In February, the popular Nyan Cat meme went under the hammer for 300 ethers – about 43 million rubles. On Twitter, the author of the image wrote that the deal “opened the door to the future of the meme economy in the crypto universe.” He hopes his experience will inspire future artists to become part of the NFT. Why is this needed? What is NFT? And how much can you earn from this? And is it somehow related to games? The answers are in our material.
What is NFT?
Non Fungible Token ( from the English non-fungible token ) – part of the blockchain or blockchain. The technology makes it possible to digitize any virtual and physical object, making it a unique exhibit. For clarity: currency (no matter what, regular or crypto) is an interchangeable product. 1 ruble is completely identical to the same ruble coin. Non-fungible – those that cannot be exchanged for similar ones. For example, the painting by Leonardo da Vinci “Mona Lisa” is unique. The situation is the same with digital art.
NFT tokens are available only in a single copy. They cannot be copied. When buying or selling such a token, the same actions are performed as when selling a physical object. Except that information about the current owner is publicly available.
The scope of use is not limited to paintings (the most famous case happened with Banksy: his work was burned and turned into a token). Anything can be transferred to the blockchain: a music recording, a video, a GIF, text, in-game items, and even a tweet (Twitter creator Jack Dorsey sold his first post for $ 2.9 million, the funds went to charity).
How is the trade going
First of all, without intermediaries. To start trading NFT tokens, you need to create your own wallet with Ethereum. It is needed for two reasons. First, to register for crypto auctions. Secondly, if a person wants to create his own NFT tokens or buy someone else’s, he will have to pay a commission, which will go to the people who ensure the operation of the blockchain (miners).
There are quite a few sites that trade unique exhibits. You can start with small lots on Rarible or OpenSea. When buying a lot, the user pays a commission: on average, about 0.05 ETH (about 6 thousand rubles) – its size depends on the workload of the Ethereum network at the time of the transaction.
If the user decides to turn his work into a token, he will have to go to crypto exchanges. But there are nuances. For example, on Rarible, the creation is immediately transferred to NFT and put up for sale. This means that the money for the work of the miners will have to be paid without waiting for the offer to buy. Opensea takes a different approach – commission is charged only if a buyer is found for the job.
Photo: Etherium.org
After completing the transaction, the former owner can only withdraw the money. There are several ways to do this. The easiest one is exchangers. With their help, the user transfers the cryptocurrency into real money, and then transfers it to a bank card or to any other payment system. The process takes 10-15 minutes. For their services, exchangers charge a commission ranging from 1% to 10%. Another part of the money will go to cover the commission of payment systems. For example, Yandex.Money takes 1-2% of the transaction amount, so experts recommend withdrawing funds directly to a bank card. Nevertheless, exchangers are far from the most reliable way, since fraudsters often disguise themselves as them.
The second way is exchanges. It is much safer, but the commission is much higher than that set by exchangers. This is due to the fact that exchanges do not work with fiat money , but enter into partnership agreements with other services. The total amount can reach 4-5% of the transaction. Experts recommend that you always read the withdrawal conditions carefully. For example, the Binance exchange charges 0.0004 BTC (about 1800 rubles) when withdrawing one bitcoin, and in the case of Ethereum, the commission will be 0.003 ETH (about 480 rubles).
Another way is cryptomats (a cryptocurrency analogue of ATMs). In 2020, there were 5 such devices in Moscow. They often take a very high commission (about 5%) and are not always safe – there is a risk of conducting a transaction through a device installed by fraudsters.
The same work by Banksy
There are other problems with NFT as well. When creating a token, a situation may occur when the author decides to use someone else’s material. For example, take a photo or drawing not from your social media profile. This is a violation of the user agreement with the platforms that create and sell NFTs. The copyright holder has the right to contact the administration and demand to hide the material from public access. However, it will not work to completely remove an already created token from the network.
Social networks are already introducing algorithms to control copyright. For example, Instagram’s algorithms will request documents that prove ownership of a particular piece of art if a user posts a picture on their profile.
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Notable cases
Many contemporary artists have appreciated the technology and have started releasing their work on the blockchain more often. According to Forbes , in February 2021 alone, digital object sales using NFT amounted to $ 500 million.
Mike Winkelmann’s collage, which was bought for $ 69.3 million
An American Mike Winkelmann was one of the first to start trading crypto art. On March 11, 2021, for the sale of a collage of 5,000 works, the artist earned $ 69.3 million.He received another $ 67 thousand for a gif with naked US presidential candidates – Joe Biden and Donald Trump.
Canadian artist Christa Kim sold a digital model of the house on March 20. A dwelling on Mars, made in a futuristic style, cost the buyer $ 500 thousand (40 million rubles). Initially, the girl hoped to receive 30 Ethereums for her project, but during the auction the price increased significantly. You can read more about this in our material .
On March 25, a self-portrait created by a robot named Sofia and artist Andrea Bonacheto went under the hammer. The man began to draw a portrait, and the robot, using a neural network, finished the work. As CNN reports , “The drawing was completely based on decisions that Sofia made without any human help.” An unknown buyer paid $ 688,000 for the creation of the robot.
Photo: @ pokraslampas / Instagram
Russian artists are not lagging behind their Western colleagues. The famous Russian artist Pokras Lampas has released a new work TRANSITION: Nature-Human-Technology-Electricity at the Foundation site. As a “canvas” the artist chose an unusual place – the Chirkeyskaya hydroelectric power station in Dagestan. On March 12, the work was bought for $ 29,000.
NFT based games
The first popular project was CryptoKitties. In just a few days, gamers have invested tens of millions of dollars in the project, and the cost of virtual cats has increased to several thousand dollars apiece. The game worked like this: every 15 minutes it generated a unique hero with a set of different characteristics that he could pass on to descendants. The cost of the cat was calculated based on the price of the previous 5 specimens. Since 2018, the system has stopped generating new cats. Now they can only be bred by crossing.
All transactions within CryptoKitties are carried out at the expense of Ethereum. You will have to pay 0.001 ETH (about 120 rubles) for the offspring. Buying an animal at auction will cost more. The most valuable copy was sold for 600 ETH or $ 74 million. For each transaction, the developers took a commission of 3.75% of the transaction amount.
The game is not that popular today. At the end of 2018, only 500 players a day entered it. Later, the creators released new games Kitty.Kred and KittyPillar. There, pets could participate in races and battles. But this did not save the situation – the line of games no longer attracted new users so much. However, with the growing popularity of NFT, the creators of CryptoKitties and the NBA Top Shot marketplace (places where users sell the best moments of matches in NBA history) managed to raise $ 305 million for the development of projects.
CryptoKitties
CryptoKitties had many copycats. Among them, Jiami Tu, a project developed by Xiaomi, was noted. It encouraged users to trade rabbits. The CryptoCountries strategy was also popular. She managed to set a new record for transactions – $ 25 million per day.
Today, crypto games are gaining popularity again. According to DappRadar, since the beginning of 2020, daily activity in them has grown by 35% (about 28 thousand users per day). Overall sales are up 191% and the daily deal averages $ 173,500. One of the most popular games now is Axie Infinity. It offers users to raise their own pets. The price for the rarest animals reaches $ 100 thousand.
NFT continues to make money in the most unusual ways, be it the sale of the cover of the album “Poison” from the rapper Kizaru, the exhibition of art tokens organized by the Hermitage, or the sale of cards in honor of the end of the career of the MMA fighter Khabib Nurmagomedov. What this excitement will lead to, analysts find it difficult to answer. But the numbers say the following: in March 2021, the sale of tokens reached a record high of $ 200 million. And it seems that this is far from the end.
