Pre 2021, if you were to ask me what an NFT was, I would’ve asked what language you were speaking.
Now, NFT’s are taking the internet by storm, and if you still have no clue what an NFT is, it stands for a Non-fungible token. An NFT can be a piece of artwork, a sports moment (NBA Top Shot, Sorare), or even a 24x24 pixel image (CryptoPunks). Each NFT is a unique digital item; every NFT uploads to a marketplace and then - is bought by a consumer - but each NFT is not tangible, meaning it cannot be held and is only accessible through the internet, virtually.
For example, an art piece made by Mike Winkelmann, or known in the NFT realm as Beeple, sold for a record $69 million.
As you can see, even I can access the image, but I don’t have ownership, meaning if I were to take a screenshot and put this exact image up for sale, nobody would buy it. Putting another example into simpler terms, if I took a screenshot of the Mona Lisa or took a picture visiting it, I don’t own the Mona Lisa, and again, nobody would buy it for even $1.
The big question many are asking is if NFT’s are here to stay for the long run, or are they just a craze that will soon die off?
Well, it’s both.
One example we can compare NFT’s to is the dot-com bubble that eventually burst. But, with the dot-com era, as many companies crashed and burned, the internet did not.
In 1993, Mosaic was the first visual web browser, allowing users easier access to the World Wide Web. With Mosaics' success, other web browsers stormed the internet giving more access and popularizing the trend. Between 1990 and 1997, households in the United States that owned computers increased from 15% to 35%.
Soon, companies started to pour in thinking - this could be a get-rich-quick scheme. With the popularity of the internet soaring, investors looked to invest in any dot-com company at any valuation. And then, the inevitable happened: companies collapsed.
Cisco’s stock dropped 86%, Amazon 90%, NASDAQ lost 80% of its value, and thousands of companies crumbled. But some survived, like Cisco and Amazon, despite being on the brink of failing and shutting down. Could you imagine a world without Amazon?
Over $7 trillion in market value, down the chute.
Now, let’s turn back to NFT’s. Could something like this be on the horizon?
Here are some statistics on what people think about NFT’s, per Piplsay.
Piplsay polled 30,390 Americans and 6,050 Britons nationwide to get their insight and opinions on NFT’s and how they will play out in the future.
In their findings, Piplsay found that 42% of Americans are still not aware of NFT’s compared to 59% of Britons, so obviously, the trend is hitting the states faster than anywhere else in the world. More statistics from this survey that jump out is that Americans are much more hopeful for NFT’s with 59% thinking that NFT’s will be the next big thing compared to 39% of Britons. Britons are much more skeptical about NFT's; 18% of Americans predict this will burst soon, but Britons are much more cautious, with 33% thinking the bubble will burst soon enough.
This survey was conducted from March 29-31, 2021.
So far, we're sitting at over $1 billion in sales from NFT’s, with NBA Top Shot leading the way with marketplace sales approaching $500 million (currently sitting at $487,480,961).
Right now, we’re seeing a small crash from the top 5 selling NFT products in the last week, per CryptoSlam.
A crash will come with NFT’s but similar to the dot-com era, the larger markets will survive, especially a marketplace licensed with the NBA. This crash, whenever it comes, should affect nearly every market involved with NFT’s.
One of the reasons I think NBA Top Shot will survive is one because the NBA has licensed with Top Shot. Another reason, Dapper Labs - the company that controls the blockchain between every purchase on the website (Flow) - is also in negotiations with nearly every other major sport on creating a "Top Shot" for the desired league.
The CEO of Dapper Labs, Roham Gharegozlou, has already stated that the next NFT to hit the digital sports collectible market will be UFC, as they've already agreed upon the licensing. More major sports leagues like: the NFL, MLB, NHL, and EPL have reached out to Dapper to create a similar product to NBA Top Shot after seeing the success of Top Shot since releasing at the start of October.
In general, I believe that NFT’s will be most successful to artists, the digital sports collectible world, and celebrities, considering the mass following certain athletes, actors, actresses, comedians, musicians, models, and even YouTubers have.
Like the dot-com era, we’re in the midst of people thinking this is a get-rich-quick scheme with NFT’s ranging from virtual horse racing, virtual furniture, and virtual avatars for selling up to millions of dollars.
These people are right. There are plenty of NFT’s out there looking to profit and collect a quick buck before the bubble bursts. But this could and will backfire for a lot of NFT’s and the people behind the creations.
This could be a horrible image for all the celebrities looking to profit now when they don’t even need the money. If their NFT’s sell for thousands of dollars now but then in a few years drops to being almost nothing and meaningless collectibles, there could be backlash.
Recently, Rob Gronkowski, a multiple Super Bowl-winning tight end, who has made over $40 million in career earnings through contracts (excluding sponsorships), made an NFT in which he profited over $1.8 million, listing them up for bidding on OpenSea. The highest-priced NFT of his sold for 229 Ethereum (a form of cryptocurrency), or an equivalent of $430,000 at the time. With Ethereum a more stable form of cryptocurrency than Bitcoin, it can still fluctuate, meaning that 229 Ethereum could be worth way more or way less in a year.
With an NFL form of Top Shot on the horizon, eventually, more Gronkowski moments will be minted through their website. We shall see how that affects Gronkowski’s NFT in due time, but Gronkowski saw an opportunity and was the first NFL player to launch his own NFT, with Patrick Mahomes shortly following him a week later. Mahomes sold $3.4 million worth of his own NFT, and this last offseason signed a ten-year $450 million contract.
I view NBA Top Shot as a multi-decade NFT that will survive, but on the website, you should always know who you’re buying and why.
Just remember NFT’s are a bubble, and you should always research what you’re investing in because right now, all NFT’s are an investment - collectible or not.