A Look Back on NFTs Where Are They Now? What are NFTs?
by Reshwanth A | Updated Dec 30, 2023
What are NFTs?
NFTs, or non-fungible tokens, are unique digital assets stored on a blockchain that represent content or physical items such as art, music, videos, and more. Unlike cryptocurrencies, NFTs are non-fungible, meaning each token is distinct and cannot be replicated. They can be bought and sold online, often with cryptocurrency, and their value is determined by market forces.
NFTs have gained significant attention and are used for various purposes, including digital artwork, real estate, and even scientific and medical applications. While NFTs are secure due to their blockchain technology, there are challenges in safeguarding them, and the market for NFTs has seen both significant growth and instances of fraudulent activities.
A Look Back on NFTs Where Are They Now?
NFTs rose to popularity in 2021, but their hype has since faded, leading to a decline in the market. The NFT boom saw trading volumes exceeding $3 billion at its peak, with some digital assets selling for millions of dollars. However, the industry also faced significant challenges, including notable scams and hacks, such as the Bored Bunny rug pull and the theft of almost $19 million in Lympo NFTs through a hot wallet attack. By 2023, the average price of NFT sales had dropped by 92 percent, and the daily average NFT sale volume was significantly lower than in previous years. The future of NFTs remains uncertain, with the industry currently being a niche market with a limited clientele.
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NFTs Origin
The history of NFTs dates back to 2014 when Quantum, the first-ever NFT, was created by artist Kevin McCoy and his wife Jennifer. Quantum, a digital graphic featuring a pink and blue hexagon, marked a pivotal moment in history as the origin of an industry that would eventually be worth billions. Notably, this milestone occurred at a time when cryptocurrencies, including Bitcoin and Ethereum, were still in the early stages of development, with many of today's popular blockchains, such as Solana and Cardano, yet to be created. It would take another seven years for NFTs to reach their peak in popularity, signifying a significant journey from their humble beginnings to becoming a prominent digital asset class.
Expensive NFTs
The surge in NFT popularity led to a steep increase in the value of many assets, resulting in groundbreaking NFT sales that captured global attention in 2021 and 2022. Notably, an NFT from the renowned CryptoPunks collection sold at a Sotheby's art auction for $11.8 million in June 2021, followed by another CryptoPunk NFT selling for $24 million in February 2022.
Additionally, The Merge, an NFT, set a record as the most expensive NFT in history when it sold for $91.8 million at the end of 2021, involving thousands of collectors purchasing fractions of the NFT. These exorbitant prices, surpassing those of classic artworks, reflected the significant growth of the NFT industry. However, the industry also attracted illicit activities, with the darker side of the internet devising ways to exploit the booming market and defraud individuals of their money.
NFT Hacks and Scams
Since 2021, cybercriminals have pulled off major NFT scams and hacks, like the Bored Bunny rug pull which cost investors $21 million. This fake NFT project, promoted by celebrities, sold nearly 5,000 NFTs to unsuspecting buyers before the creators vanished, causing the NFTs' values to crash. Other scams imitated popular collections to lure investors and run away with the money. Cybercriminals also stole valuable NFTs through hacks, including a $19 million theft in a hot wallet attack. Phishing targeted platforms like OpenSea, causing users to lose funds and assets. These incidents highlight the widespread NFT cybercrime and the challenges in protecting digital assets.
A Look Back on NFTs Where Are They Now - FAQs
NFTs, or non-fungible tokens, are unique digital assets stored on a blockchain that represent content or physical items such as art, music, videos, and more. They are used for various purposes, including digital artwork, real estate, and even scientific and medical applications.
Most non-fungible tokens can be purchased with Ether only. To buy NFTs, owning and storing them in a digital wallet is the primary step. They can be bought via online NFT marketplaces such as OpenSea, SuperRare, and Rarible.
NFTs that use blockchain technology like cryptocurrency are generally secure. Their distributed nature makes NFTs nearly impossible to hack.
The NFT boom saw trading volumes exceeding $3 billion at its peak, but by 2023, the average price of NFT sales had dropped by 92 percent, and the daily average NFT sale volume was significantly lower than in previous years. Notable scams and hacks, such as the Bored Bunny rug pull and the theft of almost $19 million in Lympo NFTs, contributed to the decline.
NFTs can represent any asset digitally, including online-only assets such as digital artwork or real assets like real estate. Some examples are in-game avatars, digital/non-digital collectibles, tickets, domain names, and more.