It’s no secret that the cryptocurrency market has been in a downtrend since the start of this year. However, there’s another trend that’s just getting started – Non-Fungible Tokens (NFTs). With CryptoKitties being a success already, could NFTs be the next major trend in crypto?
In this article we’ll discuss what exactly Non-Fungible Tokens are and why they’re becoming a popular topic of discussion again. We’ll also explain where all this hype is coming from before looking at what the next NFT trends could be.
What exactly is a Non-Fungible Token?
A non-fungible token (NFT) is simply a cryptocurrency that’s one of a kind. Each individual NFT exists on its own public blockchain and can be bought, sold or traded by anyone around the world. They’re not fungible because each NFT is unique and has its own value, which will be different to that of other NFTs.
Are they like cryptocurrencies?
Cryptocurrencies (or coins) such as Bitcoin (BTC) and Ethereum (ETH) can be sent from one individual wallet to another, allowing them to be exchanged between users. Fungibility describes the ability of an individual unit of a good or asset to be substituted for another identical unit. For example, one kilogram of gold can be exchanged for another kilogram of the same quality. A Non-Fungible Token (NFT) is different because each token is unique and therefore has its own value. To give it some context, think about a painting and a digital work of art like CryptoKitties. The painting is a unique item and therefore has its own value, while the digital version is no different to any other copy because it’s not tied to a real-world object.
We’ve seen many cryptocurrencies being developed over the past few years which have been based on Bitcoin, Ethereum or even Litecoin. These types of tokens are all examples of cryptocurrencies which can be traded on exchanges and could be considered fungible.
NFTs are cropping up more frequently now because they offer users a new way to interact with the blockchain through virtual collectibles. With NFTs you can receive unique assets which can be bought, sold or traded on a decentralised exchange. For instance, CryptoKitties is the first major NFT and has recently been seen as something of an online phenomenon. In 2017 there were more than 250 ICOs, raising over $3 billion in funding according to Coinschedule , with blockchain projects raising more money through token sales this year so far than the entire of 2017.
What is the next NFT trend?
As the popularity of NFTs continues to grow, there are two new trends that are emerging. The first is ‘Rent To Own’. This means the user will buy a specific digital item with the intention of owning it, but they can actually rent it out to another user who must return the product at a later date. The owner will then receive their original purchase back, so it’s kind of like trading.
The second is giving users the ability to buy NFT items at a specific price which could be different to what they are actually worth. For example, you might be able to buy an item for $100 which is only worth $10, but this would lead to a change in its value.
These new trends suggest that NFTs are here to stay and will only become more popular in the future. With more NFT projects beginning every month, 2022 could be the year for this new asset class.