Non-fungible Token Market Driven by Increasing Importance of NFTs in the Cryptocurrency Industry

Non-fungible token (NFTs) is a financial security that comprises digital data stored in a blockchain and its ownership is recorded in the blockchain and can be transferred by the owner. NFTs can be sold and traded and are cryptographic assets that have unique identification codes and metadata that can easily distinguish them from one another. NFTs represent ownership of unique items and enables tokenization of things such as art, collectibles, and even real estate. The different and unique construction of each NFT has the potential for several use cases. Since they are based on blockchain, non-fungible tokens can remove intermediaries and connect artists with their audiences. NFTs can effectively remove intermediaries, simplify transactions, and create new markets.

Majority of the current trend and market for NFTs is revolving around collectibles such as digital artwork, sports cards, and rarities. Smart NFT is physically bound to its IoT device through the use of physical unclonable function that enables recovering of its private key and then the blockchain account address. While NFTs have been around for a while, they are gaining rapid prominence owing to rising popularity of metaverse and as a popular way to buy and sell digital artwork. Non-fungible tokens create digital scarcity as they are one of a kind and have unique identification codes. Non-fungible tokens also contain built-in authentication that serve as a proof of ownership. Since NFTs have unique digital signatures, it makes it impossible for NFTs to be exchanged for or equal to one another. NFTs are typically held on the Ethereum blockchain, although other distributed ledgers support its creation. NFTs and blockchain offer content creators and artists a unique opportunity to monetize their art by selling them directly to consumers and receive a percentage of sales or royalties when any art is sold.

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In May 2022, popular social media platform Instagram announced it was planning NFT integrations for Ethereum, Polygon, Solana, and Flow. Instagram plans to support widely used crypto wallets and users will be able to prove their ownership by plugging in their wallets and also showcase them on their profiles and tag the creators who have developed them. The pilot testing will be featuring a small group of NFT aficionados that are based in the United States. Meta will be following up this launch on Instagram with minting and group membership options on Facebook.

Some of the major companies in the Non-fungible token market include YellowHeart, Cloudflare, Inc., PLBY Group, Inc., Dolphin Entertainment, Inc., Funko Inc., OpenSea (Ozone Networks, Inc.), Takung Art Co., Ltd., Dapper Labs, Inc., Nifty Gateway (Gemini Trust Company, LLC), and MakersPlace (Onchain Labs, Inc.). In May 2022, Andreessen Horowitz (a16z) led the seed round worth USD 25 million to fund the launch of Co:Create, which is a new protocol that aims to support and accelerate the growth of NFT projects and enable them to launch their own native tokens. Co:Create also aims to manage and engage communities through decentralized autonomous organizations while simultaneously incentivizing the growth and progress of dApp ecosystems around their collections.