NFT mania and digital ownership

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In the chaos of the digital age where trends come and go at the speed of a click, one phenomenon stands out like few others. In the year The years 2020 and 2021 have seen unprecedented growth and widespread adoption of these digital assets, shaping the way we perceive ownership, art, and the Internet itself. In fact, in 2021 alone, the NFT market will see a trade volume of nearly $25 billion, compared to a benchmark that barely existed a few years ago.

.@blackmirror_xp launches Smile Club digital collections today at @base.

Here's everything you need to know ⬇️ pic.twitter.com/ahim0CLopw

— nft now (@nftnow) March 12, 2024

While the concept of blockchain technology has been around for over a decade, the creation of NFTs captured the imagination of creators and collectors. NFTs represent unique digital assets stored on the blockchain, ensuring scarcity and authenticity. This innovation has made it possible to simulate digital art, music, videos and even tweets, turning intangible creations into valuable commodities.

The concept of NFT can be traced back to at least 2012 when the Colored Coins protocol was created on the Bitcoin blockchain. This protocol allowed users to issue custom tokens representing digital or physical assets. However, with the emergence of Ethereum smart contracts and the ERC-271 token standard in 2017, it wasn't until later that immutable tokens for digital assets became possible.

In the year One of the first and most popular examples of NFTs to gain widespread attention in 2017 is CryptoKitties. Developed by Canadian studio Axiom Zen, Cryptokitties is a blockchain-based fantasy game that allows players to buy, collect, breed and sell virtual cats. Following the success of CryptoKitties, several other projects began experimenting with NFTs for various purposes, including digital art, virtual real estate, in-game items, and more. Platforms such as Decentraland and NBA Top Shot have gained significant attention during this period, demonstrating the diverse applications of NFTs beyond gaming.

Then, between 2020 and 2021, mainstream adoption exploded.

NFTs have reached a new level of mainstream recognition as they headline high-profile sales in 2021, with digital artwork selling for millions of dollars and celebrities launching their own NFT collections. On one such occasion, on November 2, 2021, award-winning writer and director Quentin Tarantino announced that he will be selling seven uncut scenes from Pulp Fiction based on The Secret Network as NFTs.

Other sales, too, headline the $69 million sale of Beeple's digital art “Everyday: The First 5,000 Days” at Christie's in March 2021. Newly created digital artworks by artists such as Pack and Grimes fetch millions of dollars at auction. And when private sales begin. Popular groups such as Bored Up Yacht Club and Cryptopunk were also born during this time.

As each was part of a collection of 10,000 algorithmically generated profile pictures, in March 2021, a CryptoPunk NFT (#7804) sold at auction for over $7.5 million, one of the highest prices paid for a single CryptoPunk at the time. Following this winning streak, in October 2021, a rare triple-board monkey set consisting of three monkeys sold as a set fetched more than $24 million at a Sotheby's auction. At the same time, NFT markets have expanded rapidly during this period. Platforms such as OpenSea, Rarible, Foundation and Nifty Gateway have gained widespread popularity, creating ways for creators to market and sell their digital assets. OpenSea has emerged as one of the largest NFT marketplaces, with monthly trading volume exceeding $1 billion by mid-2021, after this figure was reached by Blur and OKX NFT.

Sleeping like a curse tonight. We love you monkeys.

Thank you #ApeFestHK 2 for an incredible night. pic.twitter.com/lfqmmQBypa

— Bored Ape Yacht Club (@BoredApeYC) November 4, 2023

However, this rise in popularity has brought criticism regarding environmental concerns due to the energy-intensive nature of blockchain transactions and questions about the intrinsic value of digital assets. In fact, during the 2022–2023 crypto winter, the trading volume of NFTs dropped by 99% from the 2021 peak.

Legal disputes over the ownership and authenticity of digital assets have also emerged, highlighting the need for clear rules and regulations. Some platforms have implemented authentication mechanisms to ensure the originality of NFTs and protect the rights of creators, while others have agreed to disclose ownership in a decentralized ecosystem. In fact, following the widespread distribution of the pulp novel NFTs, Miramax sued the Hollywood director in a copyright lawsuit that ended in September 2022. Yuga Labs, the current owner of BAYC and the CryptoPunks series, has also faced similar legal battles over its digital presence. Collections.

Yet, all was not lost; With the ongoing crypto bull market, NFTs trading volume has rebounded. New NFT projects, especially in Hong Kong, are growing in popularity, with collections increasing soon after launch. New protocols such as ParaSpace (now Parallel Finance) are developing new tools for the ever-growing NFT lending market. Meanwhile, new Ethereum token standards such as ERC-404 seek to defragment NFTs and enable their wider reach.

Overall, the NFT space continues to evolve, with continuous experimentation across industries and new platforms emerging to cater to different niches in the NFT ecosystem. Additionally, efforts are underway to address environmental concerns and improve the sustainability of blockchain technology as developers and enthusiasts seek to ensure the long-term viability of NFTs as digital ownership and expression.

Punk #305 is home, hanging next to Warhol on @icamiami's wall. This is where she belongs. She will be on display until December 20 and will remain in the museum's permanent collection. pic.twitter.com/hKe5tmexyx

— CryptoPunks (@cryptopunksnfts) December 3, 2022

Related: Different Types of NFTs: A Beginner's Guide