Do you know what an NFT is? Continue reading. Top cryptocurrency data aggregator CoinGecko has compiled some responses to what appear to be frequently asked NFT inquiries.
Unsurprisingly, Google’s most popular search term for non-fungible tokens is “What is an NFT?” Additionally, according to the crypto-data website, this one receives an average of 948,000 searches each month.
Zhong Yang Chen, the chief of research at CoinGecko, provides the following response:
NFTs are distinct, non-fungible tokens on the blockchain that are frequently used to represent digital versions of assets like works of art, collectibles, music, and video game items, and real-world assets like title deeds, luxuries, gems, and more.
Though Paris Hilton’s description of them is also one we like, it’s a solid summary nonetheless:
You can sell anything, from art to music to experiences to physical goods, using an NFT, essentially a digital contract on the blockchain. In August 2021, Hilton explained to Jimmy Fallon, presenter of The Tonight Show.
Of course, we haven’t addressed the essential query: “What the hell does non-fungible mean?”
Thus, the question, “What the hell does fungible mean?” arises.
Investopedia defines fungible goods as those that can be used interchangeably since they are almost identical. Please think of the dollar, our old friend. Each dollar is similar to the others. A commodity like wheat is fungible since it is the same product wherever it is produced.
Non-fungible goods include diamonds and works of art since they are one-of-a-kind and cannot be replaced.
How do you create an NFT?
The second-most frequently asked NFT query, “How do you create an NFT?” is reportedly Googled 287,000 times monthly.
Chan stated that the implementation of smart contracts could produce NFTs. The NFT creation process is made more accessible by NFT markets like OpenSea, x2y2, and Magic Eden, where users may submit files and mint them as NFTs on the blockchain.
Finished third? On average, Google searches for “where to buy and sell NFTs?” occur 116,400 times each month.
According to Chan, “NFTs can be traded on a variety of marketplaces across different blockchain networks, including OpenSea, Magic Eden, LooksRare, and even certain centralized exchanges like Binance or FTX.”
Most costly NFT? Why are NFTs valuable?
Is this article a cynical attempt to ride on the back of some high-ranking NFT-related SEO action? It is not among the Googled queries. That question undoubtedly has an answer, but we didn’t ask CoinGecko. However, let’s go on.
What NFT is the priciest of all? Followed by 64,000 monthly searches for “Why are NFTs valuable?” with 102,000 monthly searches.
These are thoughtful inquiries.
The most expensive individual NFT is Beeple’s “The First 5000 Days,” a collage of art created daily for over 13 years, which sold for $69 million, said Chan. “While most attention on NFTs is focused on profile-picture collections like the “Bored Ape Yacht Club (BAYC)” or “CryptoPunks,” Chan countered.
As we reminded ourselves the other day when writing about Christie’s new NFT-auction platform and Apple’s 30% sales-commission sideways foray into the NFT field, the Beeple sale occurred back in March 2021.
We still find it hard to believe, to be honest. And we’re betting Beeple still feels the following, even after 18 months:
In addition, you would be correct if you assumed that NFT trading volume may be lower, given the severity of this crypto winter right now. On that front, there is information from yet another outstanding crypto analytics company.
According to Dune Analytics statistics, the entire weekly trading volume of NFTs has decreased to US$114.4 million. That represents a 98% drop from the weekly volume of US$6.2 billion that was recorded in late January of this year, and it is a far cry from the US$146.3 BILLION trading frenzy that took place in early April.
This was OK until a minor incident involving the total collapse of Terra Luna and a few other connected, leveraged crypto companies.
But let’s return to the original query: what makes NFTs valuable? You may be aware that not all of them are. In fact, it’s probably fair to state that a good deal of them are hardly worth the paper they aren’t printed on. That is not to imply that we do not believe NFTs have the potential to be exciting and valuable.
Chan from CoinGecko responded as follows:
“As with tangible art and other collectibles, an NFT only gains value if others think it is worthwhile. The intrinsic worth of the NFT is influenced by various factors, including the inventor, the NFT’s surrounding community, and others.
“In the case of game NFTs, it might reflect ownership of game assets within the game or metaverse, and the metaverse roadmap or game development can drive the NFT value up or down.”
NFTs—are they bad to the environment?
There are 32,000 global searches per month for this, it seems. And while it’s a legitimate query, it sadly appears to be based on the widespread belief that all cryptocurrencies are grouped in a single energy-consuming basket due to the notion of Bitcoin mining. Which, it must be said, consumes the energy of a medium-sized nation every year. Or the holiday lights from the Griswolds.
Most NFTs are created on the Ethereum network, except for Solana, which competes with Ethereum for NFT trading volume. Ethereum was a Proof of Work (mining) network like Bitcoin until very recently.
But now that Ethereum has survived the Merge, the NFT energy-inefficiency argument is much less persuasive.
Zhong Yang Chen from CoinGecko here is the last word on that:
NFTs are minted on the blockchain, which raises environmental concerns. However, the most well-known NFT chains, including Ethereum (post-Merge), Solana, and Polygon, are now built on the energy-efficient Proof-of-Stake consensus method. To produce NFTs, users might choose more energy-efficient networks.
