What’s the NFT frenzy all about? Here are some astute observations by experts:
- NFTs enabled provable digital scarcity that no one could violate and inherently gave all ownership and transfers rights to the owners of the NFTs.
- Forming an emotional attachment to anything does not have to be predicated on visual fidelity or anything else tangible.
- The value attached to non-fungible tokens is growing beyond mere blockchain-based images or contents.
Since the beginning of the year, interest in the NFT market has risen significantly. There is no sign of slowing down anytime soon, given the new concepts introduced in the space. Analysts speculated that NFTs would drive more returns than cryptocurrency in the future, in the prime of fractionalized NFTs and metaverse.
These past nine months have been spectacular for the world of crypto arts. As people realized the true worth and applicability of non-fungible tokens (NFTs), the market for these unique blockchain data units grew immensely popular. Should you make a dive for NFTs? These metrics offered by pseudonymous $7.5M CryptoPunk buyer Peruggia need some good self-reflection:
- How great is the global demand for scarce assets?
- How likely is it in the future that the most valued assets are digital?
- How likely are the first NFTs to be viewed as the scarcest?
Looking at the cryptocurrency space, I believe that the NFT space will produce and merge with the wealthiest people on earth. You might wonder why, but discover why not? The distribution of NFTs is incredibly fair, and Cryptopunks are scarcer than Bitcoin. Very minimal faith in innovation would help you to conclude NFTs will be more valued in the future.
$20 to $30 billion combined with primary sales
For the record, the total sales on the secondary NFT market recently surpassed a benchmark of $10 billion, and about $20 to $30 billion combined primary sales, according to Messari research analyst Mason Nystrom. These data indicate the growing level of interest and appetite among investors for NFTs.
The majority of the sales were generated from the collection-type crypto arts, especially Cryptopunk. Punks have been around for over four years now, but they only gained massive attention this year because of the increased interest in the general NFT market. Matt Hall and John Watkinson began this collection of 24×24, 8-bit-style pixel art images as an experiment, but it soon cleared the path for the CryptoArt market.
Surprisingly, only a few people paid attention to this highly sought-after crypto arts when they were launched to the public back in 2017. Meanwhile, only about 20 to 30 Cryptopunks were bought after the first week of launch, even though they were cheaper than the value today. The answer was probably because many people knew less or did care about the potentials of Cryptopunk. The most attention on NFTs was channeled towards Cryptokitties at the time. However, things changed following the publications of the article from Mashable titled “This ethereum-based project could change how we think about digital art.”
Fast forward to the present; most Cryptopunk content has sold for hundreds of thousands in sales–many for over $1 million and $10 million just in the wake of interest in the NFT market. This trend is a win for the early-bird investors who bought characters from the exact 10,000 Cryptopunk arts. Going by the price today, unfortunately, Cryptopunk seems unreachable for many, especially retail investors.
NFT market continues to grow
If you failed to get your hands on one of the characters before the frenzy in the NFT market, you have unfortunately missed out on a massive profit-making opportunity in Cryptopunk. However, there are speculations that Cryptopunk will be worth much more in the coming years.
On a general note, however, the blossoming is not over for the non-fungible token market but just getting started. Many believe the market still has a lot to offer, and the popular collection-type and single NFTs are just the pathfinders to more potential.
Here are a few reasons why the NFT market will continue to grow.
- Scarcity: The cryptocurrency market, especially Bitcoin, is also driven by the suspense of scarcity. More people are drawn to the most significant asset by market capitalization; given the fact, there will only be 21 million BTC in existence. This is equally applicable to other cryptocurrencies, and NFTs are not left behind. Crypto arts are non-fungible, and they represent the rarest asset. Given the monetary worth of the Mona Lisa painting by Leonardo da Vinci as the scarcest asset, do you not think NFTs will tap into the growing demand for scarce artworks, considering the global transition to the digital era.
“I think NFTs are going to work out. Every art is commercialized and monetized; why GIF/interactive/digital art wouldn’t? NFTs are the only medium for that. There is no other decentralized way to achieve the same; I have no doubts that NFTs are the future of digital art,” said Spanish NFT curator and collector, Sutan.
- Value & Interest: People will continue to invest in NFTs because of their fundamental value and concept. Many people are into arts, trading cards, and other collectibles, although these things can be replicated. They buy these physical items not because they are cheaper than others but because they are interested in them and appreciate the value. Do you not see the trend shifting towards NFTs in the future, given that NFTs have much more value to offer? Managing the authenticity and proving the ownership of NFTs in a decentralized manner is something unthinkable before. We recently published an article detailing the importance of NFTs and why most are worth so much.
- Metaverse: The applicability of NFTs in the metaverse will unlock more intriguing opportunities among crypto users. Metaverse is a relatively new concept that refers to an augmented reality-enhanced environment on the internet where people can interact with digital assets, potentially including NFTs adding utility to them. This article also explained how NFTs fit into a revenue model in the emerging metaverse space, extending their utility and value.
Soon, more innovations and worthwhile projects will skyrocket in value more than the numbers Cryptopunk could do before. Already, some of these new opportunities are here. As always, however, they are negligible to the extent that people barely pay attention until prices skyrocket.
Fractionalized NFTs soar up
Fractionalized NFTs will be one of the next big trends in the cryptocurrency industry, especially the B20 Token or tokenized fractions of 20 digital artworks created by the popular American NFT and digital artist, Beeple.
To fractionalize NFTs, the owners lock the main content in a smart contract. Then, they issue two or more tokens that represent the value of the content when combined. This concept reportedly began with the B.20 project, still relatively new in the non-fungible token market. This model has been used by PleasrDAO to resell the official Dogecoin meme NFT in tokens.
Among other things, fractionalizing an NFT decentralizes the ownership and allows for more significant price discovery and accessibility. Since the value is split into tokens, more people will be able to afford and speculate on the price instead of an expensive NFT content from Beeple or even Cryptopunk.
Notably, the perception that fractionalized NFTs are splitting crypto arts isn’t that helpful and detailed. More people are likely to follow along with this market if the narrative can be changed a bit to mean “altcoins by NFTs.” We can’t ignore the fact some people are unfamiliar and unmoved by the crypto-art thing. However, they can go to all extents if it involves cryptocurrency, which they understand.
B20 is potentially bigger than Cryptopunk
In 2020, the famous digital artist Beeple – formally known as Mike Winkelmann – sold a collection of 20 crypto arts to Metapurse for $3.2 million. Currently, the largest NFT fund, the company has locked these artworks in a smart contract under the B.20 project, fractionalizing the 20 contents into B20 tokens.
In this emerging section of the NFT market, B.20 can be rightly compared to Cryptopunk. As Cryptopunk propelled the crypto art movement, B.20 is the pioneering project for fractionalized NFTs. This project gives it an edge as one of the most, if not the most, promising projects to pull off under this section.
What’s more interesting about B20? It holds a tangible, intrinsic value. Beeple is perceived as the most significant digital artist in the NFT space, and the bids on his artworks speak well of this. Earlier in March, Beeple bagged nearly $70 million from the sale of his “Everydays: The First 5,000 Days,” a collection of 5,000 crypto arts. In this regard, B20 tokens are poised for a significant increase as more people come to discover these collectibles created by Beeple.
Aside from these fundamental leads for B.20, the tokens can spontaneously tap from the NFT frenzy. Many projects benefited from the rush in the market. Because of this, B.20 isn’t limited. Although the rush already began earlier this year, many analysts believe the peak is yet to be seen, further increasing the price of NFTs.
$25-$30 on the horizon
Judging by the respective market value of Beeple’s artworks locked in the smart contract, the current price of the B20 tokens is trading lower than it should. Since its all-time high in March this year, the price has declined significantly. However, considering all the cases mentioned above in the bull market, which is expected to kick off this November, the B20 token price is expected to reclaim the $25 to $30 price level in the spring of 2022.
Imagine how much early NFT projects like Cryptopunk grew in value amid the flood of interest in the market. NFTs are not going up like the bubble of dot com, and that means other unique concepts have the potential to skyrocket when the market kicks off again.
“I’m now convinced that the returns can be far greater in NFTs than even cryptocurrency at large and that these returns are, far from being baseless and rooted in mere greater-fool-theory hype and bubbly fadness, in fact extraordinarily justified for a few select investments,” said Ben Yu, co-founder of Stream Token.
His vision is not far-fetched. Most marketplaces for NFT art have already implemented their royalty code in their smart contracts that mint NFTs for creators. There’s an Ethereum Improvement Proposal outstanding to create a universal standard for how royalties should be specified in the smart contracts that make NFTs. These royalties will exist perpetually, designated in the code that spawned the NFT representing the artwork itself.
The immutable smart contract will ensure that if the artwork increases in value at some point, the artist or his inheritors will get a 10% royalty of current value from every secondary sale. Artists are assured of continuous income, guaranteed by code that will last forever on the blockchain.
Your goal should be to speculate on adoption for your intended time horizon. And if you’re a firm believer in everything spawned by the blockchain, you’d do well to invest in fractionalized NFTs like B20.