Crypto-Collectibles Take the Blockchain by Storm
This week, I’m taking a look at the latest craze in blockchain technology: crypto-collectibles known as NFTs. What are they? Why are people spending millions on them? I cover everything you need to know. But first, an announcement from CoinFlip.
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Crypto-Collectibles Take the Blockchain by Storm
The latest craze to take over the crypto-space has nothing to do with currency and everything to do with using blockchain technology in new ways: the NFT.
As Bitcoin and other cryptocurrencies continue to rise in popularity (I see you $52,000 BTC), people have started to apply the technology behind our favorite coins to something other than finance. Blockchain technology has found a place in gaming, art, celebrities, sports; you name it — there is probably an NFT out there for it.
Many say that 2021 is the year of the NFT, and if you have taken a look at crypto headlines over the past week — then that sentiment rings true. Today, I’m breaking down everything you need to know about NFTs.
What is an NFT?
NFT stands for non-fungible token. A non-fungible token is a digital certificate stored on the blockchain to represent a wide range of things that can exist digitally or tangibly, including digital art, sports cards, gaming add-ons, and so much more.
NFTs are collectibles for the digital age and can be used to tokenize just about anything. One of the main advantages of owning a digital collectible versus physical is that each NFT contains unique information encoded on the blockchain. This distinguishing information makes each NFT distinct and easily verifiable, eliminating the distribution of fakes because now all collectibles can be traced back to the original issuer.
While NFTs use the same technology as cryptocurrencies, they are not the same. One bitcoin is virtually the same as any other bitcoin, meaning bitcoin is fungible or is easily replaced with another identical item. NFTs are non-fungible, meaning they are not interchangeable because no two NFTs are identical. Each token has different attributes encoded into it on the blockchain.
The best way to think about an NFTs is like a concert ticket — most concert tickets look the same, but the barcode on the ticket contains specific information that is unique to the purchaser, the date of the event, the venue, etc. This data makes it impossible for all concert tickets to be traded interchangeably. Some ticket companies even require you to use their software to digitally transfer concert tickets when selling, eliminating the risk of being sold fake tickets.
CyptoKitties (pictured above) is one of the first uses of NFTs. In this blockchain-based game, you can purchase, collect, breed, and sell virtual cats with each CryptoKitty uniquely coded on the blockchain.
If breeding rare virtual cats sounds a bit strange to you, you’re not alone. To better grasp the concept of NFTs, let’s get right into some more of the most popular ones.
Sports
Have you ever tried to look up sports trading cards on eBay? Unique and rare cards can be sold for big bucks — like this 1986 Michael Jordan one listed for $5.5 million. The sports industry has upgraded its collectibles approach to be more modern and more difficult to fake with NFTs.
NBA Top Shot is a blockchain application from the NBA that has recently exploded in popularity with daily sales volumes of more than $1 million, ranking it as the most valuable crypto-collectible, with roughly 20,000 buyers and 33,000 collectors.
Each item in NBA Top Shot is an NFT that contains a short video of a game moment instead of a photo like a regular trading card. Because it is an NFT, it has unique identifying information and a blockchain-based guarantee of authenticity.
It’s a digital card containing a bunch of information, including the game the moment came from, the importance of that moment in the player’s career, the player’s stats for the game, and season averages.
You can buy, sell, and trade your moments directly on the NBA Top Shot platform. In January, a Lebron James moment was sold on NBA Top shot for $71,455. Then, two days later, a Zion Williamson moment sold for $100,000. Now, you can find listings for moments that are going for more than $200,000.
Art
In the art world, NFTs are used to encrypt digital artworks with the artist’s signature on the blockchain, which effectively verifies authenticity and ownership. On Wednesday, it was announced that this collection of 5,000 images taken over 13 years by digital artist Beeple will be the first purely digital NFT artwork to sell at Christie’s, the major art auction house.
Beeple, the US-based artist behind the work, has said: “The technology is now at a place with the blockchain to be able to prove ownership and have true scarcity with digital artwork so I think we are going to see an explosion of not only new artwork, but also new collectors and I am very honored to be a part of this movement.”
You don’t have to be a Christie’s level art connoisseur to get yourself some NFT art. With websites like Asyn.art, Mon.art, and NFT.art, you can safely purchase digital artworks and support artists’ pursuits to protect their copyright online.
I never thought I would be getting research for my newsletter from the Style section, but I’m so excited to see the ways people in the real world are implementing the revolutionary technology behind Bitcoin in new ways.
Celebrities
If you’ve been reading this newsletter for a while, then you may remember that I mentioned rapper Lil Yachty launching the social token “YachtyCoin” in early December. YachtyCoin is an NFT offered by Fyooz, a celebrity-based NFT platform that gives you a stake in your favorite celebrities’ careers.
Last Week, rapper Post Malone also teamed up with Fyooz to launch a celebrity beer pong league using NFTs. If you buy the “Celebrity World Pong League NFT,” you can get the chance to play beer pong against Post Malone himself. I’m glad to see that Bitcoin’s revolutionary technology is being used to make the world a better place.
Lindsay Lohan also minted and sold an NFT last Week. She used Rarible, a marketplace for digital assets, to create the NFT, an artwork of Lohan with a lightning bolt earing that reads “LIGHTNING” that sold for $50,000.
Earlier this month, Logan Paul tokenized himself by creating an NFT Pokemon card featuring himself in boxing garb. With NFTs, literally anyone can create a blockchain-based asset that can be traded and sold online.
Because NFTs allow you to tokenize anything, they are also trendy in the gaming industry, decentralized finance, or even selling your personal skillset.
Why are NFTs so popular?
According to Dune Analytics, interest in NFTs is growing fast at the moment. Its data, which covers OpenSea, another platform for non-fungible digital goods, shows a 128% increase in monthly trading volume from December to January. December enjoyed a volume of $3.5 million in sales, while January saw $8 million. However, February has shattered all records with more than $44 million in sales. At this rate, February’s volume is likely to be just over $70 million, and that’s only for a single NFT platform.
Why have sales been skyrocketing like this? The most obvious reason is that they are growing in parallel to the cryptocurrency market. As cryptocurrencies like Bitcoin, Ethereum, and Litecoin (all of which experienced new all-time-highs this week) become more popular, so does the technology behind them.
NFTs also hold the promise of significant gains. For example, when NBA Top Shots packs are first released, they are priced anywhere from $9 to $230. The “From the Top” deck initially sold for $230, but this Lebron James Dunk from the pack is available for resale between $175,000 to $250,000. That’s a huge profit.
Will You Take Part in the NFT Craze?
NFTs are great for collectors, artists, and all those looking to use blockchain technology for its immutability and programmability.
I will say, as I was researching for this newsletter I stumbled across some really strange stuff — like this Pikachu holding a Bitcoin that is going for $18,000. And I just have to know who is willing to spend $50,000 on a gif of a dancing green Star Wars stormtrooper. If that is you, please let me know. I’m sure you have a very entertaining art collection.
I love to see the way people are adapting to new technologies. While I do not currently have any NFTs, as someone interested in vintage fashions, I think it could be cool to see NFTs used for re-selling authentic high-end products.
The craze has got us thinking… what about a CoinFlip NFT? What would that look like? Stay tuned; maybe we have something special for you in the works.
CoinFlip in the News
- Bitcoin hits another record. Here’s how much you’d have if you invested $100 in 2009 — CNBC
- How Bitcoin Is Taxed — U.S. News and World Report
- Banks Might Treat Bitcoin Like ‘Real Money’ — These Experts Weigh the Pros and Cons — Go BankingRates
- Tips for Dealing with the Inevitable — Bitcoin and Taxes — Benzinga
