CRYPTO NEWS AGREGATOR
Wed, Mar 17, 2021 12:54 PM by Eugene Chum

How Non-fungible Tokens Save Works of Art on Blockchain

Coinjoy NFT

Non-fungible tokens (NFTs) are becoming an increasingly popular asset class. In this article, you will learn about their technological aspects, their history, and what problems they solve. We are also going to talk about several use cases that have made these tokens hugely popular and finish off telling about celebrities who turned pro-NFT and surprised the world with NFTs that sold for tens and hundreds of thousands of U.S. dollars worth of cryptocurrency.

NFT Technology and Ethereum NFT Standards

Non-fungible tokens are quite like fungible digital tokens: they run on blockchains, they can be transferred, and the history of their transfers is written into a blockchain. Their main distinction is their uniqueness. For example, Ether is a fungible token, meaning that they are all the same; therefore, all Ethers have the same value and are mutually interchangeable. Non-fungible tokens are contrary to that, each of NFTs originating from a single smart contract is unique. This makes them a good proof of authenticity for digital assets that include works of art and in-game collectibles in online video games.

Non-fungible tokens are interoperable and can be transferred across all ecosystems which support the underlying blockchain. This feature allows to make environment-specific goods like in-game items tradable on large marketplaces like Ebay. This increases the liquidity of environment-specific goods, which would otherwise be limited to their original environment and have less demand. This lets non-fungible tokens embrace a larger audience that may include investors who might be willing to buy the tokens for financial profit. For this reason, game developers are some of the biggest winners of non-fungible tokens.

The most popular NFT standard is the Ethereum ERC-721. It allows programmers to create non-fungible tokens with unique identifiers on each token. The most popular NFT projects, including CryptoKitties, have been launched using this standard. The tokens of this standard only represent a single asset.

Another popular Ethereum NFT standard is ERC-1155. It is different from ERC-721 in that it allows to transfer multiple assets with a single token. While the tokens of the ERC-1155 standard allow to prove authenticity, they do not allow to track the history of transfers of the individual assets they represent. For this reason, ERC-1155 tokens are also called semi-fungible.

The History of NFTs

The first NFT platform was launched in 2015 on top of the Bitcoin blockchain as an Internet protocol; it was called Counterparty. There were numerous projects that were launched on Counterparty: Spells of Genesis, Rare Pepes and Force of Will. Spells of Genesis started on Counterparty in 2015 and successfully launched their own crowdfunding campaign through their own BitCrystals digital token. It also lays the foundation for meme trading. In October 2016, Rare Pepes, a meme project featuring a frog was launched on Counterparty and started to gain traction fast, which was proof of the demand for unique digital assets on blockchains. In March 2017, Rare Pepes migrated onto the Ethereum blockchain.

2017 was the rise of non-fungible tokens with the launch of the Ethereum ERC-721 standard in September 2017. It offered a whole set of sophisticated metadata for non-fungible tokens, including unique names, which allowed non-fungible tokens to represent highly sophisticated articles. 

CryptoPunks and CryptoKitties were launched in July 2017. It is a meme-like project with 10,000 unique graphic characters. All the characters were quickly sold and continued being traded on the open market. CryptoKitties was the first NFT launched on ERC-721 by Dapper Labs in October 2017. It is a blockchain game in which people breed virtual cats and can sell them afterwards; some have been sold for around $100,000 worth of Ether. 

CryptoKitties became so popular at the time that it congested the Ethereum blockchain so much that it could not efficiently process all the transactions kept in its mempool. It made the problem of Ethereum’s throughput limit for the first time look really acute.

Celebrities and NFTs

The potential of NFTs to represent digital assets was quickly realised by celebrities and artists from painters to musicians. NFTs have been used to sell digital artworks and musical works. Cris Torres, who created the Nyan Cat video in 2011, sold a GIF replica of it ten years later in February 2021 for $590,000 worth of Ether. He shortly afterwards followed up on it with a Dogecoin-inspired version of Nyan Cat that sold for 45 ETH, roughly $69,000 at the purchase price. Logan Paul also known as the second most hated person on the Internet has earned $504,990 on NFTs that represented pokemon cards with anime versions of himself.

Grimes, a singer and the girlfriend of Elon Musk, sold a collection of 10 artworks called ‘War Nymph’ via NFTs on the NFT marketplace Nifty Gateway for a total of $5.8 million on March 1. One of the artworks with a vision of a winged baby with a sword flying around the Mars traded off for $300,000 within 10 minutes and shortly relisted for 2.5 million under the title ‘Newborn 2’.  The last piece called ‘The Death of the Old’ was sold for almost $400,000, and the singer said that she named it after her song demo ‘Anhedonia’.

Other celebrities have minted NFTs for charity and commercial purposes. Lindsay Lohan has sold her Ethereum-based NFT supposedly referencing Bitcoin Lightning Network on Rarible for 10 Wrapped ETH, which was resold for 33 ETH to ‘Mr Lohan’ an hour later. Mark Cuban, the owner of Dallas Mavericks, sold a motivational quote via an NFT for $1,700 worth of cryptocurrency for charity in early March 2021. And Mike Shinoda, a permanent Linkin Park guitarist and MC, raised $33,000 for the students of the Arts Center College of Design via selling his NFT. And the rock band Kings of Leon has sold NFTs representing digital copies of their latest album ‘When You See Yourself’ for as much as $2 million.

Conclusion

Non-fungible have risen to the top of digital assets since just 2016, and their popularity is growing fast. Interoperability, which makes NFTs so practical in various art and business areas, is their biggest fundamental asset. They have seen a continuously growing demand since 2017, and more public attention will be directed at NFTs if influential personas continue to use NFTs for purposes ranging from charity to commerce. Therefore, NFTs may become the next big thing in the digital-asset space and lead the mainstream adoption of digital currencies in the future.


The content of this article is for informational purposes only and should not be construed as investment advice. We ask you to do your research.

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