Don’t buy an NFT until you’ve read this first. It’ll break your heart.
Yeah, that’s right. Keep your crypto wallet to yourself for a few minutes, and read this before even considering purchasing an NFT.
Okay, okay. That may have sounded a bit aggressive, but hear us out:
NFT projects are an incredible opportunity to immerse yourself in the Blockchain and Web3 digital economy, even if you don’t know what Solana, Cardano, or Open Sea Projects are.
Sure — you may or may not have heard about NFTs being JPGs but fancier. Or a new art form. Or a new shiny object that would eventually fade to black.
But none are true. It’s a bit more complicated than that. And we want to bring an unbiased description of what you can expect.
That’s why we’ll explain what NFTs are, what it is all about, and how you can get familiar with them before purchasing something to hop on a hype train.
Let’s begin with the basics then:
Nope. It’s not a new e-Sport.
In simple words, an NFT (Non-Fungible Token) is a digital asset that represents something in the tangible realm. It could be a piece of art, a music album, or even a Real Estate project in the Web3 world. Best part? You can brag about that piece being exclusively yours, as it allows the user to prove, without exception, the ownership of that material.
Quick clarification: By Non-Fungible Token, it means that the token cannot be replaced or duplicated. It’s unique.
Think about Bitcoin (BTC), Ethereum (ETH), Solana (SOL), or Cardano (ADA) — these are all coins, so they could be traded (they are fungible) for each other, and you get the same in return.
That doesn’t happen with an NFT. There’s no unique one. Or, at least, there are minimal samples to create scarcity or uniqueness.
Now, back to what are NFTs — Forbes defines them very well by saying:
“An NFT is a digital asset representing real-world objects like art, music, in-game items, and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. The market for NFTs was worth a staggering $41 billion in 2021 alone, an amount that is approaching the total value of the entire global fine art market. NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes. “Essentially, NFTs create digital scarcity,” says Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures.”
To explain the hype, we must go back in time to explore where it all began.
Zero works as our own DeLorean for this matter, saying that “on May 3rd, 2014, digital artist Kevin McCoy minted the first-known NFT ‘Quantum’ on the Namecoin blockchain. ‘Quantum’ is a digital image of a pixelated octagon that hypnotically changes colour and pulsates in a manner reminiscent of an octopus.”
Then, a couple of visionaries, Devin Finzer and Alex Atallah, founded Open Sea, now the world’s biggest NFT marketplace, to list projects online.
This was the beginning of the Mainstream Era of Non-Fungible Tokens, in which projects like CryptoPunks, CryptoKitties, and even Axie Infinity gained popularity as crypto-based video games, supporting that expansion that now rules to this day.
2021 could be considered the year of its final explosion in the market, supported by the involvement of big names in the Art industry like Christie’s and Sotheby’s, who began to sell NFTs.
To set an example, this helped digital artist Beeple sell a token for a record $69 million at a Christie’s auction. Talking about visionaries.
Fast forward to 2022; even the likes of Eminem, Justin Bieber, Snoop Dogg, or Neymar Jr. are NFT owners at different scales.
But now, let’s talk numbers.
In 2020 alone, long before Web3 was a thing, there was a reported $82 million in sales from Non-Fungible Token projects, setting the foundation for what was coming next.
2021 wasn’t the exception. There was a 21,000% increase in profits from NFTs projects:
17,6 billion dollars. And that was last year.
What’s coming next? Time will tell.
We CAN say that NFT collectors sent over 37 billion dollars to the marketplace in 2022, and there are five months ahead of us by the time we wrote this post.
So, 2022 will be a record-breaking year for the Web3, NFT, and Blockchain industries. That’s out of the question.
In many ways. That’s the short of it.
The long of it, instead, compounds the involvement of several industries, digital economies, and business models — like Influencer Marketing, Web3, and Blockchain working together.
Odd combination? Could be. But Dennie James from the Forbes Technology Council shares an exciting idea about how these three factors could end up empowering each other:
“The market for Web3 digital products is increasing, and it is difficult for people to resist. As a result, the number of creators, including social media influencers, experimenting with Web3 digital products has risen. Although several creators have already built multimillion-dollar brands through such digital effects, many creators continue to struggle. The market is ripe for innovation, and it is sizable, boasting more than 50 million creators. With the power of Web3, creators can reap enormous benefits from NFTs.
It’s 2022, and we’ve all heard of Web3 and NFTs. However, in this new digital era, how can creators effectively leverage NFTs?
Here are three ways:
1. Convert existing content to NFTs.
2. Create unique and new content for NFTs.
3. Link NFTs with other products and services.”
If you ask us, it’s spot on — NFT, Open Sea, Web3, and the Blockchain industry, in general, could potentially boost not only the Influencer Marketing business model but also Design, Marketing, and even Real Estate.
How? Through the use of smart contracts to speed up negotiations and execution, for example.
Nonetheless, one aspect that cannot be ignored is that Web3’s concept and principles could take NFTs to the moon based on the trustless approach to transactions and new ways to generate profits.
For example, the appeal of NFTs critically relies on community building for asset holders, offering perks such as:
Just like Nike, Taco Bell, and Coca-Cola have done, they’ve immersed themselves in this booming digital economy, pushing other relevant actors to do the same to avoid getting left behind. FOMO is all over the place, but massive news for Web3, Crypto, and NFTs in general.
If there’s anything the Web3 and NFT thunderbolt rise has taught us, it is that creativity and simplicity sparks excellence.
However, there are standard procedures to tie utility to NFTs — and the core value here is connecting your new creation to a real-life use case scenario.
Not just creating a Non-Fungible Token, listing it on Open Sea, and sitting hoping for the best.
For example, Gary Vee lays out some core standards for adding utility to NFT projects:
How You Can Turn an NFT Into a Real-World Utility for Your Business
Now, back to adding utility, there are three great ways to get started.
Legit Method lists them below:
Let’s explain each one of these right here:
First, when talking about redeemability, we mean making these NFT projects some sort of good — either physical or digital. You can add a benefit from purchasing that NFT, such as shipping a physical product immediately after they buy.
The second is to find a real-world necessity and connect it to the NFT universe. For example, in the stock market — when someone buys a share, they are supposed to get a percentage of the value of that share they are holding. This could apply to your NFT project by offering a portion of that dividend to your asset holders. That’s utility at its finest.
And finally, you can make that digital asset open gates to other benefits — BTC consulting, Ethereum projects, or Solana-based gaming. The possibilities are endless.
See, when someone buys an NFT receives exclusive access to pre-sales of future collections — which automatically adds utility to the project.
NFTs, to be considered as such, must have three core characteristics. CG Modern Art says it best below:
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Until next time!
- The Spark + Mint Team