What Is an NFT? Inside The Next Billion-Dollar Crypto Sensation.
March 8, 2021 6 min read
Opinions expressed by Entrepreneur contributors are their own.
If you haven’t heard of them now, it’s only a matter of time. Whether its digital sports cards or digital artworks, NFTs have been taking the internet by storm and have simply doubled their total volume in USD in the month of February alone. So what are these digital assets selling for fortunes, from niche marketplaces to world-famous auction house Christie’s?
What does NFT mean?
An NFT is a non-fungible token existing on a blockchain. A token is the sign of ownership of an asset. For example, a concert ticket is a sign of ownership of one space for a concert. A Bitcoin is the title of ownership to the underlying value of the Bitcoin. A token is a digital asset, stored on the blockchain. As the blockchain is transparent, it is easy for all to see who is the owner of what token.
Fungible refers to an asset that is easily exchangeable. A dollar is very fungible, you can give me a dollar in exchange for some good and I can then re-exchange it for another service. A neighbor could borrow a pound of sugar to bake a cake and buy me another one in a few days when he goes to the supermarket. It doesn’t matter that the sugar is different, it is easily replaceable and exchangeable.
A non-fungible token is a unique token that isn’t easily exchangeable with another. The foremost use case is artworks. Artworks have been selling on the blockchain for millions of dollars (or in this case a blockchain native currency, Ethereum). Examples abound but the most famous NFT artist so far is Beeple who first sold 21 pieces of artwork on digital marketplace Nifty Gateway for a total of $3.5 million. He then went on to sell his masterpiece “EVERYDAYS: THE FIRST 5000 DAYS” at Christie’s for $6.5 million. Beeple is Mike Winkelmann, previously a graphic designer from Charleston South Carolina.
Artworks are not the only things exchanged in these marketplaces. More and more volume in the NFT space is coming from digital sports trading cards. In fact, fans of basketball have already spent $230 million trading NBA Top Shot cards. These cards represent certain classic moments for the sport and there is only a limited amount of each. The ownership and the scarcity of these cards are insured by the Ethereum blockchain. Recently, a rare Lebron James highlight sold to the highest bidder for a crisp $200,000.
Related: How Esports and Gaming Are Bringing Crypto to the Masses
Why would anyone pay for this?
The crazy thing about these purchases is that anyone can download Beeple’s artwork or Lebron’s highlight. It is as simple as clicking ‘save image’ on your laptop. What buyers are after is not the artwork in itself but the proof of ownership for that artwork. The buyers are akin to art collectors putting their most prized possessions on display in museums. NFTs represent a way for art collectors to encourage financially their favorite artists online.
As humans evolve more and more, especially in lockdown, it seems only natural that we decide to buy art in the digital world as well. One step further, certain platforms such as Decentraland allow users to buy land or real estate in a digital world.
While this has been no more than a niche sector of the internet, in the last six months it has truly exploded onto mainstream media and seems to be here to stay. While the first experiments with NFTs date back to 2013-2014, the market seems to arrive to a certain maturity and mainstream appeal in 2021.
Several issues remain with the NFT market, however. As the main currency of exchange and the network on which marketplaces are built is Ethereum, transaction fees are very high and it is commonplace to have to pay $50 to transfer the property title of an NFT from its creator to the buyer. On platforms such as Rarible or OpenSea, the current market leaders, not only does each transaction (creation of the NFT, bids, transfer of ownership) costs users large sums, they also amount to the terrible carbon footprint of the Ethereum network.
There is hope, however, as Ethereum is planning to change its architecture by the beginning of 2022 to be much more eco-friendly. In the meantime, certain marketplaces have found technical solutions to these limitations. Drops.is, an upcoming NFT project that lets you do a lot more with NFTs than just buy and sell. It allows users to create NFTs, bid, stake, take loans by using your NFT as collateral. It’s also using a Layer 2 solution by building on Polygon network, reducing both the costs of these transactions to a few cents (which are paid for by the platform itself) and the important environmental costs.
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The new creator economy
The most exciting part of the NFT revolution is that artists specialized in digital arts will finally be compensated for their work. Until now, it was very hard for artists to monetize their creations because of the very nature of digital art and its infinite reproducibility. Now, true fans of the artists will be able to directly support them with any middle-men or platform.
Mainstream artists seem to have caught on to this trend with artists such as Grammy-winning Kings of Leon releasing their latest album as an NFT. It’s also the case of Grimes, Lindsay Lohan or even Soulja Boy who all released NFTs representing music, digital artworks or even the ownership of a limited-edition vinyl.
But it is not only artists who can make money from NFTs, the market for digital sports card for example has already exploded. Soccer trading card platform Sorare has seen the unique 2020-2021 Kylian Mbappé card sell for $65,000. Cashing in on sports fans stuck at home has turned out to be extremely profitable for these platforms, so much so that it has brought the attention of gaming giant Ubisoft who has now partnered up with Sorare for future projects.
NFTs are the hottest item in the recent crypto craze and as mainstream artists start to discover them they will only become more popular and coming soon to a digital market near you.
Crypto Coin Outperforming Bitcoin Is About to See Supply Reduced
Bloomberg
(Bloomberg) – Bhavish Aggarwal surveys the empty 500-acre expanse encircled by neon-painted homes, tiny shrines and mango groves. The high-profile Ola founder hopes to erect the world’s largest electric scooter plant on this vacant plot on Bangalore’s outskirts within the next 12 weeks, cranking out about 2 million a year – a landmark for one of India’s largest startups.A two-and-a-half hour drive southeast of Bangalore, Aggarwal’s envisioned $330 million mega-factory marks a bold foray into uncharted territory for an entrepreneur who’s spent 10 years building a ride-hailing giant. His follow-up Ola Electric is getting into an electric vehicle market already crowded by names from Tesla Inc. to China’s Nio Inc. – albeit with a humble two-wheeler initially – but that could play in a $200 billion domestic EV industry in a decade.If all goes according to plan, his Ola Electric Mobility Pvt hopes to make 10 million vehicles annually or 15% of the world’s e-scooters by the summer of 2022, starting with sales abroad later this year. That would be one scooter rolling out every two seconds after the plant expands next year. It’s the first step in Aggarwal’s goal to eventually assemble a full line-up of electric cars in a boost for Prime Minister Narendra Modi’s Make in India and sustainable mobility ambitions.“It’s a vehicle we’ve engineered ground-up so India can get a seat at the world EV table,” the 35-year-old said in an interview last week. Indian companies “have the smarts and energy to leapfrog into the future of EV.”Aggarwal is getting into the market just as the core business of ride-hailing slows during the pandemic. Fume-spewing scooters and motorcycles remain the most popular mode of transport in India’s infamously smoggy cities, 21 of which ranked among the 30 most polluted urban centers in the world in 2019. But the country is now pushing electric vehicles and self-reliance in battery technologies that could, according to the think-tank CEEW Centre for Energy Finance, underpin a $206 billion EV market in 10 years.That won’t be easy. Middle-class Indians worry about air quality but are reluctant – at current rates – to fork out twice the price of a regular scooter for an electric version. Aggarwal too will have to fend off competition from not just local rivals Hero MotoCorp and Bajaj Auto, but also up-and-comers such as Ather Energy and Chinese brands including Niu Technologies.Read more: Why One Startup Founder Turned Down a $1.1 Billion SoftBank DealThe entrepreneur takes inspiration from the likes of Tesla, Nio and Xpeng Inc., which have out-engineered established auto giants with ever-cheaper batteries and over-the-air software capabilities, but he’s taking a different tack. He wants to sell affordable two-, three- and four-wheelers for urban rides. “Our ambition is to build the world’s leading urban mobility EV company,” he said.Ola Electric is Aggarwal’s second act. A decade ago, he pioneered ride-hailing in the country and took on Uber Technologies Inc., expanding across 200 cities before heading overseas to the U.K, Australia and New Zealand. His EV startup was incorporated in 2017 and became a billion-dollar company, or unicorn, two years later, when SoftBank Group Corp. and Tiger Global Management forked out hundreds of millions. It was the second time for the pair of global investors, even though Aggarwal had fought them to maintain control of Ola.This time round, he’s even more firmly in the driving seat. He’s also secured capital from Hyundai Motor Co. and Kia Motors Corp. and recently won over more backers whose names he wouldn’t reveal.“We’re very well-capitalized and investor interest is unprecedented,” said Aggarwal.Aggarwal, who often interrupts himself to ask “What do you think?,” wants to introduce five two-wheeler models at the outset, including mass-market, premium and self-balancing versions. Even more audaciously, he wants to get the first electric cars on Indian roads in 18 to 24 months. He talks about someday selling autonomous vehicles and futuristic four-wheelers that don’t look like cars.Read more: Next Big Wave of Tech Unicorn Listings Could Be in IndiaOn this particular Thursday, he zipped around on a sleek scooter prototype in the office park in the Koramangala neighborhood, the epicenter of Bangalore’s startup scene. He showed off novel lighting, removable batteries and a large storage trunk. His plan is to sell the scooters digitally as well as via dealerships, offering monthly payment plans to make it easier on buyers’ pockets.Electric vehicles now comprise fewer than 1% of all automobiles sold, estimate consultancy KPMG and the Confederation of Indian Industry. In India, battery-powered scooters could account for between a quarter and 35% of the two-wheeler market by 2030, and three-wheeled vehicles – popular locally – 65% to 75% by then.Vehicle affordability could be key to cracking the India market, and it boils down to the running cost per kilometer. Aggarwal’s not revealing prices yet but said his product would compete with traditional scooters going for about $1,000 apiece. “We’ll drive costs down by playing at scale.”To keep costs in check, Ola is designing, engineering and manufacturing its own battery pack, motor, vehicle computer and software. Like Tesla, it wants to keep costs down by building its own power cells. It’s testing charging solutions and battery-swapping stations. Last year, it acquired Amsterdam-based smart scooter startup Etergo BV to jumpstart its own scooter manufacturing.Ola’s factory site will sport more than 3,000 robots working alongside 10,000 workers. Software built by its 1,000-member team – mostly engineers – will divvy up the work. The factory’s roof will be covered with solar panels and be carbon negative. Two supplier parks at either end of the complex will make about half of the scooter components required.Aggarwal oversees it all scrupulously. Once a week, he trudges around the construction site checking on progress. On other days, cameras mounted on tall pipes around the site relay the action directly to his desk. His pride is evident: a graduate of the elite Indian Institute of Technology, he said he designed the automated storage, retrieval and delivery system for the electric scooters and won a patent for it.“It has to come in handy sometime, right?” he said of his education, using the popular Hindi phrase “kahin toh kaam aana chahiye na.”India’s Ride-Hailing Honeymoon is Over: Fully Charged(Updates with analysis of the EV market from the fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
OG Status in Crypto Is a Liability
“Bitcoin is rapidly becoming the crypto version of Australian wildlife. We separated ourselves, blocked all cross-pollination, and now there’s an isolated gene pool producing weird versions of everything.”
So security researcher and Summa founder, James Prestwich, contended in a tweet thread last summer.
Is bitcoin complacent? An austere monolith? A hermit kingdom? I don’t know. Bitcoin is probably fine, but underlying Prestwich’s hot take is a larger point that’s relevant beyond BTC: a lengthier crypto tenure does not equate to greater wisdom.
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In the crypto culture, there’s a strong tendency for folks to flex about when they bought in. For me, I feel like the right date marking the beginning of my blockchain journalism is September 2015, when I wrote enough about Imogen Heap’s music-rights tracking project to become curious.
This article is excerpted from The Node (formerly known as Blockchain Bites), CoinDesk’s daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
But the allure of greater vintage is so tempting here, so I can date it to December 2013, when I first started following Charlie Shrem, a scrappy young Brooklyn, N.Y.-based tech entrepreneur, though truthfully my interest in bitcoin was really only ancillary then, going no further than the fact that it counted as “tech.”
Tenure yields respect; not as much respect as heavy bags, mind you – but in absence of bags, time counts.
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But it shouldn’t count for that much. In fact, having watched this space roughly as long as the Ethereum blockchain has existed, I’m happy to go a step further: tenure can be a liability.
Tenure is, in particular, a liability for those who have dipped out and come back. But some who never left remain stuck in ancient ways.
Story continues
Time is not data
One way to measure how much data can be gathered in a particular time period is by counting people. Of course we can’t count people in crypto very easily, but we do have counts of active wallets, which is a decent proxy (noting, obviously, that many crypto users have more than one wallet — as they should).
So let’s say you were super early to the space, say from late 2011 to early 2015. You lived in a world that had only a little over 10,000 active bitcoin wallets and faded out when there were under 200,000. There were zero ethereum wallets.
Now let’s compare you to a relative newbie. Say they showed up in early 2017, before the BTC price really started sailing high but close enough that you could smell a change in the air. There would have been 500,000 active bitcoin wallets and 20,000 or so ethereum wallets.
If they stuck around for roughly the same amount of time, they would have the opportunity to meet vastly more people, watch vastly more experiments and learn vastly more lessons. There’s just more going on now.
And lest we assume these new arrivals are just random, it’s worth noting how many blockchains have healthy and growing developer communities.
These days, more people show up for the first time in one year than were ever present early on. Framed like that, it’s crazy to presume perspectives gleaned in those hazy bygone days are inherently superior to more recent ones. This isn’t some fantasy story about lost and forgotten magicks. This is technology.
One of the chief blind spots that I see in the OG’s is dismissing anything that’s new. There’s the Bitcoin Maximalist and the Ethereum Maximalist. The two are largely caricatures, though. Many bitcoiners grudgingly accept Ethereum is here to stay and vice versa, but there’s still a knee-jerk attitude of not just skepticism, but dismissal of any new coin or consensus mechanism.
Moar chainz
“Scam” and “s**tcoin” get thrown around much too flippantly, which diminishes the charge’s impact when it actually should stick (and often enough it should).
For anyone who left and missed the mid-2010s, this is understandable. The space was awash in cash grabs then. But the quality of new blockchain architects has changed: Polkadot is not equivalent to TrumpCoin. Tezos is a more thoughtful piece of software than Bitshares.
Once upon a time, most new cryptocurrencies were lame forks of bitcoin (or forks of forks) with some marketing slapped on. Auroracoin, anyone? Remember potcoin? Dogecoin.
But that’s simply no longer true. Today, many new blockchains are initiated by talented, well-resourced teams. No doubt many of them will fade off into obscurity, but so do many startups. Startups are afforded the benefit of the doubt and new blockchains by well-intentioned creators should be, too.
When they do fail, there are lessons to be learned for the whole industry. Old heads who dismiss them out of hand will miss out on those lessons.
Not every OG has failed to adjust their thinking to the modern reality. For example, consider Boost VC. In 2014, it promised to back 100 bitcoin startups. In 2018 we reported that it hit its goal, but the firm also changed the terms of its pledge. It had funded 100 crypto startups, not just on bitcoin.
Boost co-founder Adam Draper explained at the time that it just wasn’t kosher in 2014 to talk about anything but bitcoin, but times changed and Boost changed with it. Not everyone has. Later in his thread, Prestwich wrote, “Our Core Dev ivory tower is now sitting next to a small skyscraper, and it’s past time we walked out and asked the neighbors what they’re up to.”
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