Let's delve into the history of what non-fungible tokens are, where we understand their functions and uses, and deepen our understanding of how they are being used in trade. Non-fungible tokens have been around since the beginning of blockchain technology. The first cryptocurrency ever launched, Bitcoin, created a digital asset that was completely controlled by its developers. These assets were referred to as "bitcoins," and they gave their owners a certain level of value. The coins could be owned by a user and used to purchase or sell real-world assets (mainly BTC) through the Bitcoin network. This meant that these assets could be used to create fiat money on the blockchain, which was unprecedented at the time. This gave Bitcoin early adopters an edge over others who were looking to purchase cryptocurrencies because there was a clear way of using them to purchase real-world goods. Some of the first NFT games were created with Bitcoin in mind. For instance, Spells of Genesis (SoG) and CryptoKitties both make it possible for users to spend their cryptocurrencies in a game.
The popularity of NFTs began to grow significantly in 2017 and 2018. This was mainly because of the increased attention and usage of cryptocurrencies on the blockchain. Up until this point, games using blockchain technology were mainly focused on creating a digital asset that could be exchanged for real-world assets (fiat). However, more and more users were becoming interested in using NFTs and other blockchain tools to create advanced game experiences. This resulted in the creation of CryptoKitties, which became an instant success. By the end of 2017, it received more than $12 million in funds from investors. This was huge at the time, especially for a blockchain-based game. The price of a CryptoKitty was reportedly so high that a digital cat went for $110,000. This means that it was on par with the price of a work of art! This shows just how valuable NFTs can be. They can be used to create assets that have real-world value, not just game value. It was after the success of CryptoKitties that the ERC-721 standard was created. One of the main reasons this standard came about is because of CryptoKitties and the fact that it introduced NFTs to an even larger audience. This meant that people who had never heard about blockchain technology previously now understood what they were, how they worked, and how they could be used in a game. Around this time, blockchain technology started to become more mainstream, which also helped increase the number of developers who saw value in NFTs and other blockchain tools.
Today, non-fungible tokens can be used by any game because they are easy to build and integrate. The popularity of NFTs has led to many other possibilities for games that were previously thought impossible. It's also worth noting that many games are now designed to increase the value of NFTs. This is because, as we discussed earlier, NFTs are more valuable and can have more functions than standard digital assets. For example, CryptoKitties tracks the total number of cats that have been created and even allows users to collect and trade them.
In the near future, we will start to see a lot of games that use non-fungible tokens as their core currency. This will allow players to use NFTs to purchase items, services, and other assets within the game. These assets can be of any kind, including weapons and vehicles.
Non-Fungible Tokens Myths
There are several myths surrounding NFTs and non-fungible tokens. This is understandable, considering that most of these myths have been around for years. Here's a list of some of the more common myths:
1) Myth: "Ethereum has thousands of pending transactions" – This is one of the most common misconceptions about Ethereum. It reveals a misunderstanding about how blockchains work and how they process data. In fact, the amount of pending transactions has nothing to do with the number of people using the network or its popularity. It simply means that there are many pending transactions in this block, which is actually a good thing because it means that many developers and users are using Ethereum. The more people who use Ethereum, the more valuable it becomes.
2) Myth: "NFTs are a scam" – This is another common misconception about NFTs. This is true in some markets, but it is not the case in most cases. A few years ago, this was true because people were unfamiliar with the concept of non-fungible tokens. However, as time went on and more people understood what they were, this myth died out. Today, many professional traders who understand NFTs and blockchain technology's benefits are starting to view them as an investment rather than a scam.
This was shown by the fact that nine percent of all NFTs were traded on the Ethereum network during 2018.
3) Myth: "NFTs are too volatile" – This is another common misconception about non-fungible tokens. The price of an NFT will go up and down, just like any other coin or token. This is because it is not linked to a specific item and can be used in any number of games. That is why it can be traded for items in games as well as real-world assets.
4) Myth: "NFTs are too expensive" – This is not true at all. The price of NFTs varies, but the average cost is equivalent to that of other cryptocurrencies, which are already cheap compared to traditional currencies. This means you can get as many NFTs as you want for a fraction of the cost of a traditional currency.
5) Myth: "NFTs are too complicated and hard to create" – This is not true, either. It all depends on the game developer and which blockchain platform they are using. Since there are so many different types of blockchain platforms, developers will be able to use whichever one they prefer. However, if they are using Ethereum, they can use NFT-Crowdfund to create their own NFT token. This means they can rely on a protocol to create their NFT without learning a new programming language or building their own smart contracts. The only thing they will need is some knowledge about Ethereum and how it works.
6) Myth: "NFTs don't bring value to the gaming industry" – This is another common misconception about non-fungible tokens. There are a lot of games that allow you to collect NFTs. This means that these features can increase the value of an NFT. After all, NFTs can be used in many different forms, including virtual items in games such as CryptoKitties and Spells of Genesis.
Problems or Controversies
When you tear off the first layer of NFTs, some overlapping issues start to arise which are: environmental, logistical, ethical, etc.
Many have pointed out the impact (extreme ecological impact) of NFT formation and trade explosions on planets already destroyed by climate change (climate change-related disasters, environment, racism, inequality). What is the relationship between NFTs and climate change? Simply put, a lot of energy is used along with the process of issuing NFTs, adding tokens to the blockchain and and the wave of transactions (bidding, resale, etc.). Multiplying that by a huge market driven by greed, we are initiating new forms of environmental destruction. Ethereum is a platform that hosts a fixed blockchain with many of these NFTs. This promised to transform the system into a carbon-depleting form so much that it kept it working safely, but this hasn't happened yet. The timing of this switch is still unknown.
From a fairness and ethical standpoint, the choice to sell a particular art as an NFT may not have the right opportunity it has. Digital artist RJ Palmer recently warned on Twitter that there are accounts that extract art by minting tweets from fellow artists, artists, and selling them as NFTs. The work of a budding artist can be severely abused if not properly enforced or investigated whether the person writing the NFT is the real artist, the true creator, or the copyright holder. It has created an environment in which the relative anonymity of cryptocurrency transactions can be exploited, stolen and harmed.
Make enlightened business decisions
Transitioning the practice of art into cryptographic art requires careful planning as a business decision as well as the selection of art dealers and galleries. The crypto art industry is now valued at $445 million, with Nifty Gateway leading the way in terms of sales volume. Because the competition is intense, it's critical to grasp the lingo, choose the appropriate platform, and seek out well-informed professionals for guidance. Do not focus on stable or fast profit yet. It is advisable not to allocate funds from the sale of cryptographic arts to pay the rent. Thus, it won’t be different from the "old" art market.
Studies show that, given the environmental impact of Ether mining, the footprint a computer needs to create a single board NFT is the same as the total electricity usage of EU residents in a month. In comparison, for the year 2020, Louvre Museum consumed same amount of electricity as 677,224 households in Paris. It would be good to invest some of the income earned from the art of cryptography to fund Jason Bailey's Green NFT grants and other attempts to decrease NFT consumption of energy.
Just as you would experiment with a new medium, experiment with one piece at a time. It's a good idea to complete, embed, or create activated encrypted art by playing it back in media, such as playing it as an animation in .mp4 or .gif format, adding sound, or converting a picture into interactive digital art. You can also create an NFTonly series to see which works are the most popular. We experiment and research what's best for your target collector and you, while staying true to your values and the brand community.
Therefore, as long as the legal consequences are understood, NFT can provide an attractive alternative to the usual art market. The choice of the market and the precise artwork to be sold is the result of precised consideration of commercial, practical and legal aspects.
