Christie’s sells digital art. Kings of Leon offers their latest album online as a collector’s item. And NBA fans have recently raised the price of LeBron James highlight videos to six digits.
Behind all three is a new asset that uses cryptocurrency-backing technology to create its own “irreplaceable tokens.” Collectors can use the tokens attached to these assets to verify the authenticity of everything from artwork to sports highlights.
Christie’s first irreplaceable token, Mike Winkelmann’s bid for digital collage, reached $ 3 million with the auction still in progress.Creator of Nyan Cat MemeIntroduced an animated cat with a pop-tarts on its torso and sold irreplaceable tokens for 300 ethers last month. That’s about $ 600,000 at the time of sale.
Here’s what you need to know about this new market:
What are irreplaceable tokens? And what do they do?
Non-substitutable tokens are similar to Bitcoin and other cryptocurrencies, with important differences. All created Bitcoins can be exchanged with each other, but cannot be exchanged. As the name implies, non-substitutable tokens are intended to be unique.
The token acts as a virtual certificate and conveys ownership of the digital asset. Each is uploaded to a digital ledger and conveys important information (creation date, sale date, amount, target audience).
In some designs, these bits of information are transmitted via a cryptographic hash function, which is an algorithm that takes this information and transforms it into a unique identifier. A slight change in that information will generate a different identifier. This allows prospective buyers to ensure that their assets have not been tampered with. In other designs, the metadata is stored independently.
“Think of it as a digital passport with assets,” said Nadya Ivanova, chief operating officer of BNP Paribas’ affiliated research firm L’Atelier. “This allows us to establish this trust and credibility in ways never before possible, whether it’s physical or digital assets.”
What do I get when I buy irreplaceable tokens?
With irreplaceable tokens, you can buy all the original versions, from digital art to pop albums.
Unlike other high-priced digital gaming accessories, only one person can really own a digital asset backed by irreplaceable tokens. Individual investors trading in digital online marketplaces such as Nifty Gateway and OpenSea receive asset tokens to a single address. This is a unique identifier for a cryptocurrency account that allows others to find your account on the network.
Many marketplaces also offer digital rendering of assets, whether they are image files depicting works of art or videos of basketball highlights. Some artists, such as Winkelman, have worked with purchasers of these tokens to display digital art in the real world, whether via digital frames or projections of paintings onto buildings. To do.
Why are irreplaceable tokens getting so much attention?
According to a survey by NonFungible.com and L’Atelier, the first irreplaceable tokens began to appear in late 2017. The market expanded in three years and attracted the attention of well-known companies such as Christie’s and the NBA. Rock band Kings of Leon recently announced that they would release the album as an irreplaceable token, allowing someone to own the first edition of their digital collection.
New attention to digital collections has pushed up prices. According to data from NonFungible.com, the average cost of digital trading cards on platform Gods Unchained increased 69% from $ 10.82 in the first quarter of 2020 to $ 18.24 by the fourth quarter of 2020. .. The average cost of digital real estate for the online game The Sandbox increased 88% over the same period to $ 59.19.
What is the Ethereum Network?
Many of the irreplaceable tokens created are on the Ethereum network.
The Bitcoin blockchain was created to store transaction values and track the movement of Bitcoin between accounts, but the Ethereum network has a broader focus. Ethereum acts as a software platform that allows developers to store computer code for other blockchain projects.
It makes it much more flexible and makes it easier to exchange items beyond cryptocurrencies. Ethereum is used to create financial contracts and applications for computers and mobile phones.
How big is the irreplaceable token market?
According to reports from NonFungible.com and L’Atelier, the irreplaceable token market surged in 2020, rising from about $ 41 million in 2018 to a market value of at least $ 338 million. Increased interest has led to the expansion of the online marketplace.
Despite the high price of some irreplaceable tokens, the market remains only a small part of the size of Bitcoin. All Bitcoins in circulation on Monday are worth $ 92.6 billion, 1 Bitcoin worth $ 49,677.39..
What is the risk of buying irreplaceable tokens?
Cryptocurrency assets have experienced an enthusiastic share for years, and whip sewing prices are causing investor losses.
In 2017 and 2018, many poured money into cryptocurrency startups through a controversial funding method called the Early Coin Offering. Such a boom preceded the rise of trading groups that manipulate cryptocurrency prices and caused losses to others.
Analysts say the value of these digital collections depends on the assumption that someone else is willing to pay more than you.
Kos has caused significant losses to some retail investors.
Jorge Storfi, a professor of computer science at Campinas State University in Brazil, said: “People 100% believe this is worth it, but it’s not because there’s really no way to get value other than selling it to another investor.”
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NFT Description: LeBron James and Kings of Leon Digital Goods Price Drive
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