Nonfungible tokens (NFTs) have seen rapid adoption and evolution over the course of 2021, birthing an array of unique projects across industries. Widely considered to be the future of the digital art market, top auction houses, fashion retailers, rock bands and restaurants were quick to jump on the bandwagon.
If you’re just learning about NFTs, here’s a crash course. NFTs are essentially smart contracts on a blockchain that help authenticate and track digital assets. Those assets have frequently been visual digital artworks, but can be other digital assets, such as songs or videos. The key difference between these NFTs and Bitcoin (CCC:BTC-USD) is that they cannot be traded or exchanged in a one-to-one manner (i.e., they are nonfungible).
While art has always been a relatively niche asset class, the rise of digital collectibles has made NFTs more valuable than ever. Museums today are adding NFTs to their portfolios while art dealers and auction houses like Christie’s are spotlighting the trendiest NFT artists. Christie’s sale of digital artist Beeple’s work for a whopping $69 million highlights just how much money has flowed into these cryptoassets.
Following the explosive success of digital collectibles, other companies are now looking to capitalize on the momentum with their own NFT projects. Here’s a look at 7 projects you need to know about in 2021.
- NBA Top Shot
- Decentraland (CCC:MANA-USD)
- Rarible (CCC:RARI-USD)
The hype around NFTs has subsided from the mania that gripped the markets in the first quarter of the year. Critics will say that makes NFTs a short-lived fad. But when investments stop being trendy, weaker hands get shaken out, making more room for investors who truly believe in the underlying asset. Let’s take a look.
NFT Projects to Watch: NBA Top Shot
One of the most popular NFT projects on the market right now is NBA Top Shot. Basketball fans are well known for their devoted loyalty and they’ve brought that same intensity to the crypto world. NBA Top Shot, a project created by Dapper Labs, allows users to buy digital trading cards of NBA highlights. The crypto collectibles can be purchased at prices starting as low as $9, depending on rarity and demand. This purchase is tied to a blockchain ledger so owners can rest easy knowing their assets are unique and authenticated.
The Top Shot project is popular for a number of reasons. First, basketball is one of the most popular sports in America. Adding to this, trading cards have always served as valuable collectibles for fans of the game and NFTs are just a digital version. A third reason is the Top Shot platform which is designed to cater to people unfamiliar with the crypto market.
According to Dapper Labs, the NBA Top Shot NFT project has generated over $500 million in sales. This success enabled the company to raise $305 million in its latest funding round.
The recent rally in NFTs has pushed the price of digital artwork to new highs, with work by renowned artists like Beeple now selling for millions of dollars. While this is great news for the creators of NFTs, the high price tag also makes these investments inaccessible to the average investor.
That’s where NIFTEX comes in. The company allows users to own fractional shares of NFTs, rather than buying the entire artwork outright. Essentially, investors can now get in on the NFT market with limited capital.
While NIFTEX has been around for a while, the platform is now working to improve its core offering. There will be greater governance over the ownership of digital assets, enabling creators to earn royalties on fractional trades. NIFTEX will also introduce a decentralized autonomous organization (DAO) to manage its application.
The core mission of cryptocurrencies has always been to democratize the world of finance. NIFTEX’s mission plays an important role in making this a reality.
Almost every major platform aims to streamline the process of buying NFTs or making digital artwork more affordable. However, Mintbase’s mission fulfills a different need.
The company allows users to “mint” different assets into NFTs. While non-fungible tokens first gained prominence as digitzed art, in reality almost anything digital can be turned into an NFT. Earlier this year, an NYT column about NFTs was sold as an NFT for $560,000. Smaller creators are now jumping onto the NFT bandwagon, minting their NFTs on the Mintbase platform.
2021 is set to be a big year for Mintbase, which recently had a $1 million investment round led by Sino Global. While NFTs are traditionally hosted on the Ethereum (CCC:ETH-USD) blockchain, the company has raised $1 million to expand onto the NEAR (CCC:NEAR-USD) blockchain. This blockchain allows royalties to be shared among thousands of owners.
Nonfungible tokens have been around for a while but it was the Christie’s auction of Beeple’s artwork that really catapulted NFTs into the mainstream spotlight. Beeple, nee Mike Winkelmann, took the digital art world by storm after his work sold for $69 million.
Prior to the auction, Winkelmann had never sold a print for more than $100. This eye-popping sale signals that the future of the art industry lays in the hands of the new crypto creator economy.
Although Beeple may have cashed in on the sale of a lifetime, the artist continues to put out unique works of art. In May Winkelmann designed a cover for Time Magazine that sold for $320,000. In an interview with the magazine, he said digital artwork has the ability to affect people emotionally and intellectually as much as any art made on canvas.
Given continuing demand for digital art, it’s safe to say that this trend won’t be fading anytime soon.
Cryptopunks was one of the first NFT platforms, but didn’t garner much attention until the recent bull run. The project was started by Larva Labs in June 2017 with a simple premise: create a software program that would produce thousands of unique avatars.
The platform worked on a first come, first serve basis and anyone with an ETH wallet could claim ownership of the characters. In its early days, the digital figures sold for $50 to $100 a pop, but as NFTs gained momentum this year, these prices have gone as high as 4,200 ETH.
In the creator economy, scarcity and authenticity are kings and Cryptopunks certainly plays into this trend. Owning the first of any asset (digital or otherwise) has its perks and for early Cryptopunks owners, their avatars are now worth millions. Just last month the auction house, Christie’s sold a collection of avatars for $17 million. That’s an impressive feat for an NFT that was once given away for free.
The blockchain technology Decentraland can perhaps be most likened to the movie Ready Player One. The platform is essentially a virtual world with no government oversight. Genesis Plaza, the city in this digital environment has 90,000 plots of “land” that users can buy and build on. They can either create a scene or a game other users play. Plots of land in Genesis Plaza that sold for $500 in 2019 are now worth $8,000.
Just like the real world, habitants of Genesis Plaza can meet up and interact with each other with VR headsets (think SecondLife). The currency used to facilitate activity on Decentraland is the token MANA. In the future, the company’s founder, Esteman Ordan hopes to use the currency as a means to spend and earn on the platform for goods and services.
Although virtual, Genesis Plaza has a thriving economy that is worth millions of dollars and a market capitalization of $1.5 billion. More recently the British auction house Sotheby’s announced that it would launch a digital replica of its London galleries in Decentraland.
As the metaverse gains mainstream adoption, Decentraland should be on your radar this year.
Rarible is an NFT platform that allows users to mint and trade rare digital artwork. Products can range from art, metaverses and domain names. Given its minting feature, NFT creators can release teasers of their artwork before releasing full versions.
Rarible stands apart from its crypto peers because it is the first platform to have its own governance token, RARI. The goal behind this native token is to create a decentralized system where users can send in proposals for platform upgrades.
The company is also experimenting with the integration of NFTs and DeFi apps, which is a first for the industry. Rarible recently partnered with yEarn Finance and Nexus Mutual to provide insurance coverage for NFTs. The platform has received a lot of support from the crypto community as its native token RARI also comes from the DeFi sphere. With a focus on democratizing the world of NFTs, Rarible is a platform worth watching this year.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.