Non-Fungible Tokens (NFTs) seem to gain more and more attention as ever-larger amounts of money are spent on these digital assets and multinational corporations seem to be encouraging their adoption. Adobe has recently launched an NFT option on its Photoshop platform whereby helping users to address the challenge of being able to certify ownership. There is a growing issue on NFT marketplaces fuelled by the need to have the assurance that the entity wishing to sell an NFT is the actual owner. The onboarding of an NFT is not dissimilar to a regulated entity, such as a bank or asset manager, having to carry out Know Your Client (KYC) checks. Recently, a renowned photographer wishing to create and sell NFTs from his personal collection claimed that it took over three weeks before he was able to begin selling on one of the leading NFT platforms. In spite of these onboarding challenges, trading volumes have reached new heights with turnover rising by 700% in Q3 this year compared to the previous quarter.
What are NFTs?
“I see NFTs as a way to innovate, empower others and push the boundaries of how creators interact with their fans” – Paris Hilton
NFTs are digital assets recorded on a blockchain and can include a wide range of items, e.g. songs, photos, videos, art and even virtual assets from on-line games, such as Axie Infinity (which has sold over $2billion of NFTs). For instance, an image can be made into an exclusive ‘1-of-1’ NFT. This means there is only one copy of that asset available, which only one person can truly own. All the information and related data about that asset is stored on a blockchain whereby the authenticity, provenance and ownership history of the asset is accessible to anyone.
NFTs offer a huge opportunity for corporations and individuals which own creative content because they are able to create NFTs from their collections and profit from this booming digital economy on a global basis. Potentially, and even more interestingly, is that not only can content owners earn money on the initial sale of an NFT but they can also generate royalties which are sent automatically to their digital wallets every time the NFT is resold in the future.
Here is just a selection of some of the more active NFT sites:
OpenSea
As the below screenshot from Opensea’s website reveals, an NFT’s performance can be a real roller coaster – with some of the NFTs for sale on OpenSea increasing by 1419% and others seen to be falling by 82% in just 7 days. OpenSea is the most popular NFT platform, and in September 2021 it recorded a 10-fold increase in volume (compared to the previous month) with sales of $3.4 billion in just September alone.
Weekly Blockchain and Digital Assets Analysis by TeamBlockchain Ltd.
Performance of top NFT collections over the last 7 days
Rarible
Rarible is another popular NFT platform and offers users the ability to participate in decisions about the platform’s future once they hold the ERC-20 RARI token. Hence it has been designed to reward active users with a voice on the platform’s future. Of note, is the turnover of some of the NFTs that Rarible lists, i.e. millions of $’s in just the last 30 days, thus demonstrating the capital that NFTs are attracting.
Top Collections in the last 30 days
SuperRare
SuperRare hand picks artists and promotes their creations so is well regarded in the art community and is making artist more widely available globally, thus providing competition to swanky art galleries in major cities around the world.
Weekly Blockchain and Digital Assets Analysis by TeamBlockchain Ltd.
Portrait of Donald Trump a.k.a Satoshi Nakamoto #9
Source: SuperRare
Foundation
Foundation calls itself the new creative economy, here to bring “digital creators, crypto natives, and collectors together to move culture forward”. If you click here you will see that a number of the NFTs that Foundation is selling are moving artworks as opposed to static images.
Current featured art
Melon
Melon offers a very specific style of NFTs based on a 120+ social media influencers which Melon has selected, and which have active and large social media followers. As the below shows, some of these creators have millions of people following them on a range of social
media sites such as TikTok, Instagram, YouTube and Twitch. Melon has created viral NFTs to tap into those social media influencers which have over 300 million followers between them. Melon has turned its back on the traditional art world and instead is focused on the mass market social media influencers.
According to a report in the publication Sprout Social:
• 55% of consumers learn about new brands on social media
• 91% of executives anticipate their company’s social media marketing budget will increase over the next three years – and the majority expect it will increase by more than 50%.
• 85% of executives report that, moving forward, social data will be a primary source of business intelligence for their company.
• 78% of consumers are more willing to buy from a brand and 77% will choose a brand over a competitor after a positive experience with that brand on social media.
The importance of social media influencers is certainly compelling. No doubt we will start to see brands using these influencers promoting NFTs with these brands as part of a company’s marketing and advertising spend. The Creator Economy (referring to the independent businesses and ‘side hustles’ launched by self-employed individuals who make money from their knowledge, skills or following) is worth $104billion – and NFTs are set to expand this market even more. However, we do need to conclude with a note of caution: there is no real clarity, let alone agreement, from regulators as to whether NFTs are to be treated as regulated assets. Furthermore, another factor that could complicate matters is the recent FATF guidance around digital assets proposing: “… creators, owners and operators or some other persons who maintain control or sufficient influence in the DeFi arrangements, even if those arrangements seem decentralized, may fall under the FATF definition of a [virtual asset service provider]…… even if this is exercised through a smart contract or in some cases voting protocols…”
Selection of Melon’s 120+ creators
