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Understanding NFTs

Do you recall when Jack Dorsey, the man behind Twitter, sold the first tweet ever for $2.9 million? Most people learned about Non-Fungible Tokens, or NFT, thanks to this piece of news. NFTs are currently in demand and are being purchased and sold like precious works of art.

NFTs have taken over the planet by a storm, especially with top Bollywood actors like Amitabh Bachchan and Salman Khan jumping onto the bandwagon by launching their own NFT collections which got sold because of their massive fan following. But what exactly are these NTFs? How many types of NFT do we have at our disposal? Let's find out more about this latest movement that has taken over the world this year.

First Off: What Are NFTs?

Think of Non-fungible Tokens as digital pieces of art. Notably, digital pieces of art that do not replicate. One for instance can take an image from the Internet and hang it on their wall or share it with friends via social media and download the picture in another format - however, the process will not result in duplicates as there exists a single copy of the source material which cannot be reproduced further. And more importantly, if only one person has a particular NFT (the original), they are able to enjoy it without worrying about their ownership being challenged by anyone else thus making them truly individualized throughout Ethereum's blockchain.

The Different Types of NFTs

Just as intangible assets can be anything, non-fungible tokens (NFTs) can take many forms. Here are eleven types of NFTs is a little more detail:

1. Art

Art is the most popular form of NFT out there. Because of that, art is also the kind of NFT that sells the best. The conception of NFTs was a prime opportunity for artists to sell their best works online as though they are physical. Right now, a lot of the most expensive NFTs are works of art. If someone had told you five years ago that a digital artwork would one day sell for almost 100 million dollars, you'd probably have laughed. But nevertheless, Pak's "The Merge" was sold to a collective 28,983 buyers for $91.8 million in December 2021, making it the most expensive artwork ever to be sold while the artist still lived.

You might be wondering why this NFT was sold to tens of thousands of individual buyers. Of course, artworks are usually bought by one collector alone, but this NFT auction was designed to allow users to buy small parts of Pak's piece, starting at $575 per piece. Every six hours, the price of each part increased by $25, encouraging early purchases. In total, over 300,000 individual units of this NFT were sold, adding up to $91.8 million. No one knows who Pak, the artist, actually is, but there's no doubt that even they were taken aback by this mammoth price point. However, Pak's growing popularity has surely contributed to the increasing value of his pieces.

2. Music

Also high on the NFT spectrum is music. Music has been a fungible good for decades, being recorded and distributed on records, cassettes, CDs, and digitally. However, musicians and DJs have been selling their work as NFTs lately, earning some of them millions of dollars in a matter of hours.

Musicians typically only pocket a fraction of the money that their music generates due to streaming platform cuts and record label cuts. When it comes to NFTs, musicians can keep roughly 100% of the money, which is why so many musicians are turning toward this method.

3. Video Game Items

Another frontier in the NFT space is video games. Companies aren't selling entire games as NFTs. Rather, they'll sell in-game content, like skins, characters, and other items. Nowadays, millions of copies of DLC assets are sold to players, but an NFT asset will be unique and exclusive to one buyer. Developers can sell regular DLC but then sell a limited-edition version of it on the NFT market.

4. Big Sports Moments

NFTs offer something that doesn't really have a physical equivalent: memorable sports moments. These are short clips of significant moments in sports history, like ground-breaking slam dunks or game-changing touchdowns. These clips can be as short as 10 seconds but sell for upwards of $200,000. One of the most famous NFTS in this category is The LeBron James Dunk, Throwdowns (Series) which is a clip of Lakers player LeBron James dunking the ball. It sold for over $380,000 and is one of the most expensive Sports Memorabilia NFTs ever. 

5. Memes

In case you thought the internet couldn't get more interesting, you can buy and trade memes on the NFT market. What's neat is that in some cases, the person in the meme is the actual seller. Some of the more popular memes like Nyan Cat, Bad Luck Brian, Disaster Girl, and others are on the list, racking in between $30,000 and $770,000. The most valuable meme NFT sale to date is the Doge meme, which sold for a jaw-dropping $4 million.

6. Domain Names

Domain names aren't safe from the spread of NFT fever. You can register a domain name and sell it on the NFT market, and that comes with a certain benefit. Usually, you need to pay a third-party company to manage your domain name. If you buy one on the NFT market, you will be able to claim exclusive ownership of the name, cutting out the middleman.

7. Virtual Fashion

Everything bought and sold on the NFT market has been virtual, so why should fashion be any different? You can blow big bucks on a bomb bikini, but you won't really be able to wear it. Folks who buy fashion NFTs will be dressing up online avatars instead.

This may sound ridiculous, but remember, someone on this planet spent $4 million to own the Doge meme. Owning a virtual handbag or necklace is definitely reserved for more extravagant and fashion-forward individuals. These, of course, will all be uniquely designed and limited in quantity.

8. Virtual Land 

Sounds bonkers, right? Virtual Land, how could that even be a thing? This includes land in video games as well as in the Metaverse. It might seem like an extremely redundant asset with no real-world applications but it has great potential. The virtual piece of land can be used to place advertisements inside video games, create virtual assets, etc. 

9. Ticketing 

The onset of NFTs has introduced various innovations in the way day-to-day transactions take place and ticketing has not been left behind. Tickets for events can be minted now on blockchain platforms and then can be auctioned off by the organisers. NFT tickets can also be sold at a fixed price. This would significantly reduce forgeries and add a sense of memorabilia because these tickets can also be stored and resold as collectibles. 

10. Fundraising NFT

Companies, start-ups, individuals and NGOs can sell NFTs in order to fund their projects. UNICEF plans to use its NFT sale proceeds to support its various initiatives. Companies can also offer special access to their products when developed. For example, Ryder NFTs are redeemable for their product.

11. Miscellaneous Online Items

This category includes anything and everything which has not been covered in the former categories, but the NFT market is sort of the wild west of internet commerce; this is exemplified by the NFT market crash that happened a few months ago. As stated before, Jack Dorsey literally sold a tweet.

This opens up the possibility for people to sell anything on the NFT market, really. People may want to sell their own tweets, Facebook statuses, articles, Snapchat Stories, or TikToks; the sky is the limit. And while they are only seen as collectibles, for now, there are a couple of real-world NFT use cases that could emerge in the future.

The NFT Market Is Still Growing

There's still a lot left to be discovered in the NFT market. From buying digital baseball cards to buying virtual Versace handbags, people have purchased many different items as NFTs; yet, we're still at the tip of the iceberg.

As time goes on, the list will continue to grow. The market is open for you to make your own NFTs.

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