The landscape of collectibles is being changed drastically by Non-Fungible Tokens (NFT), a virtual item that is represented solely online. Celebrities have jumped on this new trend causing NFT’s to go viral and the marketplace of these products to reach record highs.
An NFT can be offered as many different virtual items bound only by the creativity of the creator. Some forms of NFT’s currently in the mainstream marketplace include short video clips sold by music artists and celebrities, sports cards, and cartoon/comic book character cards.
Singer The Weeknd sold NFT’s that included exclusive songs and unique artwork at prices ranging between $100 and $490,000. While social media celebrity Jake Paul sold an NFT of a video clip of his knockout of former basketball player Nate Robinson for 10 million dollars.
The thing that makes the video clips unique is they are a part of something called a blockchain. A blockchain is a digital ledger of transactions, these video clips aretracked through every sale to verify the validity of the NFT, ensuring that it is not a fake.
The blockchain is crucial to the high price of NFTs. With so few NFTs being sold, buyers want to know the high price is for a legit product.
Uniqueness is a major factor in buying an NFT. Fans of an artist or collectors of cards want to have something that nobody else owns. Buying these NFTs while still relatively new offers buyers the lowest price for these online collectibles before the price skyrockets if or when mainstream media fully embrace NFTs.
Another reason NFTs have become popular is in the card collecting community. A start-up still in its Beta phase of release called NBATopshot has partnered with the NBA to release unique in-game moments as online trading cards.
These NBA cards are called Moments, and collectors can purchase packs ranging from $9-$1,000 that offer different levels of card types. Every Moment has a different price value depending on many factors such as the player’s popularity, the serial number of your specific Moment, and how rare the Moment is.
For example, if you were to purchase a $9 common level pack on NBATopshot and pulled a common level LeBron James Moment the current minimum resale value for the Moment is $39.
The NBA is not alone in this NFT venture as Topshot has already partnered with the UFC and the NFL Players Association to potentially release Moments of different professional sports in the future.
NFL quarterback Tom Brady has started his own NFT company stating his company named Autograph will, “bring together some of the world’s most iconic names and brands with the best in class digital artists to ideate, create, and launch NFT’s and groundbreaking experiences to a community of fans and collectors.”
Major gambling businesses are also attempting NFT sales in a unique way. PreaknessStakesNFT is a website that allows you to buy a unique virtual horse NFT and enter that horse in daily races. Races are held every hour, and you can wager any amount of money on each race.
A major question arising with the popularity of NFT’s is the environmental impacts these tokens are having.
NFT’s are sold under the blockchain of the popular cryptocurrency Ethereum. A single transaction for Ethereum consumes enough energy to power 1 U.S household for 2.5 days, according to Digiconimist.
Cryptocurrencies remain a large threat to the environment as they consume large amounts of energy and emit massive amounts of carbon. According to a study by Cambridge University, Bitcoin, the most famous and highest priced crypto on the market, uses more electricity annually than some countries such as Argentina, the Netherlands, and the United Arab Emirates.
Ethereum’s energy consumption is around the equivalent of the energy usage in Peru. This is a problem that Etherum is looking to address immediately.
Currently cryptocurrencies use a system called mining, this term means gaining cryptocurrencies by solving cryptographic equations through the use of computer software. This mining process is used to verify transactions on the blockchain of cryptocurrencies and miners are rewarded with new crypto coins that they can sell for large profits.
This mining process is the main reason cryptocurrencies consume so much energy. Large mining farms have become the norm as miners fill large spaces with computers to mine these cryptos 24/7 in hopes of earning a profit.
Ethereum’s plan to phase out this process and predicts their energy consumption will drop by more than 99%, according to the Ethereum foundation.