NFTs Annual Review （Part Ⅰ）： NFTs Rise To Fame

22 February 15:41

Summary

1. The global NFT transaction volume throughout 2021 exceeded $19.6 billion, an increase of over 228 times compared to2020.
2. In general, NFTs were less influential and popular with low transaction volume before 2021 when they were only regarded as "toys" for a few senior players.
3. As more related infrastructure was built from 2020, the number of NFT-active addresses increased by 201%, buyers increased by 144%, and sellers increased by 113% from 2018 to 2020, registering an expansion of 825% in its market size.
4. By 2021, the NFT ecosystem further expanded by combining traditional fields such as art, finance, entertainment, and even social networking. Therefore, NFTs exerted greater influence in the market and were gradually becoming the next trending topic following the DeFi in the industry.
5. The digital collection of NFTs is also the first application of NFT that became widely known to the public.

2021 was the year defined by NFTs. Before 2021, the average NFTs monthly sales were lower than $20 million, accounting for only 0.003% of all encrypted assets trading volume. However, the global NFT transaction volume through 2021 exceeded $19.6 billion, an increase of over 228 times compared to 2020.

When it comes to the social impact, NFTs have also made themselves known outside of the crypto space and have become a kind of "pop culture" craze widely known to the public. "NFT" beat a series of candidates such as "Crypto" and "Double-vaxxed" and was named by Collins Dictionary the word of the year for 2021 on November 24. In 2021, NFTs appeared in various fields such as art, finance, social networking, and many other fields, with the usage rate of the term NFT growing by over 11,000%.

Before 2021: Expand the Market

Just as Rome was not built in a day, the entire NFT ecosystem did not come into being suddenly.

The origin of the NFT can be traced back to Crypto Trading Cards in 1993, and the first "blue chip" NFT project was CryptoPunks born in 2017. In 2017, Matt Hall and John Watkinson, founders of the New York software company, designed a software program that could generate thousands of different, weird-looking characters.

The famous CryptoPunks pixel avatar project contains 10,000 24×24 pixel avatars in total. Even today CryptoPunks still exerts considerable influence and is even regarded as the Bitcoin of the NFT field. Owning a CryptoPunks is equal to a status symbol in the NFT community.

The current NFTs were born after the emergence of ERC-721 in January 2018. Each NFT is a unique Non-Fungible Token according to the Ethereum ERC-721 standard. When it came to birth, CryptoPunks did not support ERC-721, but did so later. CryptoKitties (encrypted cats) is regarded as the first real NFT project. In CryptoKitties, users can collect, sell and even cultivate virtual cats. Each cat is a unique NFT. Two cats can also reproduce like real cats, giving birth to new breeds with the characteristics of the previous generation. The birth of CryptoKitties gained great popularity, which at one time, caused congestion on the Ethereum network. The CryptoKitties operation mode has also made the present on-chain games popular.

In general, NFTs were less influential and popular with low transaction volume before 2021 when NFTs were only regarded as"toys" for a few senior players. A few superior projects such as CryptoPunks and CryptoKitties set off a trading boom at first but quickly fell silent. However, as more related infrastructure was built from 2020, the number of NFTs active addresses increased by 201%, buyers increased by 144%, and sellers increased by 113% from 2018 to 2020, registering an expansion of 825% in its market size.

By 2021, the NFT ecosystem further expanded by combining traditional fields such as art, finance, entertainment, and even social networking. Therefore, NFTs exerted greater influence in the market and were gradually becoming the next trending topic following the DeFi in the industry.

All things from art collections, music records, to game assets, can be economically confirmed through NFTs, making NFTs the most trending asset. NFT platforms and products have ushered in a big explosion where its ecology has flourished and a relatively complete industrial chain has been formed.

Please refer to our blog articles:
Looking at the Past and Present of NFT from "CryptoPunk #7523"

The 1st half of 2021: The Digital Collection Craze

Dapper Labs, the encrypted cat production company, worked together with the NBA again to create an NFT series of NBA stars video collections, NBA Top Shot, in February 2021. This series of NFTs recorded a transaction value of $226 million, exceeding the total NFT transaction value throughout 2020.

The first NFT collection auctioned on March 11, 2021 by Christie’s auction house closed at a sky-high price of nearly $70 million ($69,346,250), setting an online auction price record. This work was created by the famous American digital artist Mike Winkelmann (fondly called Beeple). He had been creating digital artworks every day since May 1, 2007, for a total of 3,500 days. These works were finally merged into the work named Everydays: The First 5000 Days. This NFT is also one of the most expensive works of art in history, even in the entire art field. Dissimilar to other works of art that are physically delivered, however, buyers of 5000 Days will only get a digital image and an NFT claiming ownership on an encrypted account.

NFT was also a big national buzzword in China. Many giants including Alibaba, JD.com, and Tencent had released their own NFTs. In June, Alipay launched a number of NFT collections such as "Dunhuang Feitian" and "Wu Liuqi" on its Ant Chain, which sold out within seconds.

The digital collection of NFTs is also the first NFT application that became widely known to the public. At present, the world's three major auction houses, including Christie's, included NFT art flats in their auction categories and announced support for virtual currency payments including Bitcoin and Ethereum. According to data from Sotheby's, another large auction house's NFT collectible auction turnover in 2021 reached $100 million, with 78% of NFT auctioneers being new users and over half of them being under 40 years old. NFT became an emerging territory for traditional auction houses to transform and expand their business.

In turn, the NFT application is also a booster for art practitioners. By selling NFTs, art workers no longer need to go through galleries or other middlemen to trade their works, which is even more valuable now that offline transactions are stagnant due to the Covid-19. Moreover, artists can also receive a certain amount of additional income (generally 5%~10% of the transaction amount) when the NFT circulates, according to the smart contract settings.

Conclusion

As a non-fungible token, NFTs achieved both the value storage and transaction medium on the Internet and provided new programmable means for traditional artworks.

All this made it shine in the fields of art collections related to intellectual property. OpenSea’s sales crossed the $100 million monthly mark for the first time in March 2021 and exceeded $2.5 billion by June. In the first half of 2021, NFTs had completely made themselves known outside of the crypto space and attracted growing attention from the public and institutions thanks to the promotion of various capitals and celebrities which had helped bring many sky-high-priced NFT products into the market.

While the NFTs market is gradually deepening, NFTs are continuing to be applied to more areas. The art collectibles are only a prelude to the application of NFTs. Please stay tuned for subsequent articles.

Author: Ashley. H, Gate.io Researcher:
* This article represents only the views of the researcher and does not constitute any investment suggestions.
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