NFTs, What Are They And Why Should You Care?

Hello folks, welcome to my first Hxro Labs blog! My name is Franklin Fitch. I’ve worked in crypto for about four years now professionally, and am currently running marketing and curation for Blockparty, a premium NFT marketplace.

This blog will be semi-regular, bi-weekly at first, comprising my thoughts on NFTs. Particularly, foundational knowledge for new participants in the market, the latest in market trends, and evaluation of possible future use cases.

 

So, what are NFTs? 

If you’re a crypto person you have almost certainly heard the term in the last few months. You might have even if you’re not.

NFT stands for Non-Fungible Token. Ok, so what does that mean? Fungible is the operative word here. Things like dollars, bitcoins, gold ounces are fungible. Each unit is the same as the other. So if I send you one dollar and you send me one dollar we’re even, since every dollar is the same unit of currency. For more on the definition of fungibility and its significance to the definition of currencies, read here.

Implicitly non-fungible tokens are not like this. Each one is unique. But why would someone want a token that is totally unique? Well, the use case for NFTs is different from the use case for dollars, or bitcoins, or gold. The point of making unique non-fungible tokens is to identify, authenticate, and track unique digital or physical goods.

These NFTs are most commonly ‘minted’ (created) on the Ethereum blockchain. They are classified as ERC-721 as opposed to ERC-20, the Ethereum fungible token protocol. Other prominent blockchains for NFT minting are WAX, Enjin (as ERC 1155) and FLOW by Dapper Labs. The blockchain component of NFTs enables open systems, so assets aren’t tied only to the websites they are created on.

Let’s stick with digital goods for now, as it’s easier to see the value of NFTs in that context. Let’s say I made a piece of digital art. A .jpeg, .png, or .mov. Take your pick, the type of file isn’t particularly important in this example. What would prevent you from copying that file if i shared it publicly, and claiming it was yours? Nothing really. That is, unless I attach an NFT to it. That NFT can show whether a piece was created by me, or by someone else, and it can show all of the previous owners of that NFT so I can see it’s path of ownership, a term called provenance in the legacy art world.

Some of you clever readers are probably realizing, the NFT in this example isn’t a ‘perfect’ solution for this type of authenticity verification. I could feasibly copy the file, mint another NFT token and attach it, and sell it as my own. And it would probably take days, possibly even weeks before someone realizes it. On open platforms, this exploit is possible. And this certainly happens, there have been a good handful of examples of this kind of theft in the last few months. But, as we all know, perfect systems are rare. Curation prevents this sort of thing from happening, but more on that later. 

In the previous example, now that I’ve established defensible authenticity and a chain of ownership (provenance) for my digital art piece, I can go ahead and sell it. That’s where NFT markets come in. Markets like my company, Blockparty, and others like SuperRare, Nifty Gateway, Makersplace, Known Origin, and Rarible all sell NFTs. The total volume and activity on the market has been on a massive uptrend. Below are some data samples from Messari, who have been publishing great NFT market data lately. 

 

They reached a local zenith of awareness in the crypto community during the month of September, with many prominent names publishing bullish theses on them. 

As a final note on what NFTs are, they represent a massive step forward for ownership, transaction, and provenance in digital goods. They effectively, although not perfectly, create a legitimate market for digital art, collectibles, and other miscellaneous virtual assets, like VR world land parcels, or video game items.

 

Why should you care about NFTs?

So we’ve got the basics out of the way. Admittedly that was a quick summary of things, but in my opinion the core concept of NFTs isn’t that complicated, which is nice. 

It can get quite interesting though, when we look at all the many ways NFTs as a core concept can be used. But first, let’s look at some of the big players in the industry, to make it clear that this is a big deal and only going to get bigger.

Trevor Jones – Creator of the now famous ‘Picasso’s bull’ art series, which have set records, selling at tens of thousands of dollars USD in both primary and secondary sale across the set.

Fewocious – 17 year old artist who is working with Pomp, smashing sales numbers as well, regularly selling pieces over 10k.

RAC – Major recording artist, active crypto enthusiast, has topped charts in music and in NFT sales.

Justin Blau – Global headlining DJ and crypto advisor Justin Blau (also music director at Blockparty) has sold multiple pieces over 20,000 dollars on various platforms.

MF DOOM – Your favorite rappers favorite rapper. A living legend. Making augmented reality compatible MF DOOM masks.

Christie’s auction house – One of the two oldest and highest volume art auction houses in the world, alongside Sotheby’s. Has sold multiple NFTs at their auctions, each fetching over 100k USD.

The NBA – Yep, that NBA. The National Basketball Association is making NFTs via their partnership with Dapper Labs, makers of crypto kitties and Flow Blockchain. Last I heard their first batch did 1.2 mil in sales with 900 beta users in a matter of days. 

I could go on and on, but I just wanted to give a flavor of what’s happening. Major individuals and organizations are already in NFTs, and MANY more are coming. I promise you that. These parties are excited about the prospect of being able to generate digital revenue, and monetize their existing banks of content. Every day the names doing NFTs get bigger and bigger.

Imagine when someone like LeBron James (74 million Instagram followers) monetizes his fanbase with NFTs. The potential for massive and very rapid global awareness, driven by celebrities, is truly mind-boggling. For the artists, athletes, and brands the value proposition is clear. Monetize what you’ve got. Make not just physical collectibles, but legitimate digital ones. These massive players will be the catalyst that rockets NFTs to the mainstream.

My thesis on NFTs is that they will be global as a means to create, authenticate, and trade digital collectibles and art within the next few years. That’s how quick it’s going to be. For the reasons I just mentioned. A few big names (they’re already getting bigger) and this nut cracks wide open. 

So why should you care? Because this is going to be a foundational way to transact digital items. It’s not up for debate anymore. The cake is already baked. Within six months we are looking at a probable explosion of interest in NFTs, as the names get bigger, the other global sports organizations finalize deals, and the technology improves. Sky’s the limit from there.

Hopefully, this first blog post got you interested. The following ones will go deeper into the market, exploring it in greater depth. 

You can follow me on Twitter here for more in the meantime!

Previous ArticleNext Article
bitcoin
Bitcoin (BTC) $ 40,050.00
ethereum
Ethereum (ETH) $ 2,428.78
tether
Tether (USDT) $ 0.997652
binance-coin
Binance Coin (BNB) $ 322.45
cardano
Cardano (ADA) $ 1.31
xrp
XRP (XRP) $ 0.756051
dogecoin
Dogecoin (DOGE) $ 0.212876
usd-coin
USD Coin (USDC) $ 1.00
polkadot
Polkadot (DOT) $ 15.46
binance-usd
Binance USD (BUSD) $ 1.00