What are NFT’s? – All we know, so far…

You know those cartoon monkeys in funny hats and sunglasses you’re seeing all over social media? Those are non-fungible tokens, or NFTs. More specifically, they’re “Apes,” a collection of NFTs created by the Bored Ape Yacht Club (BAYC), one of the most influential NFT creators in the world. But they’re by no means the only NFTs out there. Those pixelated 8-bit characters people are using for their Twitter profile photos? Those are CryptoPunks. Those Anime-influenced two dimensional cats? Cool Cats.

Indeed, NFTs are the latest in a long line of crypto and blockchain trends. They’ve captured the imaginations of everyone from Paris Hilton, Hotel Heiress, to Ozzy Osbourne, Prince of Darkness. Even Pablo Picasso’s grandson wants in. 

Well, in technical terms, NFTs are unique units of data (i.e. “tokens”) stored on digital ledgers called blockchains. They are associated with particular digital or physical assets and typically include licenses stipulating what can be done with said assets. In this sense, NFTs are more akin to certificates of ownership or contracts. So, while you’ll often hear BAYC’s Ape images colloquially referred to as NFTs, this isn’t strictly accurate. Additionally, while NFTs are stored on blockchains, the underlying assets are generally housed elsewhere — the InterPlanetary File System (IPFS), for instance. 

In any event, let’s take a closer look at the concept of “non-fungibility.” Something that is non-fungible is unique and can’t be replaced with something else. For example, Bitcoin is fungible because individual coins are identical in both quality and value and can be traded one-for-one — just like dollar bills or gold ingots. But NFTs are non-fungible because they are entirely unique, like Michelangelo’s Pietà or Thutmose’s bust of Nefertiti. They can be exchanged for something of similar value, but they can’t be exchanged one-for-one because they are one-of-a-kind.

The vast majority of tokens are kept on the Ethereum blockchain (although, there are a growing number of non-Ethereum NFT projects). This means transactions are stored on the Ethereum network and most NFTs are valued, bought, and sold using Ethereum’s cryptocurrency, Ether (ETH). 

So, if you’d like to acquire an NFT, you’ll first need to set up a crypto wallet and then purchase ETH via a crypto exchange. From there, you can use your ETH to purchase or bid on an NFT in a secondary market or acquire one directly from an NFT creator prior to the “minting” process (I.e. the process whereby digital files are converted into non-fungible tokens).

Additionally, because NFT contracts are stored on the blockchain, originals are easy to verify. So, no, taking a screenshot of Eminem’s twitter photo won’t impact the non-fungibility of his Ape. (Try explaining that sentence to your grandparents!)

“Gas” is another important concept in the NFT space. Basically, just as gasoline is required to drive ICE cars, computation energy is required to process transactions conducted on blockchains. Moreover, just like gas, this computation energy costs money. So, “gas fees” are the payments that NFT investors have to make to compensate for the computation energy required to process blockchain transactions. This is commonly compared to the processing fees charged by credit cards for transferring money from one account to another.

On the Ethereum blockchain, gas is typically calculated in Gwei, which is a denomination of ETH (think: one penny versus one dollar). To track gas fees, many users use tools like Etherscan, gwei.at, etc.

Ultimately, NFT prices are determined by supply and demand. If 100,000 people want to buy NFTs from a single collection, that collection will likely have a much higher floor price than one with interest from just 1,000 people. As a consequence, creators have a vested interest in generating demand for their collections. This is typically done by creating rarity within collections and offering incentives for purchasing NFTs. Let’s begin with the question of rarity.

While some collections are crafted manually, with creators treating each NFT as individual pieces of digital art, other collections are created using NFT generators that randomize various pre-designed characteristics. In the case of the latter, NFTs that have more unique characteristics are more valuable than others from the same collection. BAYC is once again a handy example. The current BAYC collection consists of 10,000 Apes, which vary in complexion, attire, background color, etc. Some features appear in fewer Apes than others and are therefore more rare. The value of each Ape is thus determined in part by the combination of these features and their respective rarity.

Finally, creators are very much their own brands. And just like Nike, Apple, or The Coca-Cola Company, NFT creators generate demand by forming brand partnerships, launching guerilla marketing campaigns, and offering benefits for owning their NFTs. BAYC, for instance, has formed partnerships with companies like Adidas and streetwear powerhouse The Hundreds. They also give their “members” access to an exclusive Discord channel, commercial usage rights for their Apes, the ability to purchase exclusive BAYC merchandise, and more.

A crypto exchange is a platform that enables you to buy and sell cryptocurrencies at real-time market prices. This can be done using regular currency (such as the U.S. Dollar or the Euro) or by exchanging one cryptocurrency for another (trading Bitcoin for Ether, for instance). In addition, you can use an exchange to convert cryptos back into regular currency.

From an NFT perspective, crypto exchanges are important because NFTs are usually purchased using cryptos like Ether. So, if you want to begin investing in NFTs, you’ll most likely need to go through a crypto exchange first.

Crypto.com – Buy BTC, ETH by Crypto Technology Holdings Limited

• Short Description of App: Crypto Wallet to Buy, Sell, and Pay with Crypto
• 30-Day Android Downloads: 3,001,953
• Total Android Downloads: 10,000,000+
• NFT-Related Ranking Keywords: cypto.com nft, nft crypto, powering nft-commerce online, crypto card nft, nft coinbase.

Coinbase: Buy Bitcoin & Ether by Coinbase Android

• Short Description of App: Buy, sell, hold & trade Bitcoin & other crypto. Easy to use & blockchain secured.
• 30-Day Android Downloads: 1,485,360
• Total Android Downloads: 10,000,000+
• NFT-Related Ranking Keywords: nft card, nft coin, nfts on solana, nft cryptocurrency, crypto card nft.

In the same way that regular wallets are used to hold cash and credit cards, crypto wallets are used for storing cryptocurrencies and NFTs. They’re software programs or physical devices that contain two “key pairs” (private keys and public keys) that allow access to the blockchain.

The most important is the private key, which functions like the key to a safe deposit box. Anyone who has access to a crypto wallet’s private key can command its contents, meaning they can buy, sell, or exchange the cryptos and NFTs held in the wallet. A public key, meanwhile, is derived from the private key. It’s a code used to facilitate transactions between parties, allowing users to receive cryptocurrencies in their accounts.

However, it should be noted that crypto wallets don’t technically store cryptos or NFTs. All crypto holdings remain on the blockchain and can only be accessed using a wallet’s private key. In this way, private keys act as proof of ownership. If you lose or forget your private key, you lose access to your holdings — full stop. So, keep your hardware wallets safe and your access credentials safer.

MetaMask – Buy, Send and Swap Crypto by ConsenSys

• Short Description of App: A secure wallet & gateway to blockchain sites.
• 30-Day Android Downloads: 2,238,572
• Total Android Downloads: 10,000,000+
• NFT-Related Ranking Keywords: nft wallet, rise city nft, decentralized nft wallet, crypto nft wallet, nfts on solana.

Coinbase Wallet – Store Crypto by Coinbase Wallet

• Short Description of App: Self-custody crypto wallet & web3 dapp browser. Store BTC, ETH & ERC20 altcoins.
• 30-Day Android Downloads: 506,416
• Total Android Downloads: 5,000,000+
• NFT-Related Ranking Keywords: nft coinbase, decentralized nft wallet, crypto nft wallet, blockchain-based nfts, wallet nft.

An NFT marketplace is precisely what it sounds like. It’s a digital platform where you can browse NFTs and NFT collections as well as buy, sell, bid on, auction, or trade NFTs. By and large these marketplaces exist on the Ethereum blockchain, however, as noted above, there are a growing number of non-Ethereum NFT projects.

Incidentally, with the success of NFT marketplaces like Foundation, OpenSea, and Binance, many other crypto leaders are now rushing to launch competitors. Coinbase, for instance, announced Coinbase NFT on October 21st, 2021.

Binance: BTC NFTs Memes & Meta by Binance Inc.

• Short Description of App: Bitcoin, Crypto, NFTs, SHIB, DOGE. Get them all at the world’s largest exchange.
• 30-Day Android Downloads: 2,635,718
• Total Android Downloads: 10,000,000+
• NFT-Related Ranking Keywords: nft marketplace binance, binance nft, bitcoin nft, binance: btc nfts memes & meta, nft coin.

OpenSea: NFT marketplace by OpenSea

• Short Description of App: Discover, collect, and sell NFTs on the largest NFT marketplace.
• 30-Day Android Downloads: 2,739,153
• Total Android Downloads: 1,000,000+
• NFT-Related Ranking Keywords: city nft guide, rise city nft, ninjafit nft, openseas nft, nft monkey.

Many NFT collections, like BAYC, CryptoPunks, The Sandbox, and others, have fostered active communities across social media platforms. This enables them to communicate with owners, coordinate events, offer benefits, launch viral marketing campaigns, and more. From a consumer standpoint, these communities make it possible to conduct community-wide NFT discussions about new collections, NFT trends, etc.

Creators also use social media to promote new collections and releases. For instance, in exchange for participating in their communities, NFT creators often give their patrons the opportunity to purchase from NFT collections before the minting process. This means active community members can acquire NFTs before they’re officially available for public transaction.

Twitter by Twitter, Inc.

• Short Description of App: Now with Twitter spaces: Join, listen, and speak in live audio conversations.
• 30-Day Android Downloads: 15,129,114
• Total Android Downloads: 1,000,000,000+
• NFT-Related Ranking Keywords: This app does not rank for any NFT keywords.

Discord – Chat, Talk & Hangout by Discord Inc.

• Short Description of App: Chat, game, stream, share, join communities and hang out with friends.
• 30-Day Android Downloads: 10,598,289
• Total Android Downloads: 100,000,000+
• NFT-Related Ranking Keywords: This app does not rank for any NFT keywords.

Blockchain technologies are always met with a healthy mix of skepticism and enthusiasm and NFTs are no different. Whereas critics are quick to jump on their massive price tags and the general volatility of crypto, proponents won’t hesitate to retort that physical pieces of art are similarly priced and don’t typically hold much intrinsic value either. Whatever the case may be, competition in the space doesn’t appear to be slowing down.

One thing that’s worth keeping an eye on is the fledgling non-Ethereum NFT space. For instance, late last year, the blockchain platform Solana launched an NFT marketplace called Solanart. It’s winning over crypto investors by offering market fees of 3% and transaction fees of just $0.00025 — both of which beat Ethereum-based platforms by a substantial margin. You’ll also note from our analysis above, that “nfts on solana” is an increasingly popular keyphrase among NFT and crypto apps. As you can see from our market study, “nfts on solana” is becoming increasingly popular among NFT and crypto apps.

In any event, no one knows for certain where all this is headed. But, so long as demand keeps ticking up, NFTs will remain a hot commodity. And based on the performance of mobile crypto apps like Crypto.com, Coinbase, MetaMask, and OpenSea, the future remains bright.

This article is not meant to be interpreted as investment advice. Cryptocurrencies and non-fungible tokens (NFTs) can be extremely volatile and one invests in them at their own risk.

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