NFTs have caught the attention of artists, collectors, celebrities, venture investors, retailers, and more. Everyone is looking at the record prices and phenomenal listing with awe.
How some NFTs managed to get such high pricetags is still puzzling. Sotheby’s auctioned off Internet source code as an NFT for $5.4 million. Twitter co-founder Jack Dorsey’s first tweet from 2006, “just setting up my twttr,” went for $2.9 million. The crypto-art group called “Burnt Banksy” sold an NFT of the remains of a Banksy print for $380,000.
Do these ridiculous sales make you more interested in the world of NFTs? If so, this article will walk you through the basics and cover a few companies in the sector.
What is an NFT?
On a technical level, an NFT (non-fungible token) is a non-interchangeable unit of data, often associated with digital files, such as photos, videos, and audio. The data is stored on a blockchain, which ensures immutable authentication of each NFT.
Another way to describe an NFT is through its main characteristic. It is an asset that can’t be exchanged for another asset of equal value. Imagine you get a book signed by its author. This book is unique, so you can’t exchange it for another book without the signature. Other examples of non-fungible assets are land, houses, and diamonds.
In contrast, assets like cash bills, oil, bonds, precious metals, and most consumer products are fungible. If you have a $10 bill, you can exchange it for another $10 bill without either of them losing value. Similarly, Bitcoin and other cryptocurrencies are also fungible.
How do NFTs work?
Traditional artwork is valuable because it’s rare and can’t be recreated. Digital art, on the other hand, can have numerous copies. NFTs tokenize the digital artwork, creating a one-of-a-kind digital signature that can’t be changed. Thus, the piece becomes unique, and the ownership becomes verifiable. NFT collectibles for other types of digital files work the same way.
When you buy an NFT, the record of the sale is put on the blockchain, and its unique identifier is directly linked to your crypto address. It’s impossible to replicate, change, or delete the uniqueID or metadata associated with a particular NFT. Although, at this point, certificates of NFT ownership aren’t legally enforceable.
Some NFTs are minted through smart contracts. They can be used to garner royalties on resales for the original owner, making the asset an investment vehicle that doesn’t require ownership at all times.
Currently, the most common underlying files for NFTs are artworks. But real-world items can also be tokenized and put on a blockchain:
- Tickets to events
- Legal documents, invoices
- Deeds to a car
NFT trading activity worldwide
Earlier, you already read about a few NFT sales that made the headlines. Here are other notable examples from 2021 so that you understand the scope of the market better:
- FEWOCiOUS’ “Nice to meet you, I’m Mr. MiSUNDERSTOOD” ($2,800,000): Life-size sculpture (plaster, wood, fabric, and mixed media in acrylic box) about freedom and isolation.
- Bored Ape #3739 ($2,900,000): Aquamarine background (13% of Bored Ape owners have this trait), sleepy eyes (8%), dark brown fur (14%), bored mouth (23%).
- Bored Ape #8817 ($3,400,000): Orange background (13%), wool turtleneck (13%), silver hoop (9%), sleepy eyes (8%), solid gold fur (0.46%), spinner hat (2%), bored party horn (0.88%).
- Mad Dog Jones’ “REPLICATOR” ($4,100,000): An image of a photocopier housed in a downtown Los Angeles office space, a nod to technological obsolescence.
- Edward Snowden’s “Stay Free” ($5,400,000): A portrait of the whistleblower used with permission over the landmark court decision ruling.
- Beeple’s “Ocean Front” ($6,000,000): An image of a tree sitting on an image of trailers and shipping containers, speaking about the current climate change challenge.
- Beeple’s “Everydays: The First 5,000 Days” ($69,000,000): a collage of 5,000 digital images (some are hand-drawn), involving figures from pop culture, which took 14 years to make.
Now, check out the list of top NFT stocks in 2022 and see if one of them sparks interest.
Twitter Inc (NYSE: TWTR)
Various reports indicate that Twitter is taking its position in the NFT market seriously. Most notably, in January 2022, the company added a feature that allows creators to track and showcase their NFTs and link their crypto wallets directly to the platform. At the time of writing, it’s only available to subscribers of the $2.99-a-month Twitter Blue service.
The feature is one of the steps Twitter is taking to launch NFTs into the mainstream. For owners, it presents an opportunity to show off what they have and to increase the circle of engagement beyond dedicated crypto enthusiasts. However, Twitter’s first venture into cryptocurrency was the tipping feature in Bitcoin via the Lightning Network in September 2021.
Dolphin Entertainment Inc (NASDAQ: DPLN)
Dolphin Entertainment is an entertainment marketing and content development company that is rumored to become a big hit on Wall Street.
In 2021, the company announced a partnership with FXT.US, a centralized cryptocurrency exchange. The partnership is supposed to bring an NFT marketplace for leading brands in fields like sports, gaming, film, culinary, music, television, charity, and lifestyle. Dolphin will handle production, marketing, and creative branding, and FXT will handle the technical aspects.
Bill O’Dowd, CEO of Dolphin, said that the company plans to improve the experience of buying NFTs. There will be an app for direct purchases, different means of payments (fiat and crypto), actual customer support, and other features to put NFTs on a level playing field with traditional consumer products.
Coinbase (NASDAQ: COIN)
Coinbase joined Nasdaq in April 2021 at $328.28 a share and with an initial market cap of $85.8 billion. The company’s debut on the exchange was such a success due to Coinbase’s position on the crypto market — as one of the world’s biggest crypto exchanges with more than 7.3 million monthly transacting users. This lays a foundation for an equally successful move to the world of NFTs. For comparison, OpenSea, a leading NFT marketplace, has 1.8 million users.
The core features of Coinbase’s NFT marketplace will be buying and selling. The company will also launch the social marketplace, where users will be able to connect with their favorite artists and subscribe to drops.
eBay Inc (NASDAQ: EBAY)
eBay’s foray into the NFT ecosystem began in May 2021, when the platform began facilitating the sale of NFTs for digital collectibles like trading cards, images, or video clips. But with a smaller number of authorized sellers, eBay is getting ready for the next step.
eBay has made multimillion-dollar investments to position itself as a key player in the e-commerce industry and build an infrastructure for traditional, physical collectibles. By combining the two, eBay can become one of the best platforms for selling NFTs, especially after integrating crypto into payment options (which, according to its CEO, they are open to).
Jordan Sweetnam, eBay’s Senior Vice President in the Americas, believes the platform will benefit creators, just like when “digital publishing brought more exposure for writers.”
DraftKings (NASDAQ: DKNG)
DraftKings, a digital sports entertainment and gaming company, collaborated with NFL Players Association to bring gamified NFL player tokens. The company has already acquired licensing rights for authentic names, images, and likenesses of Tom Brady and Rob Gronkowski.
The fantasy sports site already has functionality for secondary-market transactions with digital collectibles and a massive user base. Beth Beiriger, DraftKings’ senior vice president of products, confirmed this, adding that their first steps will be at the intersection between sports and NFTs. That said, DraftKings Marketplace is advertised as the place to buy the latest NFT drops from “your favorite celebrities,” which probably means the company won’t stop at sports legends.
The NFTs sales volume has surpassed $10 billion, and there are 28.6 million wallets trading NFTs. So, they aren’t going anywhere. And just like how companies are joining the bandwagon, you can also take part in the action. If you’re not the collector type, NFT stocks are a great way to trade the market.