Non-fungible tokens or NFTs are taking the world by storm and you should probably start paying attention. It is the newest craze in crypto, which can be confusing to wrap your head around, but it could possibly hold the most utility in this landscape so far.
NFTs are essentially unique tokens that prove individuality. Unlike with cryptocurrency where one Bitcoin holds the same value as another Bitcoin, NFTs are something completely on their own. They are stored digitally on the blockchain and promote the culture of uniqueness.
The art scene has resonated with the NFT market and why shouldn’t it? It fits perfectly, especially in the contemporary art space. Holding ownership of an art piece has never been more transparent. You can clearly see who has held it before you, what they paid for it. It is verifiable, which means you can be sure that you’re not picking up a replica or a fraudulent piece. In the last week a collection of 101 “Bored Ape Yacht Club” NFTs sold for $24.4 million. The most expensive NFT ever sold though was a collage of images from Beeple’s “Everydays” series that went for $69.4 million in March of this year. Granted, digital art is something foreign to most people but the younger generation seems to be embracing it.
If we envision the online world to continue to exist, why would the ownership of digital media not make sense?
The fundamental principles of NFTs are quite easy to understand which further makes the case for worldwide application. Essentially, anything that we should be keeping record of will benefit from this technology. Are you looking to buy a house and want to see the sale history for that specific property? Well, go check out its transaction history on the blockchain. These are the types of things that we can do in order to create a more transparent and equitable environment. It also proves the most practical use case for crypto’s and blockchain to date. High value, unique items that need detailed and irrefutable records keeping.
Now that we know the basics of NFTs, let’s explore where we can view these digital art pieces. OpenSea is currently the largest marketplace for these tokens to be bought, sold or perused. OpenSea operates with Ethereum as currency and for that reason, if one wants to buy something, you need to hold Ethereum. It is not the easiest to transact on OpenSea as a complete beginner because you have to install an application called “Metamask” which acts as your cryptocurrency wallet by means of a browser extension. OpenSea then talks to Metamask so that the user can accept or decline transactions.
As mentioned earlier, Ethereum is currently the biggest player in the NFT space, however Solana is catching up. Not only is Solana catching up, they are miles ahead when you compare transaction fees and speed for these transactions taking place on the blockchain. We call both Ethereum and Solana “Layer-1 protocols”. “Layer-1” and “Layer-2” are terms used to describe the architecture or protocols of blockchains.
Layer-1 is the term that’s used to describe the underlying main blockchain architecture. Layer-2, on the other hand, is an overlaying network that lies on top of the underlying blockchain.Petro Wallace
Think of “Layer-1” as the base layer. This is the network we are using to process our transaction. Then think of “Layer-2” as adding additional protocols, or the information we are exchanging.
The explosion of volume in the NFT market has contributed to the growth of the coins mentioned above and can point to further upside. Standard Chartered, a large bank in the United Kingdom, predicts that Ethereum can rally tenfold in the medium term (to roughly $26 000 – $35 000) and potentially surpass Bitcoin in the long run.
See below growth year to date for both Ethereum and Solana.
By Justin Theunissen