Before talking about what NFT is, let’s discuss why we need to know what NFT is. After all, there are many people who have come into contact with or have heard of NFT for the first time, and still think that NFT is just a short-lived carnival and hype of a small circle of people. In fact…
According to a new report from NFT data firm Nonfungible.com, the transaction size of NFTs will reach $17.6 billion in 2021, a 210-fold jump from $82 million in 2020. We can see that many large companies and financial institutions have entered this market, and the development of the industry may be accelerated accordingly. However, no matter whether the development of this industry is improving or not, from the perspective of profitability, the risk of losing money by investing in NFTs is still very large.
So, now we can look at NFTs from the perspective of not investing, but understanding an emerging market.
The full name of NFT in English is Non-Fungible Token, which is translated into Chinese: non-fungible tokens, which are indivisible, irreplaceable, and unique.
On the blockchain, digital cryptocurrencies are divided into two categories: native coins and tokens. The former, such as the familiar Bitcoin, Ethereum, etc., has its own main chain and uses the transactions on the chain to maintain the ledger data; the token is attached to the existing blockchain and uses smart contracts to record the ledger. Such as a token issued by being attached to Ethereum. Tokens can be divided into two types: homogenization and non-homogenization.
Homogeneous tokens, namely FT (Fungible Token), are mutually replaceable tokens that can be nearly infinitely split. For example, there is essentially no difference between a bitcoin in your hand and a bitcoin in my hand, which is a homogenized token.
The birth of NFT is based on a pixel avatar project called CryptoPunks in Ethereum in 2017. The total amount of these pixel avatars is capped at 10,000. No two characters can be the same. Anyone with an Ethereum wallet can receive it for free, and can hang it after receiving it. Go to secondary market transactions such as Opensea.
We all know the follow-up stories. During the epidemic, Clubhouse, a multi-person online voice chat social software that requires an invitation code to enter, became popular. On this app, the only thing you can display to maximize your identity is the avatar, and these interesting ‘s pixel avatar has also been followed by fans of Clubhouse users. Twitter giants have also changed their avatars and Christie’s high-price auction has made CryptoPunks completely popular, and also made NFTs born a few years ago finally start to attract attention in 2021.
Coingecko data shows that in 2020, the NFT market size is only $338 million. By the first quarter of 2021, this figure will become $1.5 billion, and now, the market size of NFT has exceeded $20 billion.
Let’s summarize NFTs with a MEME diagram 🙂