Why they’re mooning and how your data could be the next big collectible
“Holy Shit, the whole world is talking about this”
These aren’t the words of a crypto influencer on the NFT phenomenon, but Principal Auctioneer of New York’s oldest auction house, Nicholas Lowry, describing how they sprang onto his radar from all sides at once.
Record-breaking NFT sales are everywhere, led by the digital artworks of Mike Winklemann, more commonly known as Beeple. Just last week, Christies sold “5,000 days”, a Beeple composite artwork for $69.3 millon; also the first time they accepted payment in ETH.
In the run since unique digital collectibles first became a ‘thing’ in 2017, other notable milestones include Homerpepe ($320,000), Grimes selling an NFT bundle for $6 million, and Jack Dorsey auctioning his first ever tweet for $2.5 million.
Now charging into 2021, NFTs are no longer a niche in crypto with over $400 million of volume being traded in 2020, not counting this latest boom. Neither does this include the $230m for NBA Top Shot (video highlights) that were so popular, developers were overwhelmed by a 200,000 person waitlist!
What makes them special?
NFTs are a special type of crypto token, which exists as a one-off and maps a digital asset (like trading cards, an in-game profile, or artwork) to an entry on the blockchain.
Ethereum lends itself well to this purpose, and there are special types of standard smart contracts, the most famous being ERC-721 which is the one used to create CryptoKitties.
These took the world by storm in 2017-18, and attracted many users outside the hardcore crypto trading world to the point where many commentators divide the evolution of NFTs into ‘BC’ (before CryptoKitties) and after…
Each NFT has distinguishing information which makes it unique from any other and easily verifiable. This makes the creation and circulation of fakes pointless, because each item can be traced back to the original issuer.
They also have some other key characteristics which make them special:
- Non-Interoperable: A “cryptopunk” cannot be used as a character in the cryptokitties game or vice versa. This creates ecosystems of interest and value which complement, but don’t dilute each other.
- Indivisible: NFTs can’t be divided into smaller denominations like BTC Satoshis. They exist exclusively as a whole item.
- Indestructible: Because all NFT data is stored on the blockchain via smart contracts, each token cannot be destroyed, removed, or replicated.
Because they’re digital ‘nuggets’, NFTs are easy to visualise and understand. Even a digital home in a “metaverse” like Decentraland is something non-crypto people can easily grasp, furthering the crypto concept, bringing it mainstream..
Why are they taking off now?
There will be a lot of analysis done on the impact of the last 12 months for how we live generally, but are a number of specific factors seem to be in play with NFTs:
- On-ramps and marketplaces for NFTs work better: platforms like OpenSea, Niftygateway, SoRare, SuperRare, and MintBase are far easier for newbies than in 2017. If you can use Etsy, then you can start with NFTs.
- The Crypto Bull Run has left a lot of investors feeling flush, with ETH in their pockets and looking for a new opportunity.
- Everyone is at home/in lockdown during the COVID outbreak and looking for something to do (other than home-schooling); probably a factor behind increased consumer investment activity generally – ‘Netflix & RobinHood’
All of this is part of a longer-term movement, as flagged by NFT mega-collector WhaleShark:
“When we want to own things, we’re becoming more comfortable owning in our digital life, which more and more is just life…”
So NFTs are popular now because they’re accessible, we can connect with them as humane tech, something Jamie Burke, CEO of Outlier Ventures stresses:
“It’s not just about the money…it’s social currency”
What has this got to do with our data?
NFTs are relatable, personal, and valuable. It’s how NFT’s have the power to lead, along with data, the Crypto Crossover into the New Economy economy central to Web3.
Not everyone has crypto and only 1-2 million people engage in DeFi trading on a regular basis, but we can all create art, music, or unique in-game collectibles, just like we have our own personal data which we can start to control again.
Thanks to smart contracts, you can have an expensive asset or artwork that’s completely unaffordable to most people, chop it up, sell each fragment for $100, and give people the chance to become part of a community, own something special and create new types of economic activity.
For artists, being able to sell artwork in digital form directly to a global audience of buyers allows them to keep a significantly greater portion of their profits from sales.
Royalties can also be programmed into digital artwork and music so the creator receives a percentage of revenue each time their content is consumed.
At Tapmydata, our vision is to use blockchain technology and the ethos of Web3 to help people create NFTs containing verified elements of their ID, Data and digital activity (Spotify, social, web) and licence these for use by third parties, with you keeping ownership and control in the palm of your hand.
Just like the individual pieces of an NFT artwork fit together to make a whole, these digital assets can be combined to create utility and value beyond the sum of their parts. As a data union, data scientist or buyer you request a ‘loan’ of the insights from the individual who legitimately holds the NFT, with the blockchain keeping record.
This is something we covered in our white paper and we’re just getting started in our journey to making this a reality with our partners in the New Data Economy. Join our Telegram channel or register to our newsletter to keep updated…