A phenomenal rise in NFTs has been witnessed all over the world for the past year. This point is supported by two statistics. A new report by L’Atelier BNP Paribas and Nonfungible.com shows that NFTs increased by almost 300 percent in 2020. NFT sales volume in the first half of 2021 amounted to $2.5 billion, up from $13.7 million in the same period of 2020.
These are digital assets that interact with blockchain technology. NFTs can represent art, collectibles like photos, music and videos, or even real estate. When these assets are traded, they are non-fungible, which means each token is distinct and can’t be replaced like-for-like. Imagine how powerful some Pokémon cards are compared to others.
For artists, it’s a lifesaver
NFTs are proving to be a lifesaver for artists around the world as the economy continues to slow down due to the pandemic. In March of this year, Mike Winklemann, alias Beeple, sold an NFT of his art entitled “Everydays – The First 5000 Days” for $69 million. The price of any of his artwork was not higher than $100 until October 2020. NFT art by Winklemann is considered to be the poster boy of the “NFT craze” due to the high prices he receives for his work.
Artists and digital creators can benefit from NFTs in several ways. In the first place, they democratize the marketplace by eliminating middlemen, so that creators can sell directly to consumers. They are scarce, making them a valuable and expensive collectible because NFTs are not interchangeable. Further, some NFT contracts also provide artists with the opportunity to earn royalties on secondary sales of their NFT artwork.
‘Pinazza’ NFT project co-founder Michael Lennicx believes this is a lucrative time for NFT artists to participate in. He believes builders can build their own audience, be their own distributors, license their art, and make money from reselling.
There are a number of potential applications for NFTs
Although NFTs have been in the spotlight recently in the art world, experts believe they are useful in a wide range of areas. According to reports, San Marino, which is bordered by Italy, is developing a vaccination passport based on NFTs. Although still not in use, many experts believe NFTs could be the perfect solution for protecting important documents and preventing identity thefts.
It was mentioned in a 2018 Niti Aayog report on blockchain that land transaction records could be maintained using blockchain technology. Since NFTs and blockchain are also powered by each other, there is a possibility that future land records may also be linked to NFTs.
Banks and finance institutions must also face disruption from NFTs in collateral security. Yasin Bijepuri, a senior investment banker at a UAE-based bank, says that digital NFTs may provide an alternative to collateral securities.
NFTs and Charities
The nonprofit sector may be affected by the use of NFTs – since they can potentially disrupt philanthropic activities. A non-profit organization, GiveDirectly, received $2.9 million from the sale of Twitter CEO Jack Dorsey’s NFT, ‘the first tweet.’ Furthermore, charities such as Save The Children used cryptocurrencies and NFTs at the beginning.
As part of their mission, NFTs such as the Pinazza Project, created by crypto enthusiast Wiley Mathews and Lennicx, donate to charity as well. Pinazza Pinas, the gamified NFT series launched by the US-based gamification project, is among the newest NFTs. The project will donate $50,000 from the sales proceeds of the new NFT series to mental health charities selected by members of the community.