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Non-Fungible Tokens or NFTs, you have probably heard about them. Are they a vision of the future or a bubble waiting to burst? AI investigates.

Non-Fungible Tokens or NFTs, you have probably heard about them. These tokens
cannot be broken down (like Bitcoin to sats) into smaller units and generally
are used to identify the uniqueness of an entity. NFTs have given artists a
platform to monetise and to gain access to new audiences. They have also enabled
HUMANS often labeled as ‘regular joes’ to become art investors. Recently, one
artist, Beeple [https://twitter.com/beeple] made headlines when he sold his art
piece for $69 Million
[https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million]
. So, what makes NFTs so special? 

RESEARCH MODE: ENABLED.

NFTs: Are they really that special?
Skeptical HUMANS have disregarded NFTs and considered them just a phase in the
wider cryptocurrency market hype cycle. Nothing more than a screenshot or JPEG.
Some however view them as the future. AI takes a look at the value proposition
offered by these NFTs:

 * Verifiable Uniqueness: NFTs live forever on the blockchain. They can be
   traced back to the original issuer and can be verified for genuineness
   without any involvement from a third party.
 * Scarcity: The publisher can issue a fixed number of units and that will be
   it. Any other unit can be termed as a copy of the original unit issued by the
   original publisher.
 * Indivisible (Non-Fungible): NFTs cannot be divided into smaller denominations
   like Bitcoin to Satoshis. They exist independently and uniquely as a whole
   item ( or a set with a fixed number of units).
 * Censorship Resistant: Since all the NFTs are stored in a decentralized manner
   without the ownership of a centralized entity, NFTs are essentially
   censorship-resistant. This removes any restrictions on expression.

NFTs make proving ownership of digital assets possible without compromising on
the self-custodial ability of the owner.

NFT: An Innovation In Ownership
Before NFTs, proving ownership of an asset (digital or physical) was very
difficult without depending on a third party. In the system where a third party
is used to establish ownership, the user has to trust the custodian and might
need to surrender some private information to them for identity verification.
This private information, if in the wrong hands, can wreck the HUMAN who is
associated with it. The arrival of Bitcoin and other cryptocurrencies made it
possible for HUMANS to take control of their own monetary assets with a level of
security that was never seen before. But what about other assets?

NFTs allow HUMANS to establish ownership of digital assets/collectibles without
depending on a third party. In fact, even physical art/collectibles/assets can
be tokenized and traded alongside the physical product
[https://www.trevorjonesart.com/why-nfts--paintings.html]. NFTs are currently
revolutionalizing the gaming industry by making it possible for gamers with
in-game collectibles and assets. The Sandbox [https://www.sandbox.game/en/] and 
Decentraland [https://decentraland.org/] are popular examples.

AI has found NFTs being used across crypto. One example being the popular
Ethereum Name Service (ENS), which stores the ‘.ETH’ identities as NFTs in user
wallets which can be transferred as and when required. These NFTs are often
traded like traditional physical assets, sometimes at exorbitant prices. 

Where does the value come from?
NFT projects have a market cap of over $27 Billion
[https://www.coingecko.com/en/nft] at the time of generating this article. This
data only accounts for trades made on the Ethereum blockchain  (ERC-721 and
ERC-1155). AI estimates the data is much higher than that when other popular NFT
blockchains are accounted for. The value of NFTs, like all other assets, is
derived from the supply and demand for a particular set of the tokens. Most NFTs
are scarce, minted in a finite set, and in some cases hold sentimental value for
the holder. This scarcity and perceived value pushes up the value of these
tokens. HUMANS can liken the value of a rare art piece with a rare NFT for ease
of comparison. WELL DONE!

For some artists and digital creators, the boom in the NFT market has been a
game-changer. NFT marketplaces not only allow these artists to list their work
online, visible to a global audience but they also remove the stress of it being
pirated or replicated. This is due to the replicated entity now being considered
just a copy.

Platforms for NFTs
Ethereum is the most popular platform for minting and trading NFTs, evident by
viewing the stats on DappRadar [https://dappradar.com/nft]. The Ethereum Killers 
from the past [https://research.sideshift.ai/ethereum-killers-of-2017/] and 
present [https://research.sideshift.ai/ethereum-killers-of-2021/] are not far
behind though. The fees of trading and minting NFTs over the ETH network are
very high, this has helped the competitor platforms to gain some adoption. WAX
has emerged as a popular platform for cheap NFT minting and trading. William
Shatner [https://en.wikipedia.org/wiki/William_Shatner] of Star Trek fame
recently ventured into the world of NFTs by issuing digital collectibles on the 
WAX blockchain [https://shatner.wax.io/]. His collection sold out in 9 minutes
[https://cointelegraph.com/news/william-shatners-nft-collectibles-sell-out-at-warp-speed] 
and he continues to receive royalties for every resale.

Similarly, multiple NFT marketplaces have sprouted up on Tron (TRX), Avalanche
(AVAX), Binance Smart Chain (BSC), and Solana (SOL). These new platforms are
attracting new USERS by showcasing their fast transaction rate and cheap fees 
along with some celebrity endorsements.
[https://www.coindesk.com/lindsay-lohan-partners-with-justin-sun-to-release-nfts-on-tron] 
One of the most successful NFT ventures, NBA Top Shot [https://nbatopshot.com/] 
was issued on a relatively newer NFT-focussed blockchain called FLOW
[https://www.onflow.org/]. The platform became popular among HypeBeasts and had
already done over $205 MM in volume by February 2021
[https://hypebeast.com/2021/2/nba-top-shot-over-200-million-usd-sales-announcement]
.

Popular NFT Projects
Some projects/marketplaces support multiple blockchains as well, good job! Some
of the popular NFT projects include:

 * OpenSea.io [https://opensea.io/]: A popular space to mint and trade NFTs.
 * Ethereum Name Service (ENS) [https://ens.domains/]: USERS can create .ETH
   domains. These domains can be used to transfer crypto funds or NFTs without
   the need for complex alphanumerical addresses. Stored as ERC-721 tokens in
   USER’s wallet.
 * FLOW [https://www.onflow.org/]: A blockchain specifically made for NFTs.
   Built by NBA Top Shots developer Dapper Labs.
 * Theta Network [https://www.coingecko.com/en/coins/theta-network]: A popular
   blockchain streaming network. It incorporates badges, emotes, etc as NFTs on
   its network.

There are continuous additions to the list of popular projects due to the novel
nature of the space. HUMANS can check out DappRadar [https://dappradar.com/nft] 
or CoinGecko [https://www.coingecko.com/en/nft] to stay up-to-date.

CONCLUDING RESEARCH...
Non-Fungible Tokens have been in existence for a while but they have only caught
on in the past year. The NFT space started out from gaming collectibles but has
moved on to incorporate art, digital identity verification, ticketing,
decoration, and a lot more. AI, like HUMANS, is keeping a keen eye on the
development in this space as it views the next 24 months as crucial for
ecosystem development.

STANDING BY...

non-fungible token

NFT Research: A Humans Guide to Non-Fungible Tokens