If you’ve been putting your ears to the ground of the crypto space, you must have heard about NFTs and NFT marketplaces a thousand times. The NFT space is currently valued at a whopping 27 billion dollars, with no signs of letting off.
For someone peering in from the outside, the thousands, and sometimes millions of dollars, spent to purchase a pixelated asset which looks nothing more than a simple GIF image, is weird. Or just purely unthinkable.
Hence, before exploring the various marketplaces and the top artists, it makes sense to understand what NFTs are, and probably try to justify the NFT-mania that’s gripping the cryptocurrency world.
What are NFTs?
NFTs or Non Fungible Tokens, are unique digital housed on the blockchain, with each having a unique metadata that distinguishes them. They give the bearer, ownership to real-world assets such as art (digital and real-life), music collections, house deeds, tickets to events, etc.
Since these assets are held on a public ledger - blockchain - the ownership record for any NFT, can be accessed and is verifiable by everyone who has the blockchain record.
A unique characteristic of NFTs, is their non-fungibility or non-replicability. What this means is that no two NFTs, are identical. One can never be exchanged for another. This is a direct contrast to cryptocurrencies and fiat currencies.
For instance, if you were to exchange one bitcoin for another, you’ll be getting the same thing. But if you exchange one NFT for another, what you’ll get would be entirely different from what you had earlier.
As a matter of fact, it’s this characteristic that somewhat justifies the thousands, or millions of dollars, spent on buying them. Because, based on human intuition, scarcity or rarity equates to increased value. And since no one else has it, having an NFT has become an egotistical race, where the highest bidders win at the end of the day.
Slowly but surely, NFTs are being treated as a store of value, for the long term, especially due to the rising inflation rate.
Why are NFTs valuable?
NFTs possess extrinsic value: they have no value in themselves.
So what makes them so valuable? This is a critical question to ask, due to the insane figures that NFTs may command, some of which is justified, while others are mere 3D or 2D images, stored on the blockchain.
There are four major factors that interplay, to either increase or decrease the value of an NFT. Investors use them too.
All NFTs are unique and rare, but some are rarer than others.
Take, for instance, the crypto kitties collection. They all have unique identifiers and features which distinct them.
But take, for instance, a piece of art or of the United States Constitution. The constitution is rarer than any other NFT and, hence, would cost far more than a crypto kitty.
Real-world usage: utility
Aside from the usage of NFTs in the game world, some give the bearer, access to a real-world utility. And based on the current trajectory, that may be the major use of NFTs in years to come.
For instance, a popular musical artist may mint an NFT that gives the bearers VIP accesses to all their future concerts. Or it could be for a monthly dinner and so on. In either case, the NFT would be hot property to own.
If you were to buy a jacket from a supreme store, you could spend $3000. If you were to buy the same jacket, but worn previously by a famous personality, the jacket could soar to hundreds or millions of dollars. In this case, the ownership history is responsible for the price hike.
It's the same with NFTs.
NFTs, associated with popular artists or big brands, usually cost a lot. Also, when the previous owner of an NFT was a famous personality, the price also increases.
NFTs, with higher liquidity, have greater value. It’s for this reason, that many investors chase after NFTs built on the ether blockchain (ERC-standard NFTs), than those that are off-chain. They can be purchased easily by someone with Ethereum and lowers the risk of holding them.
Summarily, the higher the liquidity, the greater the number of people that are willing to buy. And the greater the value of the asset.
Top NFT projects to watch out for in 2022
NFT projects are valued, based on the exclusivity or rarity of the items in the collection. Hence, they serve as a long-term value store, or as a hedge against the ballooning inflation rate.
The top NFT projects to focus on in 2022 include:
With a surge in the population of players on this metaverse-themed gaming platform, its value has continued to rise.
Founded in 2018, it adopts a play-to-earn approach, where game players earn, by breeding collecting or battling with creatures known as Axies. These Axies are NFTs built on the Ethereum network and can be redeemed in game, or exchanged outside the gaming platform for other assets such as cryptocurrencies.
Currently, Axie has a market cap of $6.53 billion, and it’s well primed to increase further, as more gamers flock to the platform.
This is a collection of 10000 unique ERC20-based NFTs, developed by larva labs in 2017. Each of them are unique and are built on the Ethereum network.
Currently, the lowest-priced NFT in the collection, goes for 65.5 ether while the highest price was recorded on October 18, when a single NFT in the collection was sold for 124,457 ether.
For cryptopunks, there are three classes: those you can sell, buy, or join to bid on. The background colour, is used to differentiate them: blue is not for sale, purple they can be bid on, and those with red background signifies that they are on the market for sale.
Bored Ape Yacht club
It’s made up of ten thousand ape characters, with varied fur colours, facial expressions, and accessories.
Just recently, a fat-finger error led to the sale of one of them, for $3000. However, this is surely the least amount you can ever get one of these for, since the lowest goes for nothing less than $150000.
Cool cats are a collection of 10000 images of cats, housed on the Ethereum blockchain.
Just like the bored ape yacht collection, each image is unique, differing by their facial expressions, accessories, and fur colour. However, a major distinction is the awarding of points to each.
The point each one receives, depends on how rare the accessories they possess.
Space runners broken shoe
This is a 10000 NBA-themed collection, of designer sneakers. Unlike most NFTs that are domiciled on the Ethereum network, these NFTs are on the Solana network.
They have collaborations with designers and celebrities like NBA star, Kyle Kuzma, who launched the first collection.
This is an NFT collection with promise and is well-primed to blow up in 2022.
In the future, NFTs are theorized to become a tool for influencers, to build their community, and incentivize their followers. VeeFriends typifies this vision.
It’s a collection of 10,225 NFTs, created by digital marketing guru, Gary Vaynerchuk. Each one, has a customized doodle drawn on it and give various rewards such as access to Gary for dinners, VIP access to events, and many more.
This collection, just goes to exemplify the enormous possibilities that NFTs bring into the marketing and influencer space.
Currently, the average price is at 20.83 ETH and there are 4920 holders currently.
NBA top shots
As a testament to the potential in the NFT space, we’re seeing a progressive adoption, by big organizations, to monetize their assets. And the US National Basketball Association, is one of such.
It's a collection of video clips of important moment in NBA history, created by dapper labs (also created crypto kitties). Those with top players, such as Le Bron James, Kobe Bryant, Michael Jordan and the likes, and with the most iconic moments, cost a lot more.
Top NFT marketplaces
There are numerous NFT marketplaces. And with the boom in this space, more would definitely crop up in years to come.
Before you begin to use an NFT marketplace, you’ll have to fund your wallet with the token accepted by the platform you choose to use, correlating with the NFT you wish to purchase. For instance, if the NFT were built on the Ethereum network, you’ll have to fund your wallet with Ethereum while if it’s built on the Solana network, you’ll have to fund with Solana.
Ethereum is usually the cryptocurrencies for transaction on most of these marketplaces because a predominant number of their NFTs are built on the Ethereum network.
Hence, do your research to find out the native token of the marketplace, before you sign up.
The top NFT marketplaces, by trading volume, include:
Opensea, benefits from being the first, and most popular NFT marketplace, with allowance for peer to peer transactions.
At the time of writing, it has over 100,000 NFTs listed and has a trading volume - since it’s launch - of $10.35 billion, which is over 3 times the closest rival, Axie infinity.
It lists collectibles, GIFs, music, digital artworks, and the likes.
Aside from trading, creators can mint their own NFTs or upload it to the platform for sale, then wait for the bids to come in.
150 tokens are supported for transactions.
The video game, which gained popularity during the pandemic, comes in second with a trading volume of $3.06 billion since it was founded.
Unlike Opensea, only Axie, which is the native NFT of the gaming platform, is listed on the marketplace. These NFTs also have in-game usage, as a tool for battling other users or giant monsters. For winning, players earn tokens which can be used to breed new species.
This is the native marketplace, for crytopunks, which are a large collection of 10000 NFTs, created by Larva labs.
Currently, it has an all-time trading volume of $3.06 billion and each NFT costs from $285,000 (94.99 ETH) to $7.58 million (the costliest that’s been sold for now).
To differentiate those available for sale or to be bid on, a special colouring scheme has been adopted: blue is not for sale, purple they can be bid on, and those with red background signifies that they are on the market for sale.
NBA top shot marketplace
It lists NFTs, which are video clips of top moments in NBA history. It’s a closed marketplace and runs on the flow blockchain, created by Dapper labs.
A major reason for their popularity, is how the creators have made it so easy to signup on the platform. You can use even your Google account, and use your phone number to verify your identity.
Just like Opensea, this is a marketplace that lists numerous NFTs - arts, collectibles, music, GIFs, and the likes. It currently has a trading volume of $247 million since it was founded.
An important distinction, however, is that all purchases can only be made with the platform’s native taken, Rarible. The platform and the token are built on the Ethereum blockchain.
For users of Opensea, the interface of Rarible would be a piece of cake due to their similarities.
The huge amounts, in the NFT space, can be tempting. But before going to purchase one, it’s important to use the markers I mentioned earlier, to judge their present and future value. No one wants to be left holding a pixelated asset, with no value.
The NFT space is growing, and we’re sure set to see a massive explosion in the space, come 2022 especially due to their numerous areas of applications, especially in web 3.0.