NFT art has become the newest trend, with collections being sold at exorbitant amounts at a fast rate. Interest is high and the market is filled with fans, collectors and investors waiting for the latest NFT art to be released. Now more than ever, it is important to ask what exactly is an NFT and why is it rising in popularity?
Tokenization is the process of converting the ownership rights, as well as the benefits, of both real-world and digital assets into a digital token that exists on the blockchain. These tokens exist in two states: fungible and non-fungible.
“I think tokenization is inevitable; it is a trend that will only grow over time. You can create a digital representation of something from the real world and have it sent across the globe in a fraction of seconds. I believe it is a natural progression of the financial system,” Steven Walt, general manager of digital asset marketplace Fabriik Markets, said in an episode of CoinGeek Conversations.
Fungible tokens can be divided and replaced by an identical item, such as fiat currency or cryptocurrency. For instance, a VIP concert ticket worth $300 can be exchanged for fiat currency worth the same amount without either party gaining or losing anything because the values are identical.
NFT, which stands for a non-fungible token, on the other hand, is unique, irreplaceable, and indivisible in nature. NFT art is then a unique representation of digital or physical art, and its proper curation ensures there is only one of that particular art in existence. Because of the nature of NFTs, a verifiable scarcity is created. This scarcity, then, draws in buyers, collectors, and investors. Just like when physical art is auctioned off, the rarer it is, the higher the value and price.
Because NFT art lives on the blockchain, security is guaranteed as there is a verifiable record of authenticity and ownership history that is timestamped accordingly. Provenance guaranteed is an added value that makes an NFT art more unique and valuable.
Although NFT art in nature is something that is innately special and novel, it still does not explain why it grew in popularity so fast over the past several months. This feat can be attributed to celebrities creating and selling their own NFT art, and making tons of money in the process. Snoop Dogg has released his first NFT collection entitled “A Journey With The Dogg,” and an art piece that is part of this collection has been auctioned off for over $100,000.
108k bid on this piece ! Here we go! 20mins n counting ! pic.twitter.com/TXXMDa50zi
— Snoop Dogg (@SnoopDogg) April 4, 2021
One of the popular meme creators Chris Torres’ unique Nyan Cat memes has also been sold for almost $600,000 in an auction. Likewise, real-life couple Ashton Kutcher and Mila Kunis, who produced the first-ever animated TV show fully funded by NFTs called “Stoner Cats” on the Ethereum (ETH) network, has sold out its character collection for a total of more than $8 million.
The fame of these celebrities, with Snoop Dogg and Kutcher having 19.2 million and 17.2 million followers, respectively, on Twitter alone, and the exorbitant amount their NFT art has sold for explaining why NFT art is the newest trend nowadays. The increasing demand for NFT products also serves to benefit the many less popular and unknown artists who are seeking to find a place for their artworks.