NFT?
If you are looking to create an NFT marketplace, NFT exchange, or conduct a smart contract audit, INC4 is here with a range of NFT development services. With our expertise, you can hit the ground running with a solid platform that wins new customers and conquers competitors. For a free consultation, book a call with one of our knowledgeable specialists.