The development of digital technology is evolving on a very large scale, which is leading to the development of new technologies to meet the challenges expressed in all areas. This is the case of NFTs, non-fungible tokens, which are increasingly highlighted for the many features they make possible. In fact, whether in the fields of art, video games, sports, virtual realities and many others, NFTs bring a real revolution to the notion of digital identity. Discover in this article everything there is to know about this phenomenon that is taking hold in the global economy.
SUMMARY
NFT: definition and generalities
What is an NFT art?
What is the difference between NFT and cryptocurrency?
How does an NFT work?
What justifies so much enthusiasm for NFTs?
What exactly are you entitled to when you buy an NFT?
Which sectors are impacted by this innovation?
The metaverse
Luxury
Cinema
Music
Publishing
What are the notable examples of NFTs selling?
Why buy an NFT?
How to buy or sell an NFT?
Which wallet to store NFTs?
Where to buy and sell NFTs?
What is the most suitable cryptocurrency to buy an NFT?
What is the value of an NFT?
How do I create an NFT?
The choice of the platform for the sale of the NFT
The configuration of a wallet
The connection of the wallet to a marketplace
The creation of the token
What are the advantages of NFTs?
What about the volatility of the NFT market?
What is the future of non-fungible tokens?
Conclusion
NFT: definition and general
In the space of just a few years, NFTs in France as everywhere else have become very popular thanks to the many applications they have in many areas. Many talk about it because they make the news, and the interest of the general public for this fairly recent phenomenon is constantly growing. We hear everything about these digital assets, but what is an NFT in reality?
Literally, it is the abbreviation of a term in English “Non Fungible Token” which means “Non-Fungible Token“. When we talk about tokens or tokens, we are talking about a digital asset that is based on blockchain technology. An NFT is therefore a non-fungible asset that has a certain value and is held on it.
The term “non-fungible” needs to be understood to better understand the meaning of an NFT. In reality, it refers to an element or good that cannot be exchanged with another good of equal or identical value. In other words, a non-fungible good is unique in its kind and has a value that is intrinsically linked to it, because it cannot be replaced by another. This is the very example of works of art that are not interchangeable with each other.
Thus, unlike fungible assets such as monetary assets that can be exchanged with other assets or goods with the same value, non-fungible assets guarantee exclusivity. Whoever owns an NFT has exclusive ownership of a digital asset , a unique piece that has no equal anywhere else. This is a certificate of digital ownership on a unique object.
What is an art NFT?
NFTs are excellent ways to publicize and sell artists‘ achievements. An NFT art is therefore any non-fungible token that concerns the world of art. This is a new opportunity for creators to enjoy their achievements exclusively.
Indeed, with non-fungible tokens, digital works of art can be bought anywhere and really benefit authors. They are no longer obliged to produce and reproduce their physical works while waiting for exhibitions in galleries to sell them.
On the other hand, digital art has long been undervalued because it is available for free. A digital work of art can be shared everywhere without us really knowing who the creator is. It was hard to imagine an online file, which is an image that anyone can copy and share, have value. With NFTs, this sector has taken on another dimension, because the author is not only known, but he is also remunerated.
NFT arts allow artists to give value to their digital artworks by incorporating an element of rarity through non-fungible tokens. Thus collectors can spend a small fortune to acquire them. They therefore constitute new sources of income for these authors.
What is the difference between NFT and cryptocurrency?
We must not confuse these two notions, which refer to different realities even though there is a certain link between them. Initially, cryptocurrencies and NFTs are based on the same technology, that of the blockchain. However, it is essential to distinguish between these assets in order to better understand the realities related to NFTs.
The fundamental difference is that the former are fungible while the others are not. Just like the euro, dollar and other currencies, cryptocurrencies are interchangeable. They have an economic value and the currency held does not matter on this value. One can thus exchange one Bitcoin for another, the value will remain the same.
Unlike a cryptocurrency, an NFT cannot be exchanged for another: it cannot be replaced since it is unique. It is subject to market volatility and its value goes beyond the economic notion. It should therefore be borne in mind that, even if all NFT exchanges are done in crypto, the two notions are quite distinct.
How does an NFT work?
The operation of NFTs depends largely on the blockchain on which they were created. The majority of them are based on the Ethereum network which includes most of the market assets. The blockchain is comparable to a giant account book in which all exchanges related to cryptos and NFTs are registered. It consists of small blocks protected and secured by a decentralized technological device, which are linked together, thus constituting a chain.
It is therefore this blockchain that forms the blockchain. It is a database spread over thousands of servers around the world that are linked together. It is a peer-to-peer and distributed ledger technology that makes it virtually impossible to attempt to reproduce, falsify or alter stored data . This method makes it easy to record and track NFTs created on the blockchain, which ensures their authenticity.
When a block of data is full, we move securely to another block that is chained to the previous one to ensure the protection of NFTs. Each of them has a unique identifier and is backed by an existing financial element such as Ether ( Ethereum network).
With the definition of NFTs that rhymes with a new reality of digital property , the work or good you buy is unfalsifiable. No one can create a new NFT that is identical to the one you own. In addition, there is no authority or individual to challenge your property or to cancel your transaction.
Anyone can create an NFT, because you don’t need prior authorization. It is the rule of uniqueness that is required in all processes related to the operation of NFTs. The decryption code (or private key) belongs exclusively to the owner.
What justifies so much enthusiasm for NFTs?
Non-fungible tokens have been in circulation since 2014, about five years after the creation of the first crypto, Bitcoin. They are used to indicate the identity of a specific real element on the internet. These were originally digital works of art , but many other fields now benefit from technology.
It was from 2017 that the general public was really affected by the first wave of NFTs with the rise of the ETH platform . It is precisely on the blockchain of this crypto that most projects are created, including the first successful NFT collection, the CryptoPunks, some of which were distributed for free in its early days, but whose record sale for CryptoPunk #5822 has risen to more than $ 23 million in 2022! It did not take more to arouse the curiosity, attention and interest of many people who saw in this speculative object an adequate investment opportunity. NFTs have thus quickly become popular thanks to the variety of applications and areas in which they can be used. The potential of the technology behind these assets is truly impressive. It is especially the applications in the field of digital art and collectibles that make many people attracted.
In recent years, there have been record sales and fortunes have been spent by many people to afford the rarest NFTs . This booming market has really exploded in 2021, with a 21350% increase over the year, from less than $100 million in 2020 to more than $40 billion in 2022, making it almost as lucrative as the traditional art market. NFTs already represent the present of digital property and the future of property quite simply. Whether for digital goods or physical goods in the real world, these will be linked in one way or another to the notion of ownership in the near future.
What exactly are you entitled to when you buy an NFT?
When you buy an NFT, you acquire exclusive ownership of a digital asset since there can only be one owner of the original work included in it. The digital signature of the purchased property is unique and for achievements that are not yet public, it is only the owners who can decide to share them online. However, by buying an NFT especially in the artistic field, it does not mean that we have exclusive rights on who can watch or share the work. Thus, it can be viewed or shared anywhere without financial compensation, but the right of resale (and commercial exploitation for certain collections such as the Bored Ape Yacht Club) belongs to the sole owner.
NFTs include a variety of assets from all fields, as they can be associated with all types of digital assets. Thus, they can be associated with goods such as:
Similarly, NFTs are used in areas such as luxury, real estate, sports and many others. Their holders may speculate on related property. Also, in some cases, on ambitious projects such as Kalissa or Bored Ape Yacht Club, it allows to obtain advantages within the community, such as that of participating in certain decisions of orientation of the project, to be invited to exclusive parties, or to obtain discounts and priority access on products and collections of the brand. In addition, owning and sporting a Bored Ape or a digital Kalissa luxury garment on social networks has become a sign of prestige.
Which sectors are impacted by this innovation?
Many sectors are already affected by the wave of NFTs, as they arouse the interest of all. While the main areas of activity affected and occupying a large share of the market are art and video games, other sectors are beginning to emerge.
The metaverse
The development of metaverses is a real opportunity for NFTs. In these blockchain-related connected virtual worlds, millions are spent on acquiring objects, properties, domains, and many more. One of these most well-known virtual universes is Decentraland, but there’s also The Sandbox, Meta, Otherside, to name a few. Real estate NFT is also in vogue in these spaces where everything can be bought.
Luxury
Luxury brands are also present in this universe and big names already have their token. NFT luxury is a reality and many real items are linked to it. We thus have NFTs shoe, dress, bag, etc. These can be unique or limited edition luxury items.
The young luxury brand Kalissa Paris , for example, is strongly rooted in NFT luxury in Paris, with luxury items. This French luxury 3.0 brand integrates an NFC chip into high-end physical clothing, a revolution in this field to avoid the risk of counterfeiting. With stores that combine luxury and metaverse, it will be possible to try the items offered in person or via your avatar.
Cinema
Today, there are more and more NFTs related to films never shown or scenes not known to the general public and which come from successful films. And not surprisingly, many are interested in this kind of images or never-before-published scenes from their cult films.
The music
Whether for songs, full albums or collections, there are now singers who offer NFTs. Even if it is not yet very well developed, notable sales are made in this area.
Publishing
The authors are also determined to invest in this trendy innovation for the dissemination and distribution of their writings. Whether in the form of an ebook or PDF files, NFTs encoding limited editions of books are available.
What are the notable examples of NFTs selling?
With the billions already spent on NFT, digital goods of all kinds have already been sold or bought. As surprising as it is, some goods for the least banal have been sold with millions of euros. It is of course, the world of art that carves out the share of the wolf in this market even if other sectors such as the world of games are also flourishing.
One of the very first collectible NFTs objects was CryptoKitties, a game based on the Ethereum blockchain. This game allows players to collect and breed virtual cats, each of which is unique. This was followed by various and varied collectibles that are well appreciated by collectors.
Notable examples include:
- The GIF “Nyan Cat”, a colorful flying pop art cat that was sold in February 2021 at 300 ETH corresponding to more than $ 550,000 at the time of the auction;
- The NFT of the viral video “Charlie bit me”, showing a baby biting his brother’s finger, viewed more than 800 million times on YouTube that was sold for about 700,000 euros ;
- The first tweet, that of its founder Jack Dorsey which was sold at auction for $ 2.9 million;
- The digital works of the musician Grimes liquidated at more than 6 million dollars;
- CryptoPunk #5822 sold for $23.7 million in February 2022;
- The work “Everydays: The First 5000 days” by artist Mike Winkelmann aka Beeple which was sold at auction by christie’s auction house in March 2021 for $ 69.3 million. A great record and an incredible amount if we consider the liquidation price which was 100 dollars;
- The work The Merge by the artist Pak which was sold in December 2021 for $ 91.9 million on the online auction site NIFTY, a new record.
There are many other examples of NFT sales at incredible prices , as speculation is rife.
Why buy an NFT?
The interest of an investment in this universe is based on the very nature of the technology used for their design. The certificate of digital ownership held by the person who buys an NFT provides information on the author of the work, the cost at which it is sold and the name or wallet of its buyer. This data is tamper-proof thanks to the blockchain that guarantees the security of the NFT purchased.
Aside from this aspect, scarcity is an important factor in the interest of NFTs. Indeed, as there can normally be only one owner for an NFT, each of them is therefore a rare material. Thus, because of the law of scarcity which means that everything that is rare creates upward pressure on the price, depending of course on supply and demand, there is a certain interest in buying it. Like limited editions of objects or goods that attract wealthy people who do everything to buy them, it is in the same way that some NFTs attract investors. Investors react quickly for the purchase before others get ahead of them.
On the other hand, there is the pleasure of collecting that guides the purchase of NFTs, regardless of their real or supposed value. The fluctuation inherent in their value is similar to a rather risky game of chance. Some people have a taste for this kind of situation, which pushes them to invest a lot in it.
In addition, in the field of art, NFTs constitute a new field that gives more autonomy to artists. They are no longer necessarily dependent on galleries or auction houses for the distribution of their creations. In the same way, lovers of these works deal directly with authors who enjoy greater income from their work. This is due to the fact that there are no longer any intermediaries between artists and buyers.
How to buy or sell an NFT?
Like cryptocurrencies, non-fungible tokens can be bought or sold online on dedicated websites. In reality, there are different online marketplaces where this type of digital asset can be purchased or traded. But before any purchase, you need to have a digital wallet for storage.
Which wallet to store NFTs?
As for non-fungible tokens related to the Ethereum network, the purchase is made through a platform that is a browser extension. This is Metamask, a decentralized application that allows you to interact with the various blockchain components of this crypto. This external wallet, called non-custodial, includes all tokens created on Ethereum regardless of their fungible or non-fungible appearance.
As soon as you have access to Metamask, you can interact with the Web3, by reloading your account with a credit card for example, and buy the NFTs of your choice on a specialized marketplace using the digital currency accepted on the network, usually ETH, but also SOL on Solana, BNB on the BNB Chain, rare on Rarible, etc. Once the transaction is completed, the purchaser of the digitized property must manage his wallet as a digital safe, the Metamask password and the wallet private key being stored in a safe place.
To sell your NFT, you must go to a website offering this service and connect to Metamask. The various desired transactions can be made from this space. Apart from Metamask, there are other digital wallets that allow you to exchange NFTs. These include:
- Alpha Wallet;
- Coinbase;
- Fortmatic;
- Phantom;
- Enjin …
These different wallets are very reliable and the exchanges that are made there are done safely.
Where to buy and sell NFTs?
After choosing the wallet for storing non-fungible tokens, one can then go to the websites that exist to make purchases or for sale. These marketplaces are like online collection sites where investors can find all the NFTs they want.
So, whether for the purchase of digital artworks , trading cards , NFT GIF, NFT image, NFT video, NFT 3D, NFT pixel, NFT games, and many others, the offers are available. The sales system is similar to the practice of auction houses where the investor makes an offer hoping to win the item concerned, when it is not offered at a fixed price .
Among the different platforms where one can buy or sell non-fungible tokens, some are very popular. The various transactions are carried out with ease.
OpenSea
This is the largest non-fungible token website that exists today. OpenSea is also the very first platform that was created for their exchanges. People who use it can buy or sell NFTs of all types. There are assets of types ERC 721, ERC 1155 and also exclusive digital assets .
It is easy to buy on OpenSea, because the catalog offered is as rich as it is varied in terms of content. Tens of millions of NFTs are listed category by category. It is not for nothing that this platform remains and remains the most popular in this field. It is the world leader in terms of volume, users and speculation carried out daily, with volume peaks that can exceed USD 300 million daily. Thus, millions of euros are spent every week on digital assets of all kinds. You can buy or sell, among others:
- Domain names;
- Land in the virtual world;
- Game characters;
- Collectibles;
- Iconic collections like the NFT Bored Ape Yacht Club;
- Digital art;
- Musical works.
OpenSea is compatible with blockchains such as Ethereum, Klaytn, Polygon and many others. It is very easy to sign up, as everything is done to make it easy for investors to use.
For the fees charged, OpenSea charges 2.5% commission to sellers and 2% to buyers. It should be noted that it is possible to sell NFTs at a fixed price, at a decreasing price or at auction. It is the buyer who pays the transaction fee for fixed-cost items, while the seller pays the transaction fee if it is an auction. Finally, the various transactions on this marketplace are automatic, which means that they must be fully carried out to be validated.
Rarible
This platform is an alternative to sellnon-fungible jetons, mostly those that are oriented towards digital art . In reality, on Rarible, many transactions are related to digital artworks. Nevertheless, other types of NFTs related to goods such as video games, music, images and others are also present in Rarible’s catalog. It therefore offers a wide variety of non-fungible tokens, which means that the possibilities of purchases are diverse.
Rarible has a pretty impressive reputation, as it is available in almost every country in the world. In addition, it is compatible with various blockchains such as Ethereum, Flow and Tezos. In the same vein, Rarible offers users a plurality of convenient payment methods. Exchanges can be made with the most popular crypto wallets , but also with credit cards or debit cards. As for commissions, they are 2.5% and are perceived on both purchases and sales.
Binance NFT
This is a great platform alternative for buying or selling non-fungible tokens. Indeed, Binance is no longer to be presented with the reputation that is its in the world of digital currencies.
When it comes to NFTs, Binance’s marketplace is naturally compatible with the BNB Chain blockchain, which comes from the same group. It is also compatible with Ethereum, which makes speculation quite easy. In addition, the website has a very practical ergonomics, making it easier for beginners to use. Moreover, as for the transaction fees, they are only 1%.
Crypto.com
This website is very well known for exchanges concerning cryptocurrencies, but it is also useful for the exchange of NFTs. Indeed, Crypto.com has also launched a marketplace for these exchanges and there are already more than 10 million users on this platform, which shows its level of popularity and reliability.
On Crypto.com NFT, there are no transaction fees on non-fungible token purchases. As for sales, the commission is 1.99%. On the other hand, Crypto.com offers very interesting payment methods that include credit cards and debit cards, unlike many other sites. In the end, most marketplaces only offer payment methods that favor the use of
cryptocurrencies.
As for the NFTs offered, the catalog is quite rich and varied with interesting achievements. Thus, you can exchange NFTs related to art, music, games and sports.
SuperRare
It is a P2P art NFTs exchange platform that connects producers and collectors. The particularity of the SuperRare marketplace is that it is exclusively dedicated to artists who must meet certain well-defined criteria. Thus, those who wish to join it must submit their application and wait for superRare’s evaluators to approve it.
This extraordinary platform exclusively hosts works of art that must be authentic. Indeed, unlike what is done on other platforms, the achievements in the SuperRare catalog are only available in one copy. It is not possible to create NFTs art in multiple copies of the same work of art, even if the versions are one of a kind.
In addition, SuperRare users must have a Metamask wallet. Similarly, the only means of payment on this marketplace is the crypto ETH. In terms of commissions, 15% is taken from the seller, which is very high compared to what is usually practiced. The platform also collects a 10% fee for each sale made on the secondary market. Also, 3% of the final price of the work is levied on the buyer.
Other platforms to buy or sell NFTs
There are many other websites for non-fungible token exchanges. These include:
- NiftyGateway;
- NFT LaunchPad;
- AxieInfinity;
- BakerySwap;
- KnownOrigin;
- Foundation;
- Coinbase;
- Solsea;
- Mintable;
- NBA Top Shot.
The choice of the platform is made according to the needs of each one taking into account the specificities specific to the marketplace, and the means of payment proposed.
What is the most suitable cryptocurrency to buy an NFT?
According to the marketplace, it is possible to make transactions on non-fungible tokens with all the cryptos usually used and accepted on it, including the token of the network used or the currency of the website in question. However, even if, in some cases, Bitcoin and other cryptos are accepted, ideally, it is Ether that is the most suitable cryptocurrency for the purchase of NFTs, because the largest projects are on this network. To buy a non-fungible token with it, you have to proceed step by step.
Indeed, it is necessary to start by buying ETH on an exchange or a site selling cryptocurrencies. With the multitude that exists, this is not very difficult to achieve. It is best to choose OpenSea, a platform that mainly accepts this cryptocurrency and more than 150 others, for NFT-related exchanges.
Then, just transfer the resulting balance to the cryptocurrency wallet. This can be done directly with some platforms that have built-in wallet functionality. As soon as the balance of cryptocurrency essential for the purchase of an NFT is reached, it is necessary to connect the wallet to the platform. When this connection is made, all that remains is to browse the catalogs of collections of NFT works available on the marketplace to make the purchase of your choice.
What is the value of an NFT?
Some NFTs have been sold or bought at prices that are beyond comprehension while others are sold at paltry costs. This may seem difficult to understand, but in reality there is nothing extraordinary about this situation.
In reality, it all depends on how much money a person is willing to put on the piece they are interested in. This is especially true for non-fungible tokens auctioned and for which everyone makes an offer. It is also necessary to take into account the floor price which gives an idea of the perceived value of the product on the market. After that, it is the law of supply and demand.
By going to a site selling non-fungible tokens, the available catalogs provide information about the creator of the NFT and who owns it. Transparency is therefore required, which means that by having access to this information, interest in the work increases. This is one of the ways in which an NFT increases in value. Collectors flock to works created by specific artists or those held by certain celebrities.
It should be noted that it is not because an NFT has been bought with thousands or millions of euros that it is worth such sums. It can be difficult to find a person who can buy it at such an amount later. In any case, the owner can boast of having this unique work even if he can no longer sell it, it will be a collector’s item. At the same time, one can buy a cheap NFT and resell it for several million euros a few months or years later, depending on the hype on the project.
For NFTs of works of art, everything depends on the notoriety of the artist who created them. In reality, as in the physical world, the personality of the latter plays a determining role in the value given to his work. In addition, some NFTs are linked to goods that are in the real universe, that is to say physical properties (in real estate or luxury for example). Thus, the value of these goods conditions that of the token. Others are also linked to classic productions such as paintings that can be touched with your finger.
Thus, all these different aspects of non-fungible tokens and many more play in one way or another on their value.
How do I create an NFT?
The creation of an NFT is free, because it is not reserved for a certain category of person. Anyone can do it, as long as you have all the necessary tools for it. In addition, it is necessary to master the workings of the blockchain. This mastery is essential to guarantee the security of the crypto wallet, since the majority of transactions related to non-fungible tokens are done in cryptos.
However, an NFT is not created at random, because what mainly guides its creation is the desire to sell it later. For this purpose, it is therefore essential to have a cryptocurrency wallet. Thus, it is necessary to follow certain essential steps.
The choice of the platform for the sale of the NFT
This is the very first step in creating a non-fungible token and it consists in opting for the site that best suits your needs. Of course, each platform has its particularities and it must be taken into account when choosing.
With platforms like OpenSea or SuperRare, you are sure to create an authentic and unique NFT . On the Ethereum network for example, it is the crypto ETH that is mainly used in transactions, so you have to choose a site that uses this cryptocurrency. Otherwise, there will be additional fees related to the conversion.
Setting up a wallet
After choosing the ideal platform , you must configure a portfolio to evolve in the creation process. For this purpose, you can choose to install the Metamask extension, based on ETH, which is the one that is most used in this environment. But above all, you must opt for a wallet compatible with the network used, Metamask or Trust Wallet on the BNB Chain, Phantom or Sollet on Solana, Daedalus on Cardano, Core on Avalanche, the main thing is that it is adapted to your needs.
As soon as the setup is complete, care should be taken to copy the private key (usually a series of 12 or 24 words used as a security code) to a safe and secure place. This can be done on a computer, an online safe or even a physical safe. This is very important, because in case of loss of this code, even the platform does not have access to your account. It is therefore necessary to secure the code so as not to forget or misplace it.
Connecting the wallet to a marketplace
Thanks to the new Web3 features, the wallet created can be connected to the chosen exchange site in order to interact with the blockchain network. To do this, simply go to the website, click on the “Create” button and the list of compatible wallets will be displayed. It is then necessary to select the one that has been previously configured to make the connection. Once connected, we can then perform all the operations related to NFTs.
The creation of the token
It is possible to create an NFT for free, without having to pay gas fees that ensure the operation of the blockchain. However, to sell it, you will have to pay the transaction fees.
By opting for OpenSea, the creation of the non-fungible token can be done in about thirty minutes. To do this, you must click on the “create” button, choose Metamask or the compatible wallet, in order to generate a collection or a unique NFT. The next step is to accept the various terms of use by validating Metamask’s confirmation request. For the collection created, it is necessary to add a name, a logo and a description, and some technical information including royalties if you want to get a percentage on resales.
As soon as everything is finalized, all that remains is to add elements that we want to hit. In order to achieve this, simply click on “Add a new item”. This is the part of the creation process where all the elements that we want to link to nfTs are added to the collection. It is then necessary to sign the various contracts of the blockchain to validate the creation.
As for the elements to be added, many different formats are accepted. This can include a file of type:
- JPG;
- GIF;
- PNG;
- Gltf;
- Mp3;
- Mp4;
- Wav;
- Svg;
- Ogg;
- Webm.
In any case, the size of this file must not exceed 100 MB. Also, it will be necessary to add a name to the NFT token created.
In addition, other features can be added to the created part. It can be decided that it is blocked content, so that it can only be received by its owner, that is to say the future buyer or beneficiary (this feature should be explored soon with what is called “Soul Bound Token“). On the other hand, it is necessary to define the number of copies desired for the token thus created. It should still be borne in mind that the production of a non-fungible token in several original copies automatically reduces its value.
In order for the NFT thus created to be sold, it must first undergo a verification to ensure its authenticity. It is after this verification that the part is made available on the market through a launch called NFT drop. After that, buyers can make their offers to acquire it.
What are the advantages of NFTs?
The development of NFTs is revolutionizing the world in many ways, as they have many advantages. First of all, they are new investment opportunities for many people. Works purchased at more or less derisory prices can sometimes be resold with a very large revaluation.
In addition, these tokens give artists the opportunity to demonstrate authenticity in their creations while actually benefiting from them. They are unique, which attracts collectors of rare works of all genres. In addition, they are immutable, as they cannot be modified, replaced or erased as they are based on the blockchain. They are therefore tamper-proof, which makes their traceability easy, ensuring proof of origin and authenticity.
A final advantage of NFT is that it is possible to include a smart contract on a non-fungible token thanks to the blockchain. Indeed, we can include certain features in an NFT, which will allow for example its creator to benefit from a certain percentage of the profit each time it is sold.
What about the volatility of the NFT market?
One of the main concerns about non-fungible tokens is market volatility. In reality, when you want to invest in these digital assets , you have to take into account the risks involved. Their market is experiencing a very high level of volatility, which exposes investors to risks of loss.
Speculation about it means that an NFT bought at a gold price can quickly see its value collapse. It is difficult to make long-term predictions regarding the value of a non-fungible token. Even if its current value is well known because of its usefulness or rarity, in the near future the situation may change radically.
To protect yourself from this volatility, it is possible to opt for certain solutions. This is the case of ETH futures contracts that allow players in the universe of non-fungible tokens to set in advance the cost at which this digital asset will be sold or bought in the future. This allows buyers to be sure that they can resell the NFT in question at a certain minimum price in the future. However, this is only a short- and medium-term protection, as it is not intended to extend over the long term. This protection therefore has an expiry date and beyond this period, there is no guarantee of the value of the asset that will rise or fall.
On the other hand, there are also derivative contracts that allow some protection against market volatility. They consist in giving the right to those who hold these contracts to sell or buy the non-fungible asset at a predetermined price . It is not an obligation to sell or buy and here too there is a maturity beyond which the price can collapse.
Finally, they are also used for tax optimization in a bear market. Generally sold in Ether, their value can be expressed in USD or other fiat currencies, but it is often calculated and expressed in ETH, which allows, in the event of a fall in the price of the asset followed by a resale at a loss, to record a latent capital loss in FIAT currency , the speculator being able to buy back in the wake an NFT of the same value in ETH, from the same series, anticipating the next bullish rally.
What is the future of non-fungible tokens?
NFTs have already revolutionized the way we think about digital property, which was rather difficult to pin down. They are an economic innovation in the digital sector, which opens the door to new opportunities to make money. Their commercial strengths are undeniable in many sectors.
Indeed, outside the art world which benefits greatly from this innovation, NFTs have already established themselves in the luxury industries with major brands such as Kalissa Paris and in the entertainment industries. The world of entertainment, tickets for sporting events and transport will also benefit from their many advantages. This has already started and it will be a great way to combat counterfeit banknotes.
It should also be noted that many major brands have already taken the plunge by hitting their own NFT token. These are brands such as:
- Visa;
- Coca-Cola;
- Pringles;
- Nike;
- Dolce & Gabanna;
- Pizza Hut;
- Charmin;
- Taco Bell.
Hundreds of millions of dollars have already been injected by these major brands into this revolutionary field. It goes without saying that no one wants to be left behind regarding these digital goods that will occupy a prominent place in the near future.
Conclusion
In short, non-fungible tokens are in the spotlight because they are the new playground for investors from all walks of life. They unleash passions, encourage investment, or raise concerns among some who do not yet really know what it is. In any case, this situation reflects the ever-growing interest in these digital goods whose applications and functionalities are enormous.
The potential of NFTs is great and the future of property is already written in the present. Although it is interesting to invest in it, it should still be borne in mind that any investment presents risks and NFTs are not an exception to this reality. It is therefore necessary to know how to choose well in which NFT to invest so as not to lose your money.