The crypto market is proving to be one of the fastest moving niches in terms of innovation. In just a decade, this industry has grown to feature multiple crypto asset categories - the latest being Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs). Both DeFi and NFTs are a hot topic in today's crypto scene, although much of the development is still in the early stages.
In this article, we will be taking a deeper look at the NFT landscape and how this emerging crypto market niche is structured. But first we need to break down the concept behind NFTs. Popularly referred to as 'crypto collectibles', NFTs are designed to be non-fungible cryptographic tokens. In simple terms, each NFT token has its own distinguishing attributes - this makes them unique and digitally scarce.
The aspect of non-fungibility differentiates NFTs from market instruments that assume a fungible nature. In fact, leading crypto assets (BTC and ETH) fall in the latter category - one unit of BTC is essentially indistinguishable from another unit, the same applies to ETH. This means that two counterparties can exchange a unit of BTC for a similar unit as they both have the same value.
NFTs are fundamentally designed to represent digital ownership or proof-of-authenticity within a digital ecosystem. Currently, most of the innovation is around blockchain protocols like Ethereum, EOS and Flow. Some of the earliest NFT projects include the likes of Crypto kitties - an NFT crypto collectible game that was initially built on Ethereum.
Basically, NFTs advance the digital world by introducing a way to create value from digital collectibles amongst other resources that exist in online economies. This new class of crypto assets enables participants to create, collect, purchase or sell their digital collectibles in NFT marketplaces. No wonder it is gaining more favor with the gaming and arts industry.
While most of the NFT innovations are still products in testing, a number have already integrated with the potential industries. The next sections of this article will feature some of the prominent NFT collectibles and marketplaces where they can be traded.
This was among the first NFT projects that went mainstream - the game's rise in popularity caused congestion on the Ethereum network back in 2017. Crypto kitties is an NFT oriented game where users can collect, breed, purchase or sell virtual 'cats' that are deemed valuable as digital collectibles. Each crypto kitty has its own distinguishable features - this could range from the color, age and breed amongst other attributes. The value behind crypto kitties is the proof of authenticity or ownership of a specific virtual cat.
Credit: NBA Top Shot
NBA Top Shot NFTs are currently the highest ranking crypto collectibles with some moments going for as much as $200,000 U.S dollars. This initiative is a collaborative effort between the NBA and Dapper Labs - the firm behind crypto kitties. Ideally, NBA Top Shot allows users to collect basketball moments of the players they love or moves that seem extraordinary. The moments are recorded as non-fungible cryptographic tokens on the Flow blockchain. Owners can sell these NFTs within the NBA Top Shot marketplace or simply hold them as part of their collection.
Just like the name punk suggests, these NFTs are a form of crypto collectibles which represent the various attributes of hoodlums or petty gangsters in the form of digital art. There exists 10,000 unique cryptopunks - their proof of ownership is stored on the Ethereum blockchain. Basically, each punk has its own distinguishable features and can only be owned by one person. Initially, cryptopunks could be claimed for free, but all the 10,000 NFTs were quickly claimed on debut. The only way to acquire them right now is through a direct purchase from someone else in the NFT marketplaces.
Hashmasks NFTs are a combination of 16,384 unique digital portraits created by over 70+ artists globally. This NFT innovation introduces the concept of value hierarchy - both the original owner and consumer can determine the value of a particular hashmask through its lifetime. To achieve this, hashmasks feature two levels of scarcity. The first one is determined by the original hashmask creator while the second level can be unlocked by the consumers - they have an option to alter some of the rarest traits including a hashmasks name.
Credit: Euler Beats
This NFT project features 27 music tracks that have been generated/minted on-chain. Each track contains 120 copies - owners have the commercial right to this music and an additional 8% royalty for every copy that is sold from an original version. Euler Beats is among the NFT innovations that appear to be scaling the possibilities through an integration with music, art, math and royalties.
This is the first and leading peer-to-peer NFT marketplace for digital collectibles. Open Sea features a wide range of crypto collectibles which include art, domain names, virtual worlds, trading cards, and sports collections. Basically, Open Sea currently ranks as the ebay of NFT marketplaces - most of the collectibles that are available today can be traded within this P2P ecosystem.
*Credit: Rarible *
Rarible is a community-owned NFT marketplace that leverages a Decentralized Autonomous Organization (DAO) model to empower its community with a voice. This marketplace allows users to create, collect or sell digital items within a secure blockchain ecosystem. In simple terms, Rarible users can generate/mint an on-chain I.D for their digital content - they can then sell this unique cryptographic token to other users who may deem it valuable. Alternatively, one could also opt to hold their digital collectibles as part of an on-chain collection.
Credit: Axie Marketplace
This is the NFT marketplace for the pokemon-inspired 'Axie Infinity' game - players collect, train, raise and battle fantasy creatures dubbed 'Axie'. The digital pets can be enhanced with indistinguishable attributes to make them more superior than others. To do so, players have to trade Axie body parts within the Axie marketplace. Each Axie is limited to 6 body parts, although there over 100 parts available for possible combinations.
*Credit: Decentraland *
Decentraland is a decentralized virtual reality platform that is built on Ethereum - it allows users to create, monetize and discover building possibilities. Some of the digital items that can be found within this virtual world include land. Basically, these are non-fungible cryptographic tokens recorded on the smart contract as 'parcels'. Decentraland parcel owners have control over the content that is integrated or published on their virtual lands - the content can range from digital art to gaming applications. Other functionalities include the ability to browse, buy, sell or manage the land tokens.
SuperRare is a digital art and gallery marketplace - this NFT built ecosystem allows users to collect, buy and sell digital artworks that are unique and have a single-edition. The NFTs on SuperRare are minted by an artist within the platform, after which they are tokenized as tradable crypto collectibles that can be bought or sold. Users can also showcase their digital artwork to anyone across the world by sharing them through a virtual reality gallery.
Innovations around NFTs are moving at a lightning speed - there has been so much activity in recent weeks. Interestingly, this crypto niche is attracting both community members and other industries like gaming and fine art. Given their value proposition, NFTs are likely to be adopted by more online economies. This upcoming class of crypto assets could finally set stage for the mainstream integration of crypto with both virtual and real worlds.