The total capitalization of the market for non-fungible tokens (NFT) at the end of 2020 was $8 billion, which is 56 times higher than in 2019. By the end of 2021, the total value of the market, which can serve as proof of ownership of a digital asset, can reach several tens of billions of dollars. NFT tokens are becoming increasingly popular with the public — including the news of the $69.3 million purchase of artist Mike Winkelman’s artwork. The niche of their application will not be limited to the world of art — the use of such tokens may extend to the sector of copyrights, contracts and even identity confirmation, experts believe.
The right to an asset
NFTs can serve as proof of ownership of a digital asset. At the end of 2020, the total capitalization of this market worldwide was $8 billion, 56 times higher than in 2019. At the end of this year, the market could increase to $40–50 billion.
NFTs allow ownership of any digital asset to be transferred. Among other things, such a token can serve as loan when one user provides credit to another at interest in cryptocurrency.
This area has enormous growth potential because a token can validate ownership of a digital asset that can be worth hundreds of thousands of dollars. For example, in early March this year, singer Grimes sold a series of ten paintings called War Nymph for $5.8 million on the Nifty Gateway platform. Each painting was represented by a non-fungible token, and the entire series has been sold out in less than 20 minutes.
The NFT system has significant potential. The acceptance of cryptocurrencies by the broad masses is becoming evident. The surge in the popularity of NFT tokens is increasingly attracting public attention, especially in March of this year after the news of the purchase of a $69.3 million non-fungible token by artist Mike Winkelman, known as Beeple.
Non-fungible tokens have become a clear trend in 2021. Convenient marketplaces have appeared for their release, where you can create a token without any special technical skills. NFTs are being actively implemented in the art sphere. They can also be fully used in the entertainment industry: games, movies, music. In the future, such tokens may become one of the ways to develop the copyright market, as it has been looking for an effective model of digital asset management for many years.
NFT technology will have a huge impact on the processes we are used to and will change the format of human interaction with property and various intermediaries such as government systems or banks. Blockchain-based non-fungible tokens are developing within cryptocurrency systems as one of the global technological and economic trends.
Today, NFT tokens are used to identify digital pictures, photos, music, games, movies. In the future, they can be used for approval and recognition of physical objects.
For instance, a token may be linked to a person and serve as an identifier. Token can approve legal agreements on various transactions, a person’s personal data, the authenticity of documents, eliminating the need for intermediaries. Any object can be identified by assigning it an NFT token created using a blockchain.
Experts do not see any special risks in NFT. If the information is in one place, it is easy to fake it. Blockchain decentralizes the storage of data, saving it in multiple systems at the same time. Therefore, it is impossible to change or falsify such information.
In addition, transactions with tokens are faster, easier and cheaper compared to those with real objects, which they reflect. There are already a large number of auction platforms where tokens can be traded and put up. The NFT is developing, and their scale will increase.
