The master entrepreneur and venture capitalist Marc Andreessen famously coined the term “Software is eating the world” in 2011 heralding the ubiquitous mass adoption of technology in business and in our lives.
Fast forward a decade, entrepreneur and investor Naval Ravikant said “Public blockchains will be the title registries for everything of value”. The romance with decentralization and democratization is palpable, almost everyone wants unfettered access, no fees and the freedom to transact seamlessly across the globe and this is the promise of the blockchain technology. The major use of the blockchain technology – apart from making cute crypto cats and selling them for 100s of thousands – is to make financial transactions, ergo the term DeFi or decentralized finance was born. DeFi represent various financial applications built to disrupt the incumbent financial intermediaries.
What are NFTs?
Cue in Non-Fungible Tokens NFTs which debuted around 2017 and made famous with CryptoKitties, a game that “breeds” one-of-a-kind collectible creatures. There are now hundreds of collections with “Dragon”, one of the Cryptokitties fetching 600 Ether (ETH) just over US$2M if you follow today’s rates. And for the avid gamers among you, there is a complete new universe where you could participate in cyber catfights should you please! COVID has played a big role in the NFT’s rise with people spending more time on the internet and having more cash at hand due to limited discretionary spending. Last year, the total value of NFT transactions quadrupled to $250 million, according to a study from NonFungible and BNP Paribas-affiliated research firm L’Atelier.
Cryptokitties aside, what is an NFT? An NFT is a unique piece of code that is linked to an asset like a media file and recorded on the Ethereum blockchain in a process called “minting”. Who can create NFTs? Everyone! All you need to do is create an account on the myriad of NFT marketplaces like Opensea.io, Foundation App and NiftyGateway to name a few. No technical knowledge required.
Who is benefiting the most from NFTs? Artists producing digital art are clear winners culminating with the sale of Beeple’s “Everydays: The first 5000 days” for just over $69M. Although Beeple is a well recognized artist with a global following, that didn’t stop him from tweeting “holy F&^$” when the sale closed. No one could have predicted this amount!
The global auction giant Christie’s led the auction of an NFT in Ether (ETH) for the first time yet collected its fees in good old US$! Has Christie’s really embraced the world of crypto?
Other artists like Kings of Leon and Grimes, entrepreneurs like Jack Dorsey and Elon Musk and platforms like NBA Topshot have been minting memorable moments into NFTs with hundreds of collectors buying and claiming ownership of tweets, songs and video clips that everyone can essentially hear and see!
Kristel Bechara was the first artist to sell NFTs in Middle East
“It’s just about the ownership” said Kristel Bechara, the first artist from the Middle East to sell NFTs of her Beauty in DeFi collection to global collectors. Kristel was able to capitalize on her track record and her unique style to command over 3 ETH or the equivalent of US$ 11,600 for one of her many NFTs titled “Beauty in Defi – Mooning”. Kristel believes that while everyone is listing digital art pieces onto marketplaces and minting them into NFTs, ultimately only the artists producing “‘real art” would be able to sell their work to discerning collectors.
Are NFTs here to stay?
Proponents of the blockchain tell us that NFTs are the future as everything that is ownable from a blog post to a piece of video content, to a house, an insurance policy or access to an elite university, everything can be tokenized and made into an NFT.
Should you care? Absolutely. What if NFTs open up new means for us to claim ownership over assets in a digital and irrefutable manner, what if you’re able to create an NFT of a title deed or a life insurance policy and not have to worry about misplacing or losing these valuable items? We will definitely be watching this space to learn about the myriad of ways, individual creators and institutions alike would make use of this technology.