Understanding NFTs In 2022
Managing Member of SPVs and Vice Chair of Red Hook Capital, a family of leverage…
Managing Member of SPVs and Vice Chair of Red Hook Capital, a family of leverage buyout companies co-investing for more than 4 generations.
Non-fungible tokens (NFTs) are growing in popularity, and some people find it difficult to understand something new. The trade volume of NFTs in 2021 was $24.9 billion, according to DappRadar. That is up from $95 million in 2020. With more research coupled with the information provided here, you can give yourself a primary education and understanding of NFTs.
What is an NFT?
NFT Artwork is the most widely known type of NFT. There are also collectibles, trading cards, event tickets, music, gaming, charity, big sports moments (digital video clips), internet memes, virtual fashion, etc.
Ethereum is the blockchain example for NFTs due to its believed blue-chip status in the cryptocurrency world and its possible reputation for smart contracts. Each NFT is unique, and there is a market for collectible NFTs. Solana is an example of a newer cryptocurrency that can be used to mint NFTs in a marketplace called SolSea. More marketplaces are coming into existence. OpenSea.io is an example of a marketplace where you can mint, buy and sell NFTs from various collections. There are help screens to get people started in NFTs. There is an auction where people can list and bid on their newly minted NFTs. There are even NFT promotion companies to help market your NFTs for you to get better prices for them.
What are marketplaces?
There are different marketplaces out there, and I’ve rounded up five to provide educational examples of various marketplaces out there.
There is a marketplace featuring anime-styled digital artwork where holders will receive airdrops, access to live events and become part of an art-community-culture network with plans for clothing lines and other benefits.
Another marketplace consists of 3D-style customizable avatars by a Nike-owned digital art studio called RTFKT (pronounced as “artifact”).
A digital “yacht club” whereby owning this NFT also gives you membership benefits.
A freak variety of the above yacht club by the same makers, Yuga Labs.
There’s also a marketplace with unique NFTs by the artist Josie to be entirely on the ethereum blockchain.
Where else do NFTs show up?
There is another marketplace focused on gaming NFTs for car collector enthusiasts on an ethereum blockchain. It can offer races, prizes and exclusive offers for holders of these NFTs. These become self-driving cars in the metaverse. You might be able to add AI to your NFT purchased here as an option. There is speculation on how popular these will be. There might be a restriction allowing the minting of only five of these particular NFTs per wallet. This race car-themed NFT game might become immensely popular due to the more than 1 billion fans of F1 racing worldwide.
According to Cointelegraph: “It’s a collection of 10,250 ultra-unique racing masterpieces inspired by F1. Get ready to experience different kinds of metaverse realities at Meta F1 Club. Our holders can entertain themselves with spectacular multimap racing events in the metaverse, compete with others, and win the same as any real-life championship.”
An NFT game from 2019 called F1 Delta Force lost a licensing renewal deal and recently shut down. It was believed to be popular at the start but faded, and legal risk in the F1 Delta Force gaming NFTs may not have been understood by those who purchased them.
Why do people trade NFTs?
Many people try to trade NFTs to make a profit. The stories of profitable NFT trading are more widely reported than people whose NFT collections are reduced in market value. There are no guarantees that your investment in NFTs will be profitable, though many people are hoping this is the case. NFT collections are a form of gambling to some people. NFT market values can be just as volatile as the underlying cryptocurrency. Information online could be more of a rumor than the hard financial metrics you might find from a public company’s annual report.
As more corporate sponsors enter the NFT world, people speculate that 2022 will be the year that NFTs will go mainstream. There is, however, a big divide on the future of NFTs, even among those in the cryptocurrency space. One thing that both sides can agree on is that there is increased interest in NFTs that is driving innovation and imagination.
Again, this does provide basic educational information about the historical landscaping of NFTs, but in no way would I want readers to believe that this information represents the NFT landscape in May 2022. For better or worse, NFT landscaping is changing not monthly or weekly but by the minute. Stay educated by reading often.
“You are always a student as the world keeps changing every zeptosecond.” — JD Morris
JD Morris does not own or have a relationship with any of the companies in this article. His fund of funds, RHC 21 LLC (RHC), has held positions in several cryptos and NFT companies through Venture Capital Funds. These funds currently act independently of RHC, with no direction from RHC.
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