Non-fungible tokens (NFTs) are a new trend in the cryptocurrency market that is developing at a record speed.
In 2020, the total NFT trading volume was just $33 million. According to the latest data, at the end of 2021, the trading volume of non-fungible tokens surpassed $13 billion. This represents a massive 42,988% increase compared to 2020's NFT trading volumes.
According to some experts, the 3 major reasons for the parabolic growing interest in NFT tokens are:
- Scarcity is one of the features that has made Bitcoin a valuable investment today. Some NFT tokens exist in a single copy, and their cost can reach $500,000,
- Indivisibility - you and only you own 100% of the asset (fractional NFTs are an exception);
- Protection - blockchain-based registries that provide an immutable record of ownership, preventing duplication or destruction of NFTs;
Today, experts unanimously assure that the popularity of NFT tokens will grow and gain popularity not only among collectors, but also among traders and investors.
What is NFT?
Many people associate NFTs with cryptocurrencies. NFTs are non-fungible tokens. Unlike cryptocurrencies and regular tokens, NFTs are unique: each exists in a single copy. NFTs are works of art, real estate, or artifacts in a computer game, for example; they are all unique and cannot be copied.
NFTs use the technology behind cryptocurrencies to reliably and securely record the authenticity of a digital asset. The blockchain is the way in which you can have a reliable record of holding cryptocurrencies without the need for an intermediary or central authority. The same technology allows validating the authenticity of a digital good and differentiating it from copies that, in any other sense, are identical to the original.
NFTs give a digital good an irreproducible character and this completely changes the economic rules of the digital world. The creation of digital goods (such as books or music) had already represented a major rule change in the economy because they can be reproduced instantly and practically free of charge with no loss of quality. This implies the existence of abundant goods with a low production cost, but it also implies the challenge of monetization by companies and the disruption of various industries such as newspapers and magazines.
NFTs are a technology that is causing disruption in the digital world because it changes the logic of (some) digital goods. Although a digital good, such as a photograph, can be copied millions of times, you can have only one (or a few) that can be distinguished with an NFT and this makes it, in a certain way, unique. The existence of NFTs has led to the emergence of new NFT platforms. What is NFT marketplace?
What is NFT marketplace?
An NFT marketplace is a platform or, more simply, "NFT shopping mall" where they can be sold, bought or exchanged. The NFT market is created specifically for non-fungible tokens. However, all kinds of digital works are stored, displayed, sold and in some cases even created in NFT platforms.
Today there are many such NFT platforms, but we will focus on the 5 most popular and interesting NFT marketplace. AtoZ Markets figured out the NFT market for you to buy or sell non-fungible tokens.
OpenSea is one of the largest and most popular marketplaces where you can buy or sell NFT tokens. This NFT marketplace contains thousands of different non-fungible tokens: from game cards to paintings by contemporary artists. The site also maintains its rating and tracks the most popular NFT tokens.
It is on this NFT market that NFT tokens from a video of a Russian eating a bat, a token of a burnt Banksy painting and many others are displayed.
The Sandbox marketplace NFT platform allows you to create, buy and sell assets in the Decentraland meta-universe using LAND tokens. The first sale of territories in the LAND space took place at the end of 2019, and in February of this year, the developers sold land plots for the second time.
Within a few days of the second presale, 6,192 blocks of virtual space were sold for a total of 800 ETH or more than $200,000. Among the buyers are both ordinary gamers and large gaming companies - CryptoKitties, My Crypto Heroes, Old Skull Games, as well as Dapp.com , a website dedicated to ranking and analyzing decentralized applications.
- “Each LAND token is an NFT token that is on the public Ethereum blockchain (ERC-721). Also, the possession of LAND allows you to create your own districts on the platform, which have enhanced functions compared to LAND,” the website explains.
SuperRare is a digital art marketplace. Digital artworks function as non-fungible tokens that can be bought and resold, but cannot be exchanged directly for each other.
Artists validate their work by creating a tokenized certificate. They then set a selling price and allow potential buyers to bid on their work. The investment aspect of SuperRare is its aftermarket. Anyone can resell the purchased artwork as if it were at a regular auction.
Selected works on SuperRare have sold over $175,000. Several other works have been sold for between $15,000 and $45,000. At the time of writing, SuperRare is ranked fourth in seven-day trading volume among all NFT platforms.
Rarible is an NFT marketplace and today has one of the highest trading volumes of any NFT marketplace. Using their own RARI token, artists can create and sell their work on the NFT market.
A unique feature of the NFT marketplace is the ability for artists to collect royalties every time their work is resold. Mark Cuban created his own non- fungible token on the Rarible marketplace, which sold for $81,000. Rarible NFT market has established itself as one of the most popular for investing in NFT in the form of digital art and collectibles.
NBA Top Shot
NBA Top Shot is a hugely supported NFT market. Some investors may find a partnership with a major American sports league attractive. The NBA Top Shot concept is to publish and sell digital basketball collectible cards. However, instead of static images of players, the NBA Top Shot cards contain video clips from past games. Each clip is a unique token of its kind . As of early February 2021, NBA Top Shot had sales of $43 million.
Experts are confident that amid growing investor interest in sports, the NBA Top Shot could be a good investment.
Last year, Crypto exchanges like Kraken, Coinbase, and FTX gave their customers the opportunity to create, sell and buy NFT tokens on the Ethereum blockchain. Recently, video game retailer GameStop is also planning to launch a marketplace for NFT tokens for gamers by the end of 2022.
How to register on marketplace NFT
If you've never used the NFT market before, don't worry - the process is extremely simple. Here is a quick step-by-step guide.
- Register on the marketplace
- NFT Choose your preferred digital wallet that will allow you to store your NFT and Cryptocurrencies. You may need to buy some cryptocurrencies depending on the currencies that your NFT provider accepts. You can buy cryptocurrencies with a credit card on platforms like Coinbase, Kraken, FTX, and even PayPal.
- Find out about NFT's bids, including items sold at a fixed price or put up for auction.
- Make an offer or buy the selected NFT item immediately
- If you are bidding in an auction, you will be notified when/if you have been outbid, similar to eBay.
- Once the item is purchased, the platform will facilitate the completion of the transaction.
Now that you know what is an NFT marketplace is, should you buy NFTs?
Should you buy NFT?
Investing in an NFT is largely a personal decision. If you have the funds, it makes sense to consider this form of investment, especially if the piece you are buying has meaning to you.
But the value of NFT is entirely based on how much someone is willing to pay for it. Therefore, it is purely demand, and even a passing fad, that will dictate the future of your NFT, and not any objective indicator (technical or economic) that normally affects stock prices and (at least generally) the basis of investment demand.
This means that you can resell the NFT for less than what you paid for it, or you can't resell it at all if no one is willing to buy it back. As with stocks in the capital markets or figures for strategic games in Allegro.
NFTs are also taxed on capital gains (such as when you sell stocks at a profit), but country tax systems have not yet developed a uniform practice in this regard. Additionally, cryptocurrencies used to purchase NFT may also be taxed if their value increases.
Therefore, the NFT is worth considering like any other investment: know the market, understand the risks, and if you decide to participate in this market, use common sense.
Meanwhile, tax agencies like the Internal Revenue Service have yet to directly address NFTs, but some experts argue that they could be considered "collectibles," meaning they would be subject to capital gains taxes.
"It's an existential issue looming for the entire industry," Pratin Vallabhaneni, a partner at White & Case, said of the impending regulation.