Today everyone and their mother have heard about NFT. Even though most don’t know what NFT means, many regular users are aware that it’s an important aspect of the crypto market. Actually, NFT has the potential to transform multiple markets from finance and fine art to real estate. So, it’s safe to say that it’s not an overstatement to expect NFT to transform our modern society.
But, the real reason why most investors are interested in NFTs is the opportunities for high ROI. The global NFTs market was valued at $15.70 billion in 2021, and it is expected to reach $122.43 billion by 2028. In this article, we will take a look at NFTs as a booming community movement and their future potential for growth.
What is NFT
NFT is short for non-fungible tokens. They are innovative digital assets created in 2015 on Ethereum’s blockchain network. The main difference between virtual currencies and NFTs is that each NFT is unique and cannot be replaced with other NFTs.
In short, NFTs are not interchangeable with other blockchain-based assets. Every Bitcoin can be replaced with other Bitcoin, but when it comes to NFTs, thanks to the design of the blockchain network, each NFT is unique.
This is why NFTs are perfect for art pieces, although NFTs can be everything from video games, artwork, and films, to articles and music. The main purpose, however, of each NFT is to prove the rightful ownership of the buyer while, at the same time, the artist will have copyright rights over their own art.
As most digital assets are based on blockchain technology, the NFT marketplace is also distributed as there isn’t one dedicated online trading platform. However, there are many reliable trading sites where you can invest in NFT. A true NFT marketplace not only allows you to invest and trade NFTs, but it’s also a place where you can store NFTs or even create NFT tokens. The first step, however, is to invest in Ethereum and then do your own research and find a marketplace that fits your goals.
Otherwise, NFTs are considered revolutionary technology in the art and collectibles market because audiences, for example, can directly connect with various artists and support them by purchasing NFT tokens or even a fraction of the NFT token.
The NFT marketplace bypasses the middle man and creates more opportunities for artists to sell their artwork. Also, the owners are at an advantage as the price of their NFT can rise in the future, which is one of the main reasons anyone gets into NFT trading. For example, the artist Mike “Beeple” Winkelmann sold a collage of 5000 pictures titled ‘Everyday: The First 5000 Days made in a period of thirteen years for $69.3 million.
Price of NFTs
As the NFT market is fully decentralized, the NFT tokens rise in value based on the ratio of the market demand and supply. In other words, the market is very volatile. Typically, the price will increase when the NFT owners are able to sell the NFT tokens at a higher price than their initial purchase price. Also, as we mentioned, the market is not regulated, and the relationship between the overall supply and demand impacts the price of NFTs. When the market demand rises while at the same time supply of NFTs decreases, the price of NFTs available for sale is expected to go up.
Another important factor is the rarity of the NFT token. For example, if there is on sale a rare, one-of-a-kind-art piece, it’s expected for this value to surge quickly. Also, the market sways based on the buzz generated by influencers like Elon Musk. He actually put up a tweet to be sold as NFT on March 15, 2021. The price of the NFT rose to $1.1 million within a day.
In conclusion, even though the NFT market is quite volatile and fairly new, there is a huge interest by investors, businesses, and artists to leverage the opportunities offered by NFT tokens. We will expect in the future for many more NFT marketplaces to emerge and offer specific options to different target audiences. NFT tokens can be used for everything from digital artwork to real estate proprieties, so it’s safe to say that we are yet to see how this market will evolve in the future.