Haven’t heard something crazy or abstract in a while? How about the digital monkey icons (familiar as appes) that reach woozy values on the crypto market? Not crazy enough? What if you just read that they are sold out and that today they go for over $400.000? Those icons are known as NFT.
After reading this you must be asking yourself what the hell is an NFT, what is it for, why is it so valuable and whether can you benefit from it. In this article, we’ll make sure to briefly explain the world of NFT and its highlights.
The technologies and systems that support NFTs are alarmingly complex, and every piece of infrastructure comes with a ton of jargon.
Understanding non-fungible tokens (NFTs) isn’t that simple so before we go into the deep let’s start with the basics.
NFT stands for Non-Fungible Tokens. It is a definition of a unique digital item and it can represent pretty much anything in the digital work, a song, tickets to an event, an artwork, a video, a book, a gif, etc. This digital item can not be replaced or fungible with any other digital good. Similar to bitcoin, it’s encrypted with the author’s signature. It’s kind of like buying original art.
Let’s say that you buy a Rolex but the watch will probably never be shipped to you, it will be stored on a digital ledger called the blockchain. But what is the purpose of buying an item that you will never receive? It’s simple, the watch is a collector’s item and it’s a question of prestige in digital communities which member you become once you buy your own NFT.
NFTs can be bought and sold through the specialized marketplaces from which OpenSea is the most popular, along with Binance, Rarible, NBA Top Shot, and many others. Purchased digital items are stored in digital wallets like MetaMask, and records of them are permanently stored on the blockchain. They cannot be changed or stolen meaning that NFTs are quite safe but there is always a risk of being hacked.
It is pretty obvious that metaverse, Web 3, and NFT are shaping the new digital era. The biggest Brands such as Ray-Ban, Loius Vitton, Nike, NBA, and Lamborghini have recently joined the NFT space and are looking at how could they use the technology to serve and engage with their customers. From the recent news, Nike has become the world’s highest earning Brand from NFT sales.
NFT sales fell by around 75% from May to June 2022, according to data from OpenSea.
Ok, we mentioned one of the most successful crypto art assets but there are also some examples of how the celebrity NFT adoption failed. Probably each of you who read this article was moving your hips in the rhythm of Chris Brown’s music, but when talking about his recently launched NFTs – this has definitely not been a hit.
Only 3% of NFTs in the 10000 pieces collection have been sold in a week. What is the reason? The market crashed, which confirms that the NFT market is not stable and is still in the developing phase.
NFT sales fell by around 75% from May to June, according to data from OpenSea (source: Cnet article). Chris Brown is just one of numerous artists who are tapping into the new digital era.
New stuff is awesome, but new stuff tends to carry some luggage. Saying to individuals that they should be mindful about their carbon footprint and reduce waste is cool, but the real change lies in the companies. Being sustainable and mindful, advocating for renewable energy, and practicing asset and material reuse is the way to go!
New things often make us look the other way when it comes to that. It’s new, it’s exciting! Before we start thinking about how to make things better, we first have to learn about them. So, that’s why we have to take a look at sustainability of NFT.
A single transaction on the Ethereum platform consumes an amount of energy equivalent to the power consumption of an average U.S. household over 5.51 days.
Even though we could say the ‘boom’ is over due to the fluctuations in transaction volume, the number of NFT buyers and sellers is growing. That’s why the concerns regarding the climate and environmental impact of the energy-intensive methods used to generate NFTs (called minting) and build metaverse ecosystem are legitimate.
A single transaction on the Ethereum platform consumes an amount of energy equivalent to the power consumption of an average U.S. household over 5.51 days and generates a carbon footprint equivalent to 201,577 Visa transactions or 15,158 hours of Youtube. These statistics can make your head spin. NFT is energy-exhaustive because they are hosted on blockchain platforms. Minting and transferring of NFTs is possible via the blockchain platform, as every transaction is recorded, and both processes are very energy intensive.
The good thing is that the blockchain platforms realize that environmental implications and are working extensively on changing their platforms to reduce energy consumption. There are also other platforms that already use greener practices, and many NFT projects are actually based on helping combat climate change and environmental concerns.
The rise in popularity of NFTs in the past 18 months, and the resulting increase of buyers, predict that this form of digital assets could be the future of collecting.
It can be a risky investment considering the lack of liquidity, making it a bit challenging for token owners who are interested in selling their assets, rather than collecting them.
So, before you decide to be a part of the NFT world it is important to research and understand how this technology works and what are the risks. Don’t get carried away by emotion or by what influencers say.
Whatever we think of cryptocurrencies, blockchain technology, and NFTs, it is hard to deny the impact they will have on our everyday lives in the future.
