Non-Fungible Tokens or NFTs as they are colloquially known are the newest trend to come out of the blockchain sphere. NFTs are one-of-a-kind digital certificates that prove ownership of a digital asset. The authenticity of such assets are verified through the blockchain mechanism giving way to a whole new realm of digital collectables. Blockchain’s recent innovation is raising some eyebrows, as the value of NFTs has grown significantly over the last few years. According to data presented by TradingPlatforms.com, the market cap of NFTs increased by 138.8% YoY in 2020 at a CAGR of 187.28% from 2018-2020.
In economic jargon, a non-fungible asset is a non-tradeable asset and is considered one-of-a-kind. In essence, owning an NFT means you own an original of whatever digital asset. While the digital asset can be replicated many times by anyone, only the owner of the NFT for that asset is the true single owner of that asset. The authenticity of each NFT is verified by the Blockchain ledger mechanism.
NFTs are a relatively new trend in the blockchain world, with many pinpointing its origins to 2014’s Colored Coins. Since then the digital tokens have grown in prominence with recent eye-catching transactions worth millions of dollars. According to a report by Nonfungible.com the market capitalization of NFTs has exploded in the last few years. In 2018 the market cap of NFTs was calculated at just under $41M. By 2020 that number had risen to just over $338M for a CAGR of 187.28% from 2018-2020.
NFTs can be any digital asset but can be broken down into 6 major categories; Metaverses, Art, Gaming, Sport, Collectibles and Utility. Revenue from NFTs in 2020 amounted to an estimated $55M. Metaverses had the biggest share of this revenue with a total of $14.02M or 25% of the total. In terms of the number of NFT transactions, the gaming category had the largest in 2020 with almost 630,000 transactions or 47% of all NFT transactions in 2020.
The topic of NFTs was recently trending because of some notable transactions. Notable in their nature because of their price or for their significance. As of March 16, 2021, the largest NFT sale was for a digital art titled Beeple Everyday: The First 500 Days which was sold for over $69M on March 11 2021 at auction by the historic Christies Auction House.
Jack Dorsey, the founder of Twitter, recently auctioned off the platform’s first-ever tweet made by himself from 2006 which reads “Just setting up my twttr.” The NFT was on the market for 2 weeks and sold for just under $3M on March 22, 2021.
