Over the last few months it has become evident that what seems like a simple cartoon image can be worth a lot, lot more. NFTs (non-fungible tokens) have been picking up speed in the cryptocurrency world since March 2021 but have since become much more mainstream.
They really began to gain attention with the sale of ‘Everydays: The First 5,000 days’, a collection of digital artwork created by Mike Winkelmann, for an astonishing $69.3 million. NFTs are part of the cryptocurrency sector but more specifically they identify as a cryptographic token, that are unique and cannot be properly duplicated. However, with many people in the centre of the NFT world putting their ‘unique’ pieces all over social media, this concept may be hard to understand. A popular way to interpret their value as a piece of individual, yet duplicated, piece of artwork is to compare it to ‘real life’ artwork.
Pieces such as the Mona Lisa (worth $860 million in 2020) has thousands of copies on the internet, similar to that of NFTs, yet it doesn’t lose its value/worth. This concept is the same with digital artwork in the form of non-fungible tokens.
Every NFT is individual, much like a barcode, and each has its own value dependent on the identity of the issuer and the previous owners of that token. Furthermore, the community in which the NFT belongs is incredibly important, and those that are successful are much more likely to have a healthy community following them. An extremely prevalent example of this is the ‘Bored Ape Yacht Club’, an entertaining and impressive set of graphically designed apes, that are often the face of NFTs. A successful NFT should have a good traction (high influence, social following, and support), a motivated team behind the project and a good rate of sales from individual to individual.
What is clear to see is that the enormous growth in popularity is not due to slow down, and this new form of asset will be around for many years in the future. Luke Fletcher, who has a strong interest in this topic, commented “The world is changing and adapting to these new ways of trading and spending which has to be welcomed with great enthusiasm- we have to remember there was huge skepticism over when credit cards were first introduced, look how far we have come now”.
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