Kevin Mccoy created the first-ever NFT in 2014, titled ‘Quantum’, and has since sold it for $1.4 million in June of 2021. Since then, the sheer amount of NFTs has grown as well as the number of people who interact with them. There are now more than 250,000 people trading NFTs, otherwise known as Non-Fungible Tokens, on Opensea every month. It is currently the most popular NFT marketplace. Among these users, celebrities such as Justin Bieber, Eminem, Snoop Dogg, and Neymar Jr. all browse the site and collect these internet jpegs.
Additionally, they are all members of the Bored Ape Yacht Club, a collection of 10,000 apes that minted for 0.08 Ethereum, or $192 equivalent, in April of 2021. Today, the collection of 10,000 apes sits at 144 ETH or a little over 420,000 USD. Hence, NFTs are here to stay. Yet, only twenty-six percent of people in the United States can explain what an NFT is. Another seventy-four percent are yet to know what one is. So let’s dive into the preface behind these internet images.
NFTs are digital assets existing on the blockchain, such as the Ethereum or Solana blockchain. They traditionally take the form of an image, sound, or collectible. However, what makes NFTs unique is the fact that artists and developers are free to represent their work in forms other than the three mentioned. They can correlate to physical artwork itself!
When you buy an NFT, you essentially purchase a line of code that can manifest into what the creator wants it to be. Some argue that an image can be screenshotted and be considered ‘stolen’. However, the stolen or reproduced image cannot be sold for the same amount as the original image due to the line of code correlating to it on the blockchain.
The History Behind the NFT
Meni Rosenfield, a Chairman of the Israeli Bitcoin Association, used the analogy of colored pennies to represent NFTs. A penny is equal to another penny, yet he colored each coin differently, making them unique. The development of the token allowed his idea to become a reality. However, limitations of the Bitcoin blockchain halted the progress of the NFT. Until Quantum, the first known NFT ever.
Experimentation and development occurred following Quantum. It happened on the Counterparty blockchain, a secondary Bitcoin blockchain. However, two software developers, John Watkinson and Matt Hall developed the original ‘CryptoPunks’ in 2017 (sitting at a floor of 60 ETH or a little over $177,000) on the Ethereum Blockchain. And hence, the shift to Ethereum commenced. Today, developers utilize smart contracts to deploy their work, which has contributed to the growth of NFTs by making the process easier than before.
All this talk of blockchains, yet where are they located? And to that, there is no answer. Blockchains are decentralized systems maintaining a correlating cryptocurrency. They reside across several computers through a peer-to-peer network. Blockchains can be a source of passive income through mining. Mining involves the process of trial and error puzzle solving and heavy computational power. A successful miner is paid in cryptocurrency, which they can then transfer to physical currency.
As the market grows, so does opportunity within the field. A quick google search for ‘NFT jobs’ reveals a plethora of opportunities from top companies. All are looking for those with skills in managing smart contracts, and the commercial development of collections. Additionally, many have made the reselling of NFTs a source of income. This includes buying listings on the secondary market and selling them later on for a quick profit through the use of alpha, or early information not available to the public that could sway the floor value of a collection. Additionally, these internet images are arguably used as a status symbol, replacing the fad of showing off luxury cars and watches. The growing appeal behind this is that the wealthiest in the world can invest in a collection and watch the collection rise in value, in contrast to cars which lose value over time.
The impact NFTs have on our lives could be argued as good or bad, however, it is an impact we must grow accustomed to as they are here to grow.