We’re here to provide a basic recap on what NFTs are and to catch you up to speed on related updates in 2022.
NFTs, or non-fungible tokens, have continued to make news headlines since we last wrote about them. However, the majority of us still don’t know much — if anything — about them. At the very least, many people continue to have plenty of questions about this emerging form of digital asset. We’re here to provide a basic recap on what NFTs are and to catch you up to speed on related updates in 2022.
Remind me: What is an NFT, anyway?
Wikipedia defines an NFT as a “non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded.” NFTs can vary from images (think digital art) to videos such as sports highlights. Since NFTs are stored on the blockchain, these ledgers serve as proof of digital ownership.
Let’s pause here to discuss what a blockchain is. Think of a blockchain as a digitally, decentralized, public ledger. The public can see whenever an asset, like an NFT or cryptocurrency, changes ownership. Most importantly, the transactions recorded on a blockchain cannot be undone. This means that NFTs and cryptocurrencies cannot be easily laundered if they’re stolen.
Now, let’s get back to NFTs. The next question we’ll tackle is what their impact is. In short, it’s massive: NFTs are transforming the art market.The current market for NFTs is estimated to be around $44 billion. The largest NFT marketplace is OpenSea, which dominates by taking up more than 90% of all NFT trading volume. January 2022 saw its transaction volume on the Ethereum blockchain surpass $4 billion, according to data from Dune Analytics.
Celebrities and companies alike are getting in on the action
Nike has already made a move in the NFT space by selling digital sneakers. Other companies like Macy’s, Adidas, and Gap Inc. have followed suit. Walmart is also reported to be launching its own cryptocurrency and NFTs, and Meta is expected to create an entire NFT marketplace. Clearly, there’s a lot of interest as well as investment in the space.
If you want to get into NFTs yourself, then you essentially have two options. You can purchase a NFT on a market and hope that its value increases to something like the most expensive NFT to date, which is a digital collage of images by Beeple that sold for $69.3 million at a Christie's auction in March 2021. Of course, it’s also possible that your NFT’s value will remain the same or will even decrease.
Your second option would be to create your own digital art and sell it as an NFT collection. That’s what Tom Brady is helping athletes to do with his venture, Autograph. This comes after a NFT collection that he created last year sold out within minutes. To get started on your own NFT collection, I suggest that you read this handy guide from CoinDesk.
Competition related to NFTs looks to be fierce, and as with any new and largely unregulated market, there are plenty of risks and an array of unknowns. Whether you intend to be an NFT owner, investor, or creator, we wish you the best of luck should you choose to get involved in this new and exciting space.