26.04.2021 Michael Golikov
NFT is a relatively new phenomenon that is at the peak of popularity. NFT itself stands for non-fungible tokens. These tokens give their holders ownership of certain items, such as digital paintings, virtual items, or collectible cards.
The ERC-721 standard is usually used to operate these tokens. Its main difference from the popular ERC-20 standard is its uniqueness. While all ERC-20 tokens have the same value (as, for example, one US dollar will always be one US dollar), each ERC-721 token will be unique and unlike another token (as one piece of art is not like another).
That is, unlike standard tokens, NFTs are unique and exist in a single copy. All information about the token owner and all transactions is stored in the blockchain and cannot be changed.
The history of the NFT hype
In general, the NFT hype originates from the well-known CryptoKitties project, which first appeared in 2017. It is an online game on the Ethereum blockchain in which users can buy, breed, and collect virtual cats. The game was so popular that it quickly filled 15% of all transactions on the Ethereum network. This led to an increased load on the network and a significant increase in fees. And the prices for some CryptoKitties exceeded $100 000.
Up until 2021, no projects ready to compete with CryptoKitties appeared in the crypto arena. But then the NFT rush broke out with renewed vigor. Media personalities, stars, and big companies came into the industry. Numerous online auctions began to be created, and the value of some tokens reached several million dollars.
A striking and recent example is the founder of Twitter, Jack Dorsey, who auctioned off his first tweet. It was sold for $2,9 million to the Bridge Oracle CEO, Hakan Estavi. And this is far from the highest price for NFT tokens. For example, a digital picture of the Canadian singer Grimes was sold for $5,8 million.
Major players are also keeping up with the trend. In April 2021, the New York Stock Exchange (NYSE) released its own collection of NFTs. The collection includes a total of 6 tokens dedicated to the first stock exchange transactions of various companies. Another example is the McDonald's fast-food restaurant chain, which decided to hold a drawing for its NFT tokens created from animated images of various dishes from its current menu.
Positive acceptance of NFT
At the moment, the demand for NFT in 2021 has reached such a level that some companies have started destroying real physical objects, translating them into the virtual world. For example, the folks at the Injective Protocol burned a real painting of the famous street artist Banksy live, turning it into an NFT token.
Of course, destroying real art objects is not the best idea, but it clearly demonstrates the trend of our life's transition to “digital.” And NFT technology solves a very important problem of proving ownership of a particular item. Unique tokens with transparent and irreplaceable information in the blockchain protect users' assets and record the fact of ownership. And society likes such rules.
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