Non-fungible tokens (NFTs) are tokens that represent non-fungible or non-interchangeable assets on a digital ledger or blockchain. Artists, musicians, influencers, creators, and companies create and sell NFTs to other NFT platform users, who can be art enthusiasts, gamers, collectors, or simply proficient users of cryptocurrency. Prices of NFTs seem to fall into one of the following ranges: $1 to $50, $50 to $300, and over $300.
Definition and Use Cases of NFTs
- NFTs are a type of token that enables the flexible representation of non-fungible assets on a digital ledger or blockchain.
- Non-fungible assets are non-interchangeable assets. Paintings are an example of a non-fungible asset. They may be of the same kind (i.e., they are all paintings), but they have unique properties that make them non-interchangeable with one another.
- Concert tickets, baseball cards and stamps, in-game items, digital art, real estate, and even shoes are other use cases of NFTs.
- NFTs are unique, traceable, rare, indivisible, and programmable. They contain information on the properties that make them unique, and they contain a record of on-chain transactions from the time they were created to the time they last changed hands.
- For them to be desirable or attractive in the long run, they should be provably rare or scarce.
- They cannot be split into smaller units or denominations, and they are fully programmable.
- NFTs are mostly traded on the Ethereum blockchain.
- The NFT industry can be divided into the following segments: metaverses, art, gaming, sport, collectibles, and utility. In 2020, the distribution of dollar sales of NFTs was as follows: metaverses (25%), art (24%), gaming (23%), sport (13%), collectibles (11%), and utility (4%).
Buyers and Sellers of NFTs
- Even though there are over 70 million cryptocurrency owners worldwide, the buyers and sellers of NFTs are few in number. In 2020, there were only 74,529 buyers and 31,504 sellers of NFTs.
· There may be plenty of art enthusiasts, collectors, and gamers in the world, but not all of them are crypto traders. Buyers and sellers of NFTs are largely limited to veteran or longtime users of cryptocurrency who are well-versed or knowledgeable in decentralized apps (Dapps).
· The top buyers of NFTs appear to fall into one of the following three groups: The One-Project Centric, The Major/Minor, or The Diversified.
· Buyers in The One-Project Centric group allocate 100% of their investments to just one project, while buyers in The Major/Minor group allocate around 90% of their investments to just one project and around 10% of their investments to a few other projects.
· The top sellers of NFTs, on the other hand, seem to fall into The One-Project Centric group or The Major/Minor group. This may be because they want to sell all their assets so they can invest in another project or they want to flip these assets to earn a profit.
Makers of NFTs
· The companies that make NFTs appear to be mostly companies in the real estate, consumer product, and auction house industries. The number of companies adopting NFT technology is growing, particularly in sectors involving real estate, consumer products, and auction houses.
· The individuals that make or create NTFs, on the other hand, include artists, influencers, musicians, and creators.
Price Range of NFTs
· As far as price or value is concerned, NFTs appear to fall into one of the following three groups: those whose values fluctuate between $1 and $50, those whose values fluctuate between $50 and $300, and those whose values remain over $300.
· Platforms where prices fluctuate between $1 and $50 include Axie Infinity and Known Origin, while platforms where prices fluctuate between $50 and $300 include CryptoPunks, Crypto Space Commander, and CryptoVoxels.
· Platforms where prices remain over $300 include Decentraland.
Average Cost to Make NFTs
- Creators who wish to sell their assets as NFTs need to register with a marketplace and mint their tokens by sharing and verifying their data on a blockchain. This whole process typically costs $40 to $200.
- Another source says the cost could be anywhere between less than a dollar to over $1,000.
Average Profit of NFT Platforms
- The average profit of NFT platforms could not be located in the public domain. All that can be found in the public domain is information on service fees and gas fees, sales on NFT platforms, and how NFT platforms make money.
- NFT platforms or marketplaces earn money by charging sellers service fees, which range from 2.5% to 7.5% of sales. Some NFT platforms charge buyers a service fee as well, with the fee reaching at most 3% of the sale price.
- Both OpenSea and Rarible, two of the leading NFT marketplaces, charge sellers a fee of 2.5%.