NFT stands for Non-Fungible Token. These are digital collectibles that are on the Ethereum blockchain under the ERC-721 Standard. This standard tracks the individual tokens movements and ownership on the blockchain. This gives the blockchain the ability to identify NFT's.
The main difference with fungible assets like Bitcoin is that while all BTC is the same, NFTs are all individually unique.
These collectibles can be anything from in game items (weapons, costumes, maps, etc) to artwork and digital trading cards. Artists can also tokenize their work and create an NFT.
The CryptoKitties Effect
While some argue the first NFT's were created in 2012, the biggest NFT craze to date was when CryptoKitties arrived in 2017. Launched by innovation studio Axiom Zen, this was a game where users bought NFTs in the form of cats, which all had their own different traits.
Users could adopt, raise, and trade CryptoKitties on the Ethereum blockchain. CryptoKitties became so popular, that it clogged the Ethereum blockchain, with the price of one CryptoKitty reaching as high as $114K!
To add, the meteoric rise of CryptoKitties happened during the 2017 bull market. This only added to the hype of the crypto industry and put NFT's on the map, globally. It evemn led to Axiom Zen spinning off into Dapper Labs, to then receive $15 million in funding from a slew of companies including Google Ventures.
OpenSea, Rarible and SuperRare will revolutionize the art world. First it will give artists, digital and traditional, the ability to digitally protect their art, while creating a version of it in which they can either sell equity of or sell outright. NFT's will make it easier for collectors to invest in rare pieces with ease and speed, while also maintaining that auction feel with SuperRare's bidding system.
Artists must apply or be selected by SuperRare before posting their art, so it definitely gives it a more refined feel. Rarible, on the other hand, is open for anyone to sign up and begin tokenizing and monetizing their digital artwork. These digital pieces can also be sent to others as a gift or a donation.
Another way in which artists benefit greatly from tokenizing their art into NFTs is they can easily collect royalties with it. On Rarible artists can set a royalty on their art where; if their piece is sold, then resold at a higher price, they would then collect a percentage of every sale.
Rarible also has its RARI governance token, which was created to give Rarible community the power to influence decisions and incentivize participation, which is commonly referred to as a DAO. RARI tokens cannot be purchased through Rarible's platform, but you can still earn it by using the platform. Rarible has also been doing weekly airdrops.
Many artists are already taking the leap of faith into the NFT world with world famous artist Beeple releasing an NFT collection, which later sold for a whopping total of $3.5 million.
I anticipate many more artists will jump into selling their art via NFTs, as I'll be alerting my favorite artists of this new wave, and also getting involved in the market myself. The way the world is moving, the mavens will move the furthest.
Wax, which dubs itself the king of NFTs, has also partnered with Capcom to release some awesome Street Fighter V NFT cards which will definitely blow up. Collectors will buy "build cards" that can then be combined to unlock a newer build card with 1 of the 6 rare attributes.
That card will then be given a power score that increases every time it has another card built onto it., once strengthened to 5 times, it will unlock a Special Class card, which also has 1 of 6 rarities. The build cards are deleted or 'burned' when used, giving the cards greater scarcity and value over time. These cards can then be held in an NFT wallet and traded with fellow collectors. Learn more about them here.
NFT's are already being used in games. Whether it's weapons, clothing items, or car parts, gamers are the first mainstream adopters of NFTs, and it will continue as platforms such as Fortnite and Minecraft convert their collectibles into NFTs. I predict the biggest move will come from Nintendo's adoption of NFT's.
When they begin turning Pokémon into NFTs, it will change the space forever with people going out of their way to pay top dollar to own the rarest of Pokémon. Just like how the vintage cards are beginning to fetch 6 figure offers, we will see the same for the Pokemon NFTs.
Video games are already a $50 billion market, so that adoption into crypto will only grow platforms and
It doesn't stop from there either. Dapper Labs announced on October 1st a partnership with the NBA called NBA Top Shots, creating a new world of digital trading cards for that are similar to the Wax Deadmau5 NFT's in that they come in packs which you can choose to unpack or keep packed, similar to physical trading cards.
Each pack will start at $9.99 and come in four categories: Common, Rare, and Legendary, and Ultimate. In the example of the Rare pack, 1 out of the 8 cards in each pack will be a 'Rare Moment.' Every pack will always contain a random set of cards, called 'Moments' with rare Moments given in rare and Legendary packs. Naturally, this means the rarer Moments will be more valuable overtime.
These Moments cards are shown in cube form with the image of the athlete shown and later as a GIF of the specific Moment collected.
Collectors can then use their Moments to participate in Showcases, Mini games, and Challenges. Collectors must hold a specific group of Moments during the Challenge to be able to then unlock a reward dropped by Top Shot that cannot be bought. Collectors will also have the ability to trade with each other, and the top collectors per team are ranked accordingly.
Packs can also be opened simultaneously in the community(via Discord) in real time. These are called Live Pack Breaks. Trading is commonplace and cards can also be sold in the peer-to-peer Marketplace. Everything in NBA Top Shots is happening on Dapper's Flow blockchain. The Flow blockchain allows for transactions to be executed in mere seconds.
There's also a fantasy sports element where collectors can guess the stats of their favorite players, and compete with fellow collectors. There's so much behind these NFT cards that you have to check out their ultimate guide to fully understand. NBA Top Shots launched publicly after its private sale was able to raise $2 million, which considering the NBA's size and popularity (though waning) is very small.
In my opinion, NBA Top Shots will be a great way for NBA fans to build their wealth, through the game they love, especially by being early and finding the gems. It will also enhance the fan experience and create a new ecosystem of fans who seek out specific players' Moments in hopes they will be the next class of superstars, similar to physical trading cards.
In a world where rare trading cards are selling for 6 figures, with the highest reaching $3 million, this is the next wave that will continue the trend. There's already a Lebron James Moment on the Marketplace for $7200!
If you're an NBA fan and would like to get in on NBA Top Shots, click here
[UPDATE 01/29/21: NBA Top Shots has been exploding in popularity. Even though it's an Open Beta, they've had a day where they added their entire userbase of 25,000 in a day!!!]
As you can see, NFT's are evolving trading cards into something more interactive and fun. People of all ages, especially our future children, will soon collect NFT trading cards, seamlessly trading them with other collectors digitally, or physically at meetups and conventions.
Not only this, it's much easier to preserve your cards since they're digital and on the blockchain, compared to physical cards that have to be protected with plastics. Eventually it'll be as easy as two people meeting, scanning each others QR codes, and parting ways only to hang out again at the next meetup.
NFTs will destroy the counterfeit industry as fashion brands adopt the tech to make digital replicas of physical pieces that only the owners of the authentic piece would own initially. For example, every new pair of Yeezy's will come with it's own NFT, which will be a digital version of the sneaker. Adidas can create one NFT that is mass distributed as well to streamline the process.
Kanye West could then add unlockable content to the NFT. This content is only visible after transfer of ownership and could be anything from a secret message, behind the scenes footage,or new music.
This will also make it so resellers must provide NFT's with their physical sales to capture the full value of the sneaker, and ensure its authenticity. Add the potential for consumers to use the clothing and sneakers they buy IRL in their favorite games, and you can clearly see NFTs are a game changer.
This is where my interest in NFTs is really piqued. The music industry has for too long been a space where artists were the first to work, and the last to eat. As we previously discussed, Deadmau5 has already used NFTs to further engage with his fanbase.
I expect this trend to continue, plotting up NFTs for my own rapidly growing fanbase (stay tuned y'all 😎).
I'm thinking even deeper though, more about how NFTs will make it so artists regain control over their music, and fundraise to fans who will then gain wealth from supporting their favorite artists. Since NFTs can be invested in, musicians will release their music, only for fans to engage with it, and invest in songs, videos, GIFs, collectibles, and art.
It's only right that as the value of music dropped to zero, it would begin rising back to potentially insurmountable levels. I envision music fans holding catalogs of their personal faves that they can not only listen to all the time, but will actually grow their wealth. It will be like those people you knew who had stacks and stacks of CDs and vinyls only for them to actually be worth Bitcoins. It will also give fans special privileges to hear songs that others won't unless they have that NFT, similar to when Wu-Tang Clan auctioned off their album.
We'll even see collabs between fans and artists when fans create artwork of their faves and turn them into NFTs. Some artists will feature NFTs in their own games, and others will give fans exclusive access, whether digital or physical. I predict Travis Scott will be the next major artist to add NFTs to his fan experience, seeing how great his marketing abilities has been to develop his cult following.
Recently a musician named Guy J partnered with blockchain platform Rocki to crowdsell the rights to his song "Cotton Eyes" through the sale of an ERC-721standard NFT. This token was auctioned for 40 ETH. An ERC-1155 token will then be issued to fans for exclusive listening privileges.
EDM legend Deadmau5 has recently jumped on the NFT train, collaborating with Worldwide Asset eXchange to release a series of NFT digital collectible on their WAX blockchain. I was actually able to get my hands on a pack, myself. The way it worked was I bought the NFT pack on their website, had to create NFT wallet on the platform, then upon purchase, was able to unpack it via a site called Rarez and after that it showed me all of the NFT's I unlocked which were cards and stickers. These were officially my first NFT's. Now I'm looking to grab different ones, and later make my own.
Hip hop artist Lil Yachty also created an NFT in collaboration with the Winklevoss Twins, founders of Gemini, who've recently acquired NFT marketplace in 2019. The quick auction was able to collect $16,000. Upon the acquisition of Nifty Gateway, Tyler Winklevoss exclaimed,“We believe that both real-world and digital collectibles will migrate onto blockchains in the form of nifties.” It's interesting he called them nifties as I can see that term catching on in the mainstream.
On the industry side, Dapper Labs partnered with Warner Music in May to work on delivering the aforementioned fan experiences. NFT's will allow for the validation of digital album art, which fans will then hold and watch as it rises in value. On a technical and legal level, NFTs will be crucial for major labor artists to hold as I think they will be complimentary to their masters.
Don't expect the labels not to figure out how to finesse artists out of their NFT rights, so this will start a new chapter in litigation, establishing how NFT rights are allocated and how royalties will be split, and whether major label artists can even sell their royalties to fans, or not.
My prediction is soon major labels will be tasked with automatically creating NFT's for every song an artist releases on their platform, whether it's being added to a contract for the first time, or through law. They'll also begin to incorporate them into fan experiences like how Deadmau5 has done.
Personally, NFT's will definitely be apart of my fan experience, and I will be looking into every which way my supporters can invest into my art as my main goal is to develop the wealthiest fanbase in all of music. What will separate the Vantum Vanguardians from the rest will be our commitment to educating each other on the latest opportunities in building wealth.
In closing, NFTs are going to change the world in a way only those who are in early will be able to understand. Check back on this article, because this space is so vast, there's even more information to be added.
For more on NFTs, check out these resources below: