Is 2021 The Year of NFT? Why are NFT so Popular?

People like collecting things. The types of items you collect depend on individual particular interests and passions or whether those collectibles resonate with you on an emotional level. When you are still a kid, you might have collected Pokemon cards, stamps, video games, books or posters. But now as an adult, you might collect fashionable bags and shoes, tech gadgets, antiques or artwork. But of course, you might still collect the same things you did as a child.

Have you ever thought that what if your physical collection can be expanded to a digital and virtual world? What if you can now own a pet dragon you have always secretly wanted in a virtual home? For the art collectors, imagine having a virtual gallery of digital artwork that can fit into your pocket and take around with you to show your friends and family? Or even owning your favourite celebrity’s memorabilia and their music? With the rise of non-fungible tokens (NFTs) in the crypto world are going to make your wildest imaginations and dreams come real – virtually real.

NFTs have been the source of whispers across the globe over the past few months and are a strong contender to steal the spotlight in the 2021 crypto world. NFTs have steadily been gaining traction in recent months. Ilya Abugov, project manager at DappRadar, recently told Cointelegraph: “There is more hype around NFTs right now. To some extent it’s an extension of the DeFi excitement.”

In terms of market capitalization, the NFT industry grew 17% in 2019 and was forecasted to grow 50% by the end of 2020. This market capitalization is fascinating as it represents the creation of more than $200 million in gross value from nothing in less than two years. According to NFT data resource NonFungible.com, NFT sales activity has increased dramatically since September 2020 and has remained higher than previous months of the year. NFT sales came close to $1 million in the first week of September 2020 as the blockchain-based fantasy soccer card game Sorare reached over $221,000 in sales. This momentum shows no sign of slowing down as $2 million worth of NFTs were exchanged in the first week of December 2020. According to CoinGecko, the NFT market capitalization has exceeded its 2020 forecast and reached over $550 million. In the first few months of 2021, we already can see the astonishing sales going on.

NFTs are creating opportunities for all kinds of creators such as visual arts, game designers, musicians and etc to unlock the new revenue streams. Part of what makes them so exciting is the variety of assets that can represent: virtual collectibles, game items, digital artwork, event tickets, virtual land, and more.

The current crypto market revolves heavily around bitcoin and cryptocurrency trading and mining. But to encourage mass adoption, it needs to move away from this area. NFTs are fueling this as they have the capacity to capture the hearts and minds of individuals and onboard them into the blockchain space in a way that fungible currencies haven’t been able to. So, what makes non-fungible tokens so special?

For a buyer, they provide a secure certificate of ownership over a digital object, protecting the good’s value. The internet makes it easy to duplicate and forge something, and without an indisputable ownership record such as an NFT, the good is essentially worthless.

For a seller, NFTs make it not only possible to sell something today, but also to keep earning tomorrow. Artists in particular have historically struggled to reap rewards if their work appreciates in value. NFTs can be coded to allow the original creator to collect money each time the token trades hands, usually for between 2.5% to 10% of the sale price. The ability to set up a recurring revenue stream appeals to any famous person looking to extend their fame’s earning potential. For example, YouTube star Logan Paul sold $5 million worth of his own NFT—a cartoon image of himself styled as a Pokémon trainer.

“NFTs are the single biggest reorientation of power and control back into the hands of the artist basically since the Renaissance and the printing press,” says Robert Alice, a London-based artist. He sold an NFT through Christie’s four months ago for $131,250, nearly ten times the estimated price. “It appeals to people who have built up their own audiences—maybe on social media—to go and sell work directly to their audience.”

As at 16 March 2021, the top 5 NFT singles sales in 2021 are as stated below. These stats were taken from Cryptoslam.io and are judged based on the ETH prices.

Note: the NFT market is moving incredibly quickly; by the time you read this article, it is possible some of the items on this list will have moved around.

Beeple’s ‘The First 5,000 Days’ sold for a record $69,346,250 on March 11, 2021. It was the first piece of purely NFT artwork to be offered by a major auction house.

CryptoPunk #3100 was purchased on March 11, 2021 for 4,200 ETH, approximately $7,584,485.82 USD, breaking the record set by Punk 7804 set the previous day—due to rising ETH prices.

This CryptoPunk sold on March 10th, 2021 for 4,200 ETH, the same as Punk 3100, but the ETH was valued at approximately $7,566,173.88 USD at the time of sale.

This CryptoPunk #6965 sold on the 19th of February 2021 for 800 ETH currently worth about $1,608,032 valued at $2,010 per ETH.

This CryptoPunk #4156 sold on the 18th of February 2021 for 650 ETH currently worth about $1,306,526 valued at $2,010 per ETH.

The possibilities and potential of NFTs are endless, and recent record-breaking sales are helping to push NFT technology forward. One of the current barriers to its mass adoption lie in the lack of widespread education of blockchain technology and the crypto world.

Part of this education includes security, as new users who enter the blockchain space need to understand how to safeguard their wallets and private keys so their valuable digital assets are not vulnerable to hackers. Because of their rarity and scarcity, many digital assets, collectibles and investments are very valuable and losing them would undoubtedly cause some heartache. Developers and creators of digital assets also need to ensure that solid copyrighting and licensing are written into smart contracts in order to protect their value. Most crypto wallets currently available are considerably complex and difficult for new users and mainstream beginners to onboard themselves. But wallets that aim to improve this are continuously being developed and released.

The NFT excitement is currently concentrated in the niche areas of gaming, art and collectibles, but new projects that continuously emerge are slowly but surely expanding NFTs to other aspects of our physical lives. As an increasing number of big brands (like Nike who has patented shoes as NFTs called CryptoKicks that allow users to ‘breed’ different shoes to create a custom sneaker) join the fray, we’ll see how NFTs grow to become transferable between different worlds — virtual and physical alike.