NFTs also involve so-called smart contracts, which is actually a software code that memorializes the terms of a contract which can selfexecute when pre-specified criteria are met. However, there is one significant difference, they are each unique, indivisible, and “non-fungible.” Similar to cryptocurrencies like Bitcoin, they can be identified individually and are authenticated through a decentralized system of nodes via a consensus protocol. NFTs are non-fungible tokens issued on a distributed ledger such as a blockchain. It sold for $380,000 (228.69 ETH) on OpenSea NFT trading platform. In another shocking incident, Injective Protocol, which is a group of cryptosavvy artists, burned the print of a Banksy piece titled “Morons” costing $95,000, and registered the recording of the performance as an NFT. One of the NFTs from his collection was recently resold on Christie’s for $69 million. In October 2020, a digital artist called Beepl, with over 2 million followers on Instagram sold an NFT art collection for over $3.5 million. He ran a 24-hour auction on the crypto art platform Foundation and the digitally signed meme fetched an astronomical sum of $590,000 (300 ETH). The Nyan Cat meme, which was a popular GIF from a decade back, was remastered by the original artist for its 10-year anniversary and registered as an NFT. Incidentally, it took only a day to complete this auction. The winning bidder was Sina Estavi, who had held the high bid since offering $2.5 million on March 6. Strangely, he did it for a specific figure of $2,915,835.47 which has some significance, yet unknown. Twitter CEO Jack Dorsey sold his first tweet as an NFT recently. It hit more than $250 million in 2020! In 2021, projections for the year are centred around $1.3 billion. Fans and collectors are buying and trading NFTs feverishly, the market for NFTs has more than tripled. Today there is a wild gold rush and people are tying these tokens to music, digital art, video and even memorabilia. It establishes that each NFT is unique in its own right and cannot be replaced with another token. (2) The ‘non-fungible’ part is the more unique aspect of NFTs. So if we both are pet lovers and have a real cat each (not virtual blockchainbased kitties), each one of them is unique, and cannot be exchanged for equal value.Ī non-fungible token actually can be broken conceptually into two parts: (1) The ‘token’ element refers to anything related to the blockchain, a digital ledger of transactions that tracks the exchange of each token on it. However, a non-fungible asset is something that is not interchangeable and not divisible for the most part. Similarly, Ethereum and Bitcoin are both fungible assets, one bitcoin is no different from another one whole bitcoin. The standard allows developers to create digital assets that can be exchanged and tracked on the blockchain.įungibility describes an asset’s ability to be evenly interchanged with another asset of the same type, so a Rs 2000 note is fungible – we can exchange notes of the same denomination without any effect on their value. The earlier ERC-20 standard provided the technological framework and best practices for token creation and emission, likewise, the ERC721 standard did the same for non-fungible tokens. CryptoKitties raised considerable awareness about non-fungible tokens (NFTs), which resulted in venture capital firms a16z and USV investing $12 million in the company to expand the product.Īxiom Zen, a Vancouverbased startup, went on to create a new standard for Ethereum called ERC-721 to create sound digital goods, which is now a recognized standard for NFTs. CryptoKitties soon began to rise exponentially in value, with one CryptoKitty even fetching 600 ETH (US$172k at the time). They have exclusive attributes like age, breed, or color.ĬryptoKitties quickly rose to notorious success and CryptoKitties transactions soon amounted to a whooping 12% of all Ethereum transactions. Each of these virtual cats is unique, and can’t be interchanged with each other. Soon, enthusiasts were able to breed, raise, and trade virtual cats with unique genomes. In October of 2017, some smartypants created ‘CryptoKitties’ on Ethereum, a blockchain platform. Cats! The bane of the internet strikes again.
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