After more than three months of enthusiasm, the DeFi boom has gradually cooled down, followed by NFT (NFT, Non-Fungible Token, some people call it ERC-721 token), that is, non-homogeneous tokens. Refers to the tokens issued by Ethereum developers according to the ERC721 standard. Its characteristics are indivisible, irreplaceable, and unique, corresponding to homogenized tokens.
Homogeneous token
Non-homogeneous tokens
Fungibility: It can be replaced by any token of the same type. For example, one BTC can be replaced by any BTC.
Irreplaceability: It cannot be replaced by any tokens of the same type. For example, your birth certificate cannot be replaced by another person’s birth certificate, even if both are birth certificates.
Consistency: Each token of the same type has exactly the same specifications.
Uniqueness: Each token of the same type is connected to each other and is unique.
Dividability: Each token can be divided into smaller units. No matter which unit you get, the value is equal. For example: the value of any Satoshi Bitcoin is equal.
Indivisibility: indivisible, the most basic unit of each token is a single token. For example, the value of each encrypted cat is not equal, and each cat is a non-homogeneous token.
ERC20 standard: It is already a well-known standard for issuing tokens in Ethereum, such as USDT
ERC721 standard: the standard for issuing non-homogeneous tokens on Ethereum. Such as: encrypted cat
According to NonFungible data, NFT’s transaction volume, average price, and total transaction volume skyrocketed from September 21-22. The MXC Matcha Exchange launched the NFT index product for the first time, and other exchanges have successively launched the “NFT section”, similar to the previous “DeFi section”.
Today, the total amount of NFT market transactions has exceeded 110 million U.S. dollars, and more than 4.8 million NFTs have been sold, with an average price of 23.36 U.S. dollars.
Compared with DeFi’s market value of US$13.5 billion and the overall crypto market value of US$341.8 billion, NFT is really a niche area. But it is still considered by many in the market as the next digital gamble after DeFi.
In fact, NFT is not a recent concept. The popular crypto cat game in 2017, Decentraland in 2018, and Nike’s tokenization of sneakers in 2019 are actually NFTs.
On NonFungible, there are currently more than 130 NFT cryptocurrencies, among which the top ten cryptocurrencies by trading volume include NIFTYMOJI, CRYPTOKITTIES, etc.
There are three reasons why NFT is favored by the market:
1. NFT is actually a supplement to “everything can be tokenized”
If we say that our greatest expectation for blockchain technology lies in the on-chainization of the real world. Then the homogenized cryptocurrency, taking Bitcoin and Ethereum as examples, is just one of its applications. Because it is impossible to write unique information in a homogenized token, many unique certificates, property rights and other data and asset tracking, verification, and transactions are still blank. And the imagination of this part of the market space is infinite. Such as games, digital artwork, software licensing, real estate, etc. Based on its indivisible, irreplaceable, and unique attributes, NFT is particularly suitable as a qualification or asset proof. In addition, its “token” attribute can also realize the tokenization of assets, promote its transaction liquidity, and the integration of virtual and real assets will be closer.
2. A big bet on digital art
NFT’s sudden popularity in the market this time is related to the auction of digital art “Portraits of a Mind” at Christie’s New York, the world’s largest art auction house.
Looking at the performance of the traditional art market in the past 20 years, from 2000 to 2018, the art market was more than 180% higher than the S&P 500 index. For decades, the wealthiest people in the world have been buying art, whether for storage of value, capital appreciation or pure appreciation. Because just like Bitcoin is better than gold, many people also believe that digital art is better than traditional art. At present, the market value of traditional art is more than 60 billion U.S. dollars, while the market value of digital art is less than 10 million U.S. dollars. The room for growth of about 6,000 times has attracted the attention of many people.
3. Combination of DeFi boom and NFT
In the past week, as the MEME of NFT+ liquidity mining bucked the market and rose to a new high, MEME became the “2020 airdrop first coin”. Someone was airdropped about 600,000 dollars and was once again called “forced wealth” by the community. The NFT field is also constantly breaking through people’s inherent impression of “artwork, cartoon and animation online pricing”, and new models such as NFT+DeFi and NFT+insurance continue to emerge. In fact, the types of NFTs mainly include three categories: 1. Platform tokens of the NFT platform; 2. Digital collectibles, digital art, etc.; 3. Digital version of valuable bills and income rights. The most large-scale implementation at this stage is the digital bill NFT, which belongs to a subset of DeFi, such as digital insurance policies, digital tickets, RealT’s real estate income Token, etc., which can realize value flow through remortgage. In addition, liquidity mining is essentially a reward mechanism, which can also be applied to NFT.
In addition to digital assets (e.g. digital artworks, virtual treasures), digital certificates (e.g. real estate certificates) corresponding to tangible assets in real life have already flooded our lives. In order to ensure that the transfer of ownership of these assets is open, transparent and verifiable , Scarcity, liquidity, it is actually a good way to use blockchain technology to turn them into NFT. Maybe in the future, each of us will have to become a big collector of NFT.
