Users have always compared crypto to other assets like gold and fiat currencies since its inception in 2009. Cryptocurrencies have provided lots of value to decentralized finance as almost every solution needs users to first convert fiat currency to crypto before they can participate on the platforms.
The relationship between crypto and NFT’s is somewhat symbiotic but over the last six months NFT’s have performed extraordinarily well in the market. In the first quarter of 2021, over $2 billion has been spent to purchase digital artworks with more pouring in during the second quarter. NFT’s are a force to be reckoned with among digital assets.
NFT’s: What are they and how do they differ from cryptocurrencies?
Non-fungible tokens are unique tokens that can’t be replaced with another non-fungible token. They are one-of-a-kind assets, unlike cryptocurrency where 1 Bitcoin is of the same value as another Bitcoin.
One NFT can never be the same as another. NFT’s can be anything digital like drawings, music, sports videos, etc. NFT’s can be created from any real-life event and be sold to someone as digital artwork. A typical example is Jack Dorsey’s first tweet which was sold for $2.9 million.
Typically, NFT’s give the buyer ownership of the work although everyone can see a copy because it remains online.
On the Flipside
The Reason for NFT’s Win
NFT’s have been doing well this year, with record sales and more adoption for their platforms; ‘Everydays’ by the artist Beeple sold for $69 million, Canadian artist Grimes sold his artworks for $6 million, ‘Crossroads’ the artwork mocking President Trump sold for $6.6 million and many more have sold for high fees.
There are several reasons attributed to the success of NFTs. The pandemic has accelerated interest for new assets to invest in, particularly from inexperienced buyers.
Secondly, NFT’s have added value to gaming as metaverses are touted to take over. NFT lands are being sold with more Wall Street investors pumping money into the future of gaming. These games also net users financial rewards thereby increasing the value of NFT’s.
NFT’s also reward the talents of digital artists, encouraging numerous artists to make the switch and enter the scene. Some platforms also offer the artist a commission each time their works are sold. Furthermore, NFT’s are popular because people have always loved collectibles; the digitization of them makes it easier and more financially alluring.
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Source: Cryptocurrency - investing.com
