DeFi 101: What Is An NFT?
NFT is short for non-fungible token. Each token represents something unique, meaning you can’t exchange one NFT for another. They often represent digital artwork, collectables, in-game items, domain names, and other digital assets.
Non-fungible tokens (NFTs to you and me) hit the spotlight in 2021.
Their watershed moment came when a digital artwork titled ‘Everydays: The first 5,000 days’ from an artist named Beeple sold for $69.3 million dollars.
To put that into perspective: up until the previous October, the most Beeple had ever received for his work was $100. But then NFTs gave new meaning to digital art, and almost overnight, a revolution was born.
But what are non-fungible tokens? And why are they so valuable? We’ll do our best to answer those questions right now. Ready?
Let’s dive in.
What exactly is an NFT?
An NFT is a type of digital asset.
A little like a cryptocurrency in that it’s secured and verified using blockchain technology, but that’s where the similarities end.
You see, unlike bitcoin, ether, and other cryptocurrencies, you can’t simply swap one NFT for another. That’s because cryptocurrencies are fungible, whereas NFTs are (as their name suggests) non-fungible.
Non-fungible means each NFT represents something unique, so each token commands a different price tag. This dynamic makes many NFTs highly collectable, much like you get with physical assets like a painting or a baseball card.
And depending on where you look, you’ll find NFTs valued anywhere from a few cents to several million dollars.
Even today, top collections switch hands for a hefty price tag.
Top NFT collections
The original NFT collection is CryptoPunks.
CryptoPunks are a collection of 10,000 unique characters, with proof of ownership stored on the Ethereum blockchain.
Some say the Punks inspired the modern CryptoArt movement, ultimately leading to a huge NFT bull run that lasted throughout 2021 and some way into 2022. And as one of the earliest examples of an NFT, this is likely true.
If nothing else, Punks undoubtedly inspired the proliferation of the ERC-721 token standard that now powers most digital art and collectables. But if you haven’t heard of CryptoPunks, you might well have heard of the Bored Ape Yacht Club.
Here’s another collection of 10,000 profile picture-worthy JPEGs. But what makes BAYCs unique is the token itself doubles as the holder’s membership to a so-called ‘swamp club for apes.’ Bored Apes were the first to take NFTs beyond art into something altogether more interactive.
Since its inception in early 2021, BAYC has become something of a phenomenon. The club has given members new NFTs (worth thousands of dollars!), alongside launching a native cryptocurrency (ApeCoin), which ape holders also received for free.
This goes some way to showing what you can do with an NFT, but these tokens are about more than profile pictures.
In a short period, NFTs have started to reimagine several industries.
Global brands see the value of NFTs
We’ve seen more and more big brands enter the NFT space.
The likes of Nike bought RTFKT, the leading creators of virtual sneakers, digital collectables and metaverse experiences.
Nike is now building out its web3 presence, using NFTs as a novel way to engage customers in expansive, experiential brand activations. And midway through 2022, Starbucks launched a new loyalty program powered by NFTs.
The ‘Starbucks Odyssey’ promises members the ‘ability to earn and buy digital collectible stamps (NFTs) that will unlock access to new, immersive coffee experiences,’ illustrating how traditional brands view web3 as a new frontier for growth.
And while some of the hype has died down, the innovation certainly hasn’t. At Elitium, we’re working on something that will bring new meaning to NFT utility.
Keep your eyes on Twitter for more news on this front.