It all started with the CryptoKitties craze late in 2017 when barely anyone knew what a "non-fungible token" (NFT) was. Each kitty was unique and tradable, and their ownership could be proven with 100% certainty on the blockchain. The flood of trading transactions was a testament to our innate desire to collect unique items, whether physical or digital.
Some of us probably thought that CryptoKitties were just as silly as we thought Bitcoin was in its early years. However, as the popularity of NFTs continue to rise, more and more people are starting to take a serious look at this groundbreaking innovation.
NFTs are unique digital tokens that can be traded free of fraud, directly between a buyer and a seller. They are turning out to be big business, and their use case extends far beyond collectible digital pets. NFTs can be used to represent digital land, special weapons, art, or even real-world products.
Ethereum continues to be the most active blockchain for NFT trading, and there have been some super impressive sales on the platform. In 2019, the "Atlas" mystic card in Gods Unchained was bid up to 210 ETH, and sold for approximately $31,000 USD. Three land parcels in Somnium Space, an open virtual reality world, recently sold for $18,000 USD worth of ETH:
Game items aren't the only thing heating up the NFT marketplace. This innovative technology has allowed artists to sell their works directly without any middle-men taking large cuts of the revenue. The co-founder of SuperRare, a marketplace for digital art, announced on Twitter earlier this month that over $1 million dollars has been earned by artists so far:
Ethereum was the first blockchain to implement a standard for NFTs and has proven itself to be a secure platform for trading. Unfortunately the transactions tend to be slow, gas fees are high, and users need to install a crypto wallet such as Metamask in order to get started.
Other blockchain platforms have taken it upon themselves to improve upon Ethereum's base technology and NFT standards to make the process of buying and selling digital items faster and easier. Zilliqa, EOS, and WAX are a few examples of platforms that are making progress in NFT standards that are gradually being adopted by marketplaces.
Zilliqa has partnered with Krypton to develop the game "Zilliqa Planet", which will feature its own NFT marketplace. Mintable.app, an application for creating NFTs, recently made an announcement that the latest version of their NFT creator software will support the Zilliqa blockchain in addition to Ethereum.
Arguably the projects making the greatest strides in the NFT space are EOSIO-based platforms, in particular the WAX blockchain. In addition to faster transactions times, no gas fees, and a user-friendly wallet, one of WAX's block producers (BPs) has created a new NFT standard called AtomicAssets.
AtomicAssets was created by the BP pink.network. It saves items to the blockchain is a more efficient manner to minimize the amount of space taken on the blockchain. The standard improves upon EOS's dGoods and SimpleAssets NFT standards by minimizing RAM costs for users and allowing items to be backed by tokens such as WAX or EOS.
WAX has also been attracting some attention on social media as of late. Earlier this year they partnered with Topps to release Garbage Pale Kids collectible cards on the WAX blockchain. Recently one of the early minted cards sold for $2400:
Ethereum continues to enjoy its network effect, relative security, and vast developer community, but suffers from slow transactions, high gas fees, and complex wallet requirements. Other emerging platforms such as EOS and WAX have improved the user experience significantly, eliminated gas fees, and improved speed, but their security remains unproven.
Users want to have peace of mind that their NFTs are secured on the blockchain, and can be traded free of censorship. After all, that is what distinguishes a blockchain solution from a centralized server solution. Only time will tell if these new platforms can offer the level of security that gamers need.
In any case, the picture is becoming ever clearer that the marketplace for NFTs is only going to grow in size. Therefore, it may be worthwhile for investors to research the NFT platforms and standards that could end up taking the lead in the future.