NFTs are not just a bubble — Here’s why:
What are NFTs?
NFTs or Non-Fungible Tokens represent a new and innovative token system built on blockchain, where token codes can be attributed to different assets. They may be artworks, in-game items, musical fragments, web domain names, and academic pieces, and so on. Traditional cryptocurrencies are being given the same code to ensure that no digital token differs from its counterpart, similarly to how we approach real-world currencies. However, with NFTs the difference lies in the fact that each NFT token code is unique, which explains the “non-fungible” term that is being used in defining this concept. This “uniqueness” factor paired with the capacity to attribute files of different natures, makes from NFTs the perfect vehicle for tracing ownership in the most reliable and decentralized technology of the modern era so far, which is the blockchain.
When did it all begin?
Here, accounts might vary, with some arguing that the NFT craze began with the “Pepe the Frog memes” which were created by the artist Matt Furie on the BTC chain and was later sold at an auction in 2016, where the rarest of them was sold for 205 ETH ($320,000) and was believed to be the highest NFT sale at that time.
However, many people believe that NFTs cemented their place in the industry, with the creation of “Cryptopunks”, which has been the first NFT project to issue computer-generated NFTs on the Ethereum blockchain, in 2017. Others argue that the NFT “era” began the same year with the first “gamified NFTs” to ever be created on the blockchain, namely the “Kryptokitties”.
However, we believe that the NFTs debuted on May 3, 2014, with “Quantum”, created by the New York Artist Kevin McCoy and developed by the coder Anil Dash, which sold this year for $1.4 million USD. The impressive sum can be attributed to Quantum’s significance for the blockchain space, by being the first NFT to ever exist and thus, be a road opener for new technology to revolutionize the way we operate on the blockchain.
The $1.4 million NFT Market Value
The $1.4 million dollars auctioned for “Quantum” in 2021 appears to be a drop in the ocean compared to the highest auction that has ever been registered so far in the NFT space. We are of course talking about Beeple’s “EVERYDAYS: THE FIRST 5000 DAYS,” sold by Christie’s in March, for the whopping sum of $69 million.
Since then, the crypto space has entered an “NFT gold rush”, with NFTs on art and collectibles being launched from various specialized platforms adding millions of dollars to the overall crypto trading volume.
Why aren’t NFTs just a “bubble”?
In short, the NFTs are not just a bubble because they are intrinsically linked to the organic human need to collect things. But, why do people collect? It turns out that our urge to collect things is rooted into our primary impulse to make the most of our environment, by collecting objects that we could later use to craft tools for hunting, building shelters, and so on.
Collectibles as monetary vehicles
With the evolution of the Economy, rarer have become relatively good investments. Nowadays, many people practice some “treasure hunting” of some sort, where they buy antiques, books, jewelry, restore them, and sell them for a profit. If done right, this sort of activity can actually be profitable, given that there is enough research being done beforehand, and there’s a market for the desired niche of antiques.
That being said, NFTs have become the perfect kind of collectibles due to their versatility and ease of transaction. Unlike real-world art and collectibles, NFTs don’t occupy virtually any space; don’t need maintenance, maneuvering, and don’t require exhaustive and expensive valuations since rarity traits are easily quantifiable and at everyone’s reach. Also, as history has proven, certain NFTs and NFT collections can lead up to important profits. For this reason, it can be argued that NFTs have become a real store of value.
Collectibles and Identities
However, the psychology of collecting is much more complex. Acquiring items from a certain collection will almost certainly make the collector attach a sentimental value to the process. More often than not, it happens that collectors tend to hold onto their objects as they represent installments where self-indulgent as possible. Collections have value because we like them and feel empowered by the complete ownership that gets transferred to us through acquisition. Acquiring a very rare item can be a means to display status. Simply put, people can use collections as a way to display their wealth, to show that they are part of a group, and even hold a specific set of values.
All being said, the ownership exchange of collectibles may lead up to the formation of close-knit communities, as strong feelings of ownership and nostalgia are mixed up inevitably with elements of identity, in this process of transacting collectibles.
This is also true when it comes to NFT art and collectibles. Almost every NFT collection is building its own community and tries its best to create a certain group identity that will help it stand out from the rest. Here, rare NFTs can also serve as one’s statement of wealth, besides being a store of value for the years to come.
For these reasons, we strongly believe that NFTs are not just a “bubble”, but are here to stay.
