Blockchain technology has exploded over the last decade and has given birth to non-fungible tokens over the previous few years. It was only in 2021 when NFTs got mainstream interest, and it has become widely popular since then. When combining games and art & collectable sales, weekly NFT sales skyrocketed from a few thousand in 2020 to 1 million each week in 2021.
August of 2021, there was over $3 billion worth of digital artwork sales on one marketplace. Many people want to know what caused this craze and why is NFTs so popular today. This article looks at how NFTs came to be and what propelled their popularity.
The Difference Between Bitcoin and NFTs?
Bitcoin has been around since early 2009 and has enjoyed mainstream adoption. The value of a single bitcoin is edging closer to $60k, and this value has made people take notice of this cryptocurrency.
There are approximately 19,030,475 million bitcoins in circulation, and all of them have the same value, and nothing differentiates one from another. On the other hand, NFTs don’t share those properties as each NFT is unique, and no others share its value.
NFTs are the Next Level for the Cryptocurrency
NFTs run on smart contracts that make use of the Ethereum blockchain. They are a step up from generic tradable cryptocurrencies. The code of each NFT is unique, enabling it to be tracked, and ownership is guaranteed. By utilising these codes, they add extra value to the NFT, and this is enhanced when it is merged with game memorabilia and music that can be sold on marketplaces.
What is the worth of an NFT?
The calculation to pinpoint the value of an NFT can be tricky. From where does the NFT value come from? Many factors play a part in determining the value. They include;
· How famous the artist is
· The rarity of the NFT
· The popularity of the collection
Relevancy – The value of an NFT can be measured by its relevance to the history and culture of NFTs. The CryptoPunks were the first NFTs to be sold, so they inherited their value.
How famous the artist is – If the artist is well-known, the price of the NFT is likely to be higher than if an average person created the NFT.
Rarity – Like the stock markets, the less of a commodity, the higher the price is likely to be.
Popularity – The popularity of a collection plays a big part in its value. The more hype NFTs get, the higher price they will obtain when it is minted. It was valid with the Bored Ape Yacht Club, which saw many celebrities purchasing this NFT.
Utility – You will find that some NFTs can be used as digital assets in video games, and some NFTs can be used as concert tickets or VIP experiences. With this in mind, the value of any given NFT is limitless.
Blockchain and cryptocurrency have opened up a world of possibilities that no one could have fathomed. The more exposure NFTs get and the more they enjoy their popularity, the more use cases for NFTs. We have seen with bitcoin that blockchain and cryptocurrencies are here to stay, and it would serve you best to be in front of the new technology and not a bystander as so many people were when bitcoin first appeared on the scene.