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Review the origin, development and hot events of NFT track

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With the entrance of a large number of giant institutions and stars, New money is pouring into the NFT market. The NFT market is so hot, so what should we, as ordinary users, think about it?

Original title: "NFT head sells for $30,000, art or JPG"

原文作者：Anthony、Maxwell、Diamond、Diane、Evelyn、Carole、Zoe

preface

NFT tracks have attracted a lot of attention from investors in recent years, with some selling prices unthinkable and incomprehensible to many. Among them, the NFT collection series, especially the head collection, can be said to let everyone love and hate, most of the users opened their mouth to mention cryptopunk, BAYC and other frequently dozens of times the price of the NFT series. Cold Rabbit NFT, which increased 70 times in a few hours, and Jielen Bear PhantaBear, which continued to be popular for more than a week, ignited the enthusiasm of NFT investors in the Chinese community. With the entrance of a large number of giant institutions and stars, New money is pouring into the NFT market. The NFT market is so hot, so what should we, as ordinary users, think about it?

This paper will start from the origin and development of NFT, summarize the historical milestones of NFT track, combined with the current popular NFT collectible projects, analyze the value of the whole track and the risks involved.

1. The concept, origin and development of NFT

1.1 concept

Non-fungible tokens, or NFT for short, are called units of data on blockchain digital ledgers and also fall into a category of cryptocurrencies. Previously, the term "NFT" was only popular in the ERC-721 standard, which was first proposed via Taifang GitHub in 2017. Each NFT can represent a unique digital profile that serves as an electronic authentication or certificate of ownership of virtual goods.

Due to its unique, non-detachable, non-interchangeable nature, NFT can represent digital files (such as paintings, sounds, videos, projects in games, etc.) or other forms of creative work. While NFT itself can be copied indefinitely, NFT data can be tracked on its underlying blockchain, providing proof of ownership.

1.2 the origin of

NFT is known to be closely related to the development of Ethereum, but the concept of NFT was developed long before the launch of ethereum's main network in July 2015.

In 1993, Hal Finney (the first person to acquire bitcoin through an exchange mechanism) proposed the Crypto Trading cards as "a digital asset to show to others the value of your collection". Hal Finney relies on cryptography and mathematics to form a series of randomly arranged cards, which he defines as cryptographic cards.

Then, the concept was born, and the first NFT Dapp: Colored Coin was born in 2012. Color coin is a mining and trading application protocol that builds on existing bitcoin data blocks. It consists of bitcoins in small denominations, and the smallest unit is a coin (1/100,000,000). It represents different assets in a decentralized manner, including stocks, bonds, virtual cryptocurrencies, etc. Although color coin has many defects, color coin also realizes the plasticity of the asset chain and has great development potential, laying a foundation for the development of early NFT.

Figure 1-1 Promotional image of color coin, image source: Google Image search

2014 年 Counterparty（点对点交易平台）的「RarePepes」活动，旨在收集悲伤蛙（Pepe the forg，2015 年最受欢迎虚拟角色）的全套表情包。基于比特币的 CounterParty 协议标准，每张悲伤蛙的表情包都跟一个独特的 Token 绑定，用户通过交换 Token 来交换不同的表情包，或者使用比特币购买其他表情包。每一张被创作的表情包都是独特的 NFT，通过网络用户之间的传播，悲伤蛙 NFT 逐渐成为一个 IP（知识产权），以「悲伤的」表情走入大众的视野，并史无前例的让用户感受到虚拟物品 NFT 也可以变得有价值。

Figure 1-2 One of Pepe frog emojis, source: Google Image Search

1.3 development

NFT officially came to the fore in 2017, when it was proposed by the founders of CryptoKitties. BTC multiplied several times and became popular in the crypto market. Crypto Cat game was born. With the popularity of crypto cats, the concept of NFT quickly came into the public eye. Thus, digital assets no longer just refer to cryptocurrencies, but are a combination of homogenous cryptocurrencies and cryptoassets represented by non-homogenous NFT.

Figure 1-3 Line chart of Google searches for NFT

According to Google Trends, the search volume of NFT was only average before 2020, but it has been on the rise since 2021, indicating that people are paying more and more attention to it and the market capacity of NFT is also increasing.

The NFT market has exploded since August 2021, when Facebook executives said they were considering building NFT alongside digital wallets. Global payments giant Visa announced the purchase and collection of CryptoPunks, a NFT digital artwork, for $150,000. On the other hand, NFT transaction prices keep breaking records: a virtual stone portrait sold for 400 ethereum ($1.3 million) on Aug. 23, setting the latest record for EtherRock, an NFT art collection.

Figure 1-4 EtherRock, NFT art collection

Most people still have a great debate about the influence of NFT. Some people believe that NFT itself has no value, and the main reason for the high price is "value recognition". Others see the potential of NFT itself as huge, such as in the cryptocurrency market, where NFT can be used to ensure that users complete identity building and social work in the virtual world, which is equivalent to replicating the uniqueness and scarcity of objects in the real world into the meta-universe. With the development of the crypto market, the development of NFT has gradually formed its own market, standing out from many blockchain projects and becoming one of the current hot track.

It is believed that as more and more creative NFT projects enter the market, people's pursuit of this digital art will become more and more enthusiastic, and the market share will be bigger and bigger. In general, the supply and demand pattern of NFT market requires more projects to enter the market in the future to drive the inflow of funds and make it occupy a place.

2. NFT goes from niche to niche

2.1 Year Memorabilia

In 1993, Hal Finney proposed the first concept of NFT and defined it as Crypto trading cards.

2012 年第一个类似 NFT 的 Token -彩色币诞生。

The period from 2014 to 2017 was the development period of NFT. The "RarePepes" activity in 2014 gradually brought NFT into the view of users.

In 2017, CryptoPunks and CryptoKitties caused the first wave of NFT fever and increased public awareness of NFT.

In 2018, WITH the gradual improvement of ERC721, ERC1155 and ERC998 protocols, NFT has also become mature.

In 2020, the phenomenon product NBATopshot was born and quickly conquered the market. In addition, the NFT trading market emerged one after another.

In 2021, NFT will sweep the screen with a series of big events, occupying the headlines and refreshing users' cognition of blockchain. Some media even call it the first year of NFT.

In March 2021, Beeple sold NFT for $69.034 million. The sale is perhaps the most iconic NFT moment, when artist Beeple sold his NFT artwork to Metakovan for $69 million. This is certainly a defining moment for the future of crypto art and a statement to the world that NFT is a force to be reckoned with.

Figure 3-1 Beeple auction, Source: Christie's Auction

In March of that year, Sandbox launched the Beta NFT marketplace, a step toward the creation of the metasverse. Users earn $SAND by selling on the game platform.

In April 2021, Christie's auctioned CryptoPunks, and nine CryptoPunks NFT sold for a total of $16,962,500.

2021 年 6 月，Decentraland 一块数字地皮以 91.3 万美元出售给虚拟房地产开发商 Republic Realm，这块地皮代表了 259 块数字土地，以 129.5 万枚 MANA 结算（MANA 是 Decentraland 的原生 Token ）。

In July 2021, OpenSea, the NFT exchange market, completed a $100 million SERIES B financing, led by A16Z. According to DuneAnalytics, OpenSea's June transaction volume reached $149 million on 210,000 transactions, both record highs, and the total number of OpenSea users topped 140,000, up 19% month-on-month.

In August 2021, famous NBA star Curry spent $180,000 to buy a BAYC NFT head picture. A series of stars were hyped by public opinion, and celebrity effect made NFT track become hot.

Figure 3-2 NBA star Curry on Twitter

In September 2021, DC Comics will launch its first official NFT series in partnership with Palm NFT Studio.

Figure 3-3 Plam NFT Studio example

In November 2021, NFT sold for $25 million. On November 10, artist Beeple's work sold at Christie's for 6,103 ETH ($28.985m), making it the second most expensive NFT work ever recorded by cryptoart.ai.

2.2 Summary of milestone projects

2.2.1 CryptoPunks- Crypto punk

CryptoPunks is the earliest image class (JEPG) NFT project built on Ethereum. These extremely "punk style" pixelated heads were created by Larva Lab, an American mobile game development company, in 2017 using computer code. No two images are identical. Therefore, CryptoPunks issued a total of 10,000 2424, 8bit style irregular pixel NFT heads, which will not regenerate into new NFT. Each NFT vividly displays the unique "punk style" that was once popular around the world through its simplified small pixel blocks.

In the early days, CryptoPunks avatars were free to owners of Ethereum wallets. Today, users can only purchase from NFT secondary markets such as Larva Lab and OpenSea. On August 19, 2017, Larva Labs announced that CryptoPunks has been fully connected to ethereum network. Users can not only query CryptoPunks attributes (hair style, glasses, beard, hat, etc.) for free on Etherscan, but also trade in NFT market.

Figure 3-4 Confidential Punk NFT price list, source: Larva Labs official website

In July 2021, an anonymous collector bought 102 CryptoPunks in one hour, spending a total of 2,650 ETH, or about $6.57 million. In August of the same year, "CryptoPunk 3100" posted a bid of 4,200 ETH, or $7.58 million, making it the world's most expensive NFT work. Since then, through constant publicity and speculation, CryptoPunks has quickly gained popularity, refreshing the concept of blockchain users with a Mosaic style of nostalgia and high prices of continuous transactions. Users have gradually begun to accept NFT this new hot track and actively participate in it, becoming a "crazy" member of NFT collection.

2.2.2 Crypto Kitties- Ethereal Cats/Enigmas

Sensing the potential of the NFT market, and inspired by its predecessor CryptoPunks, the Dapper Labs team immediately launched an Ethereal cat game called CryptoKitties. Dieter, its developer, uses NFT images to represent the different colors, genes, generations and other information each cat has.

Crypto Kitties, launched on November 28, 2017, is a smart contract game based on Ethereum. Made by Axiom Zen's Venture Studio in Vancouver. It's a card-like game with a different cat on each card that you can buy, sell and even breed. When a player buys a kitten, that kitten is completely owned by the player who bought it. The popularity of NFT even caused the collapse of the Ethereum network. It also succeeded in bringing NFT into the public eye with the cute and cute drawing style of cats.

Figure 3-5 Shows a partial example of an Ethereal cat

The most popular token issuance standard on Ethereum at the time was ERC-20. ERC20 was particularly popular in the summer of 2017, with many users asking how crypto and ERC20 (ERC20 is a homogeneous token, namely FT) interact. For this reason, Dieter proposed NFT, i.e., non-homogeneous token. The main characteristic of FT is that there is no difference between the tokens, can be exchanged at will, and can be split and integrated. For example, cryptocurrencies such as BTC and ETH belong to FT, and there is no difference between each BTC in essence, which can be exchanged and divided. Dieter's innovation is the introduction of scarcity into the concept of cryptocurrency. The most important characteristics of NFT are uniqueness and inseparability. Each non-homogeneous token is different, separate, unique, and not interchangeable.

Two projects, CryptoPunks and CryptoKitties, have officially introduced the concept of NFT to the public and brought it into the market, and their hyped prices have also made the market see the infinite potential of this kind of NFT. In addition, CryptoPunks for the first time let people take NFT as a cultural representative, and reached a consensus that NFT is used to highlight identity symbol and social status.

3. Inventory of POPULAR NFT items

In this chapter, 15 popular NFT head collectibles are selected for data analysis, and background investigation and heat rating (full star) are made for 6 of them.

Please note that this inventory is only our team's objective analysis of the following projects, not as investment advice!

Figure 4-1 Bar chart of total market capitalization and total trading volume of 15 NFTS as of 2022-01-19

Figure 4-2 Bar chart of 15 NFT historical lowest prices ($ETH) as of 2022-01-19

Figure 4-3 Price growth rate statistics of 6 items, as of 2022-01-20

3.1 CryptoSkulls -

Figure 4-4 Basic CryptoSkulls information as of 2022-01-19

CryptoSkulls 是存储在区块链上的 10,000 个可收藏的 ERC-721 Token 。每个 CryptoSkull 角色都是一个独特的像素艺术图像。从 2019 年开始的 OG NFT 项目，每个 CryptoSkull 字符都是具有唯一性索引属性的唯一像素艺术。

The cheapest CryptoSkulls actually cost less than 0.05ETH to get started, while floors are now priced at 2.75ETH. The volume of transactions skyrocketed, and for a time beat Bored Ape Yacht Club to become the TOP LEVEL NFT. Both the trading volume and the increase are extremely amazing, so it has become a hot topic in the NFT circle recently.

Figure 4-5 Display of part of the CryptoSkulls NFT transaction screen

CryptoSkulls has much in common with other successful projects such as CryptoPunks and Bored Ape in terms of its large community and celebrity investors, and the project also grants full license to its holders, which is one of the similarities it has with other successful NFT projects. Today, some NFT players sell their CryptoPunks to get CryptoSkulls.

Many predict that THE NFT space will become a place of everyday consumer use, with concert tickets, digital goods, and other collectibles sold as NFT, and the ability to have instant authentication and consumer rewards adopted on a large scale as major incentives.

3.2 Bored Ape Yacht Club-

Figure 4-6 Basic BAYC information as of 2022-01-19

Bored Ape Yacht Club, also known as the Bored Ape, is a Bored Ape Club with a collection of 10,000 unique NFTs, not only based on the unique digital collection built on the Ethereum blockchain, but now with BAYC's status, Second only to CryptoPunks.

BAYC was launched by Yuga Labs, an American Web3 company, on 2021-04-29. The creator used algorithm programming to mix and match apes and created 10,000 different ape images. The apes, rendered by the algorithms, appear against colorful backgrounds, in quirky costumes and in cute accessories. The bright colors and unique design, coupled with the high price, make many NFT users crazy for it.

Figure 4-7 Partial BAYC image transaction interface display

Celebrity has always been an integral part of selling in the NFT market, and the celebrity attached to BAYC is yet another testament to the madness and power of the NFT market. As well-known NFT collector Pranksy acquisitions, "boring ape" the heat of the continuous fermentation, not only by the star, rappers, star, the favour of host and a series of celebrity, a variety of selling news follow. Armies of NFT user pouring in, for having a "ape" boring head and thankful. When the demand far outstrips the supply, the price of BAYC also increases, from the initial price of 0.08 ETH to the current lowest price of 82 ETH (about hundreds of thousands of DOLLARS) on Opensea, and gradually develops into a trend IP.

The evolution and development of BAYC is undoubtedly shocking and SOB:

1) Based on the original intention of open community, the original sponsors hope to promote a positive community.

2) Bored Ape NFT avatars serve as the basic threshold for users to enter their club and enjoy exclusive club membership benefits that unlock future areas and privileges.

3) The celebrity effect makes it a high-priced VIP symbol in short supply and a capital to show off.

4) And now there is no practical application and is hung "not true" fashionable brand goods.

But even as NFT users bash NFT like this, there will be plenty of users who will fight for it in the next release. In contrast, BAYC, as a successful product in THE NFT circuit, has exploded its strength in just nine months, which has to admit its strong influence. In the NFT circuit, there are always projects like CryptoPunks and BAYC that not only refresh user perception but also show the potential of NFT.

3.3 PhantaBear -

Figure 4-8 Basic information about PhantaBear as of 2022-01-19

The PhantaBear project was co-initiated by Jay Chou's PHANTACi and Ezek. PhantaBear is a collection of 10,000 algorithmically generated digital collectibles that double as an Ezek club membership card. The project was released on The Ezek platform at 11:00 am, January 1, 2022. The presale price is 0.26ETH. Each PhantaBear has a unique set of characteristics and unlocks different, unique access rights and privileges for its owner.

As the NFT avatar indirectly endorsed by Jay Chou, PhantaBear has its own fan attraction effect when it develops.

But in spite of this, its development is not plain sailing, in the early stage of its birth also suffered from great obstacles. The high price of its offering made users not buy it at the early stage. In addition, jay Chou's agency publicly clarified that it did not participate in the production and sales of NFT later, resulting in a sharp drop in its price and poor sales.

Figure 4-9 Part of PhantaBear image trading interface

However, the turning point is that Jay Chou is still very supportive of the creative project of Geng hong Liu, founder of PhantaBear distribution platform Ezek, and changed the NFT avatar to show his support, and then started to promote PhantaBear on overseas social media.

At the same time, many other stars, such as Jj Lin and Edison Chen, have released their PhantaBear, which has triggered the popularity of PhantaBear among domestic players. Moreover, the price of PhantaBear has soared as Chinese users are in a weak position in the NFT field. Reach the situation of "a bear is hard to find". This is also a representative of the fan economy and celebrity effect.

Fan flow and celebrity benefit are very important in NFT circle. The development of any project cannot be separated from the accumulation of popularity, and the market brought by stars highly meets this condition.

But over time, the ephemeral celebrity wears off because there is no technical upgrade per se, proving that this approach is not sustainable. As of January 21, 2022, despite the emergence of other popular NFT projects, PhantaBear's popularity and transaction volume have continued to decline, and its Floorprice has dropped from its peak of 10ETH to around [2-3 ETH]. However, the project has recently prepared a series of airdrops for PhantaBear users, which further demonstrates that the consensus effect is continuing, and we will have to wait and see if there are any further developments and opportunities in the future.

3.4 Azuki -

Figure 4-10 Basic Azuki information as of 2022-01-19

Azuki is a meta-universe brand built by the community and is a very new NFT project. Azuki offers 10,000 avatars to community members. In addition to the NFT launch, it plans to expand into offline streetwear stores, hold meet-and-greet events and live music festivals.

Azuki 的背后是一支实名团队，成员社交帐号均披露在官网上，此外团队拥有 Facebook、Google、YC 和暴雪等大型科技公司背景。未来计划发行 Token $BEANS；计划试验 DAO 的治理结构以创建一个永恒的品牌。

Azuki has revealed the specific avatar content at 4am on January 21, 2022 Beijing time, which is a Japanese style two-dimensional cartoon avatar.

Figure 4-11 Display of some Azuki image trading screens

According to the PANews article, Azuki's popularity is linked to its three NFT "new gameplay".

1) New NFT casting standard. Azuki's batch casting method allows users to cast multiple NFT at a single Gas charge, reducing the cost of casting NFT for users.

2) New casting whitelist filtering mechanism. Instead of randomly selecting a whitelist in the current market, Azuki will complete the whitelist selection in combination with social media interaction and other criteria within the project, and wherever possible reward real members who will build the community over the long term, rather than the Wool party.

3) New NFT selling method. Azuki completed the NFT sale in three stages, Dutch auction, whitelist casting and open sale, to provide proper cost for genuine members of the community to acquire NFT.

Azuki has introduced new NFT casting standards, whitelisting mechanisms and NFT sales models relative to current NFT projects, providing more benefits to community members committed to long-term construction projects. After the launch of the market data can be seen that the popularity of Azuki has risen. But at present the whole NFT plate hype mood is strong, has accumulated a certain bubble, at the same time Azuki disclosed a lot of development plans have not really landed, need further observation.

3.5 Doodles -

Figure 4-12 Basic Doodles information as of 2022-01-19

Doodles NFT, released in January 2021, was designed by Canadian illustrator Burnt Toast (Scott Martin). Combining bright colors with funny little characters, the author's lovely, round style is also unique in its recognisability. It is a unique series even in the highly competitive NFT circuit in 2021.

Doodles NFT was originally sold at 0.123ETH, and the price rose to 1.5 ETH when it was publicly sold, and the lowest price has climbed to about 10.5 ETH. Even in the public sale, there was a small climax that made ETH Gas fees reach 7000 Gwei, and its powerful energy also made a lot of users exclaim that "it is a clean stream in the current NFT track".

Figure 4-13 Display of part of Doodles image transaction interface

How did Doodles get users to call them "awesome" while NFT was running rampant?

Design by illustrator, professional marketing and support from some collectors and fans. The team behind Doodles is also committed to building a decentralized, open community.

Unlike other NFT communities, which consume loyalty by making it more expensive for supporters to buy into Discord, the Doodles community whitelisted applications early and invited contributors to join the Discord community. This greatly strengthened the Discord community's sense of identity. Moreover, the "scanning" users are screened out to maintain the value of NFT.

Because Evan Keast and Poopie, who were involved in the early NFT game CryptoKitties, are now responsible for marketing and development of Doodles, their own understanding of NFT and the control of market sentiment, Also attracted a considerable part of the user participation.

Doodles has shown how important an excellent professional team is to the NFT project. Aesthetics, marketing planning and community are all indispensable. Today, the success of an NFT collection is no longer dependent on a single factor, and the strengths of the team and community are utilized to promote the growth of the project.

Worlds of Women - 3.6

Figure 4-14 World of Women Information, as of 2022-01-19

At present, the technology-centered market is usually dominated by men, and the NFT market is mainly dominated by men. Shenyu, co-founder of F2Pool, released the investment logic of the NFT market: "Buy men not women, buy white not black, buy strange not people." Many players in the industry also believe that such NFTS are not only more valuable, but also easier to sell.

According to research firm Art Survey, at least 77 per cent of the money generated by NFT Art sales over the past 21 months has gone to male artists and only 5 per cent to female artists. This also reflects the male-dominated NFT market. The emergence of Worlds of Women has broken the status quo to some extent, and the more female NFT market is quietly emerging.

Figure 4-15 Display of World of Women image trading interface

World of Women (WOW) was born in July 2021. This project is one of the first NFT works of art with only female heads, with a total of 10,000 sets and an initial release price of 0.07ETH. Created by female artist Yam Karkai, the art aims to empower women through art and promoting diversity.

WOW launched on the night of July 27, 2021, sold out within 10 hours, and received coverage from CoinDesk, Le Monde, Yahoo Finance, and more. Yam was interviewed by Randy Zuckerberg and METACITZN, a decentralized media outlet, WOW's notable buyers include Internet entrepreneur Gary Vaynerchuk, American actress Reese Witherspoon, noted NFT collector Pransky, and YouTuber Logan Paul.

In the transaction data displayed on the official website, there are two collectors who have bought a large number of WoW works. The first collector has owned as many as 474 sets of WoW. Jaft is a collector named Jaft. Number two has 200 WoW units.

Currently The most expensive NFT avatar in WOW is #6025, as shown below, purchased by The Sandbox for a transaction price of 200ETH.

Figure 4-16 World of Women #6025 display

Why does WOW stand out from the rest?

First of all, the focus from female theme from the beginning to attract a lot of buyers, inclusive of mot also considered in the design of art, women are equal, regardless of race and skin color between second she also took into account the religious sensitivity and the differences of regional, remove contentious elements, such as African braid and Muslim veil.

The WOW team has also done a good job of marketing, attracting fans by buying other well-known and highly hyped NFT titles as giveaways, and increasing the visibility of their social media platforms. WOW has maintained a high level of social media activity to date, with over 90,000 followers on Twitter and a high level of community engagement.

WoW has been taking real action for its brand value and message since its launch, and its trajectory and plans show that its ambitions extend far beyond NFT and beyond the empowerment of women, and that it wants to expand the brand globally. In addition to the WoW project, similar female-oriented and female-themed projects include Boss Beauties, Sad Girls Bar, Fatales, ENCRYPTAS, Women and Weapons, and many more.

The rise of WoW and other female-oriented NFTS has partly broken the stereotype of male-dominated NFTS. WoW is more than just a women's NFT project. Its foundation, philanthropic activities, and other women-themed activities have helped more people see the value of NFT beyond digital assets, with important implications for gender equality, world inclusion, and new women's empowerment.

3.7 Other popular projects

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Figure 4-17 Basic information about some popular NFT projects, as of 2022-01-19

4. Discussion on NFT value

4.1 Value characteristics of NFT

Different from traditional industries in the real world, internet-based blockchain technology has a clear and efficient change in information transmission and communication mode. NFT is not only a major development plate in the blockchain, but also one of the non-essential types of economics. Its value source depends on the additional attributes of the masses to the item.

For non-necessities, the ways to change their total value include expanding the demand market by increasing the group base, and indirectly strengthening the original identity and power authentication by enhancing the scarcity (reducing the quantity) and added value of the goods. NFT has just this property:

In addition, apart from the most fundamental characteristics of NFT, some additional factor dimensions often enable a unique set of NFT collectibles

1) Fundamental value

NFT collection has a certain collection value and ornamental value, to the collection of the user of the work to bring psychological satisfaction, and the embodiment of external vanity. The unique NFT sequence designed by the team through its own characteristics is the basis of its development, but for practical application of NFT, such as access certificates, property certificates, its aesthetic value is not so important.

2) Practical value

Part of the NFT collection is not just for collections; the project team will inevitably continue to empower these NFT in order for the project to continue to grow, giving them unique functionality in particular scenarios. In essence, the project side hopes to cast a certain IP image through its NFT project, which will produce a radiating effect from the center to the periphery.

1) Get in the game. Some of the NFT collectibles of cards and meta-cosmic assets can be used as "tickets" to the game, while others are more complex and can be used to expand the additional features and experiences in the game and increase the user's playability. For example, land in the SANDBOX can be used for official or private events.

2) Membership privileges. For example, people who love the CryptoPunks project naturally form a community. Anyone can participate, but users with NFT can get some benefits from time to time (such as lottery, air drop, etc.).

3) Digital identity symbols. With the development of digital society and the increase of online communication time, identity symbols and images have more applicable scenarios, and gradually become a real and expanding demand. The most can reflect this feature is NFT head class collection, currently CryptoPunks and become a symbol of identity, status. Just like joining the "ticket" of "upper society", owning the "ticket" can enter the circle and obtain the opportunity to communicate and discuss with other users who also have the NFT.

5) Derivative activities. Currently the Bored Ape Yacht Club community has spawned anime production, games and more. Although the project did not plan the area at the beginning, with the development of community autonomy, the road gradually widened to a new direction, and at the same time promoted a series of product activities under the brand.

3) Historical value

The historical background of the creation of NFT collections reflects the corresponding era and historical significance. Its development is usually accompanied by the establishment of the community and then the precipitation of cognition. Finally, the perfection of consensus can become a unique community culture, and also become one of the historical values mapped by the NFT.

4.2 Value dilemma of NFT

Since the NFT sector exploded in 2021, its overall market capitalization reached $12.7 billion in the first half of 2021, an increase of nearly 310 times compared to 2018. At the same time, series A rounds of $10 million or more were completed on various NFT platforms, including OpenSea, SuperRare, Bitski, Rarible and other NFT trading markets focused on different areas. In addition, based on NFT economic system, domestic and foreign Internet companies also began to layout NFT. For example, Ant Chain and Tencent Zhixin Chain constructed by Tencent and Ali began to seek popularity and functionality under the premise of system. On the surface, the domestic and foreign NFT market is in full prosperity, but the underlying crisis has never left.

1) There are a lot of speculative phenomena in the development of NFT track nowadays. Excessive speculation, blind pursuit and crazy creation of short-term hot spots make the NFT market contain a lot of bubbles. Once the market is depressed, it will be found that most of THE LIQUIDITY of NFT is almost equal to zero.

最初火爆整个币圈的 NFT 竞拍《Everydays：The First 5000 Days》买家并不是正统的收藏家，而是一位资深的币圈玩家，也是 NFT 基金 Metapurse 的创始人 Metakovan。他打着「让艺术品收藏更民主」的口号，发布了 1000 万枚 Token 。随后这些 Token 的价格从 0.36 美元一路飙升到了 28 美元。然后他在这场竞拍中不仅赚到了噱头，扣除拍卖支付费用后，还大赚一笔。

Judging from the current speculative atmosphere and Fomo sentiment in the market, the majority of NFT in the market have "gimmicks to drive up prices", or participate in project publicity and speculation through big VS, stars, or counterstrike transactions (left hand over right hand). The market price is much higher than the market value. Once the market bubble bursts, The total value of NFT assets will be significantly reduced, with over 90% of the NFT collection becoming airborne due to the lack of fluid properties.

2) So far, there is no legal regulation of NFT in global regulation, so NFT, which is not regulated in any way here, has become the epicenter of legal violations

At present, it is still difficult to define the attributes of NFT physical goods globally, and it is also difficult to define the NFT virtual goods that will really play a role in supporting the economic system in the future. There is also no agreement on what kind of property rights various digital assets, including NFT, are. In the absence of an official concept, criminal ponzi schemes abound. At the same time, some we-media Internet celebrities did not assume the responsibility of correctly leading the public, but by exaggerating value and misleading ideas, they gave a series of NFT "value" packages with no artistic value, falsely claimed art investment, collection crowdfunding and so on, and created a scam using blockchain new technology.

3) Security guarantee of NFT. As a digital product, NFT is a piece of standardized software code executed on the blockchain, highly dependent on the attributes of the underlying blockchain protocol

The casting of NFT is based on ethereum network, but at present, ethereum network is facing the problem of expansion, which is bound to affect the development of its derivative NFT. In addition, the way and process of NFT creation are not smooth sailing. The current blockchain technology is in a period of rapid development, but its security and privacy is not perfect, so there is no absolute security guarantee. This is bound to lead to part of NFT assets by hackers and other illegal elements of the attack and theft.

Apart from external factors, are the security systems in many NFT trading markets up to standard? Just as the Opensea market froze the stolen NFT assets recently, the community also raised questions about whether there is enough decentralization and traceability in the process of trading NFT to ensure the integrity of the transaction. Although there have been no large-scale security and privacy breaches, we still need to pay attention to these hidden corners and prevent them from taking advantage of them.

5. NFT track summary and tips

At the micro level, the study of individual NFT sales reveals a great similarity between the cryptocurrency art market and the traditional art market, despite the fundamental differences between the two (e.g., transaction transparency, no middleman participation, etc.).

A recent study by Canadian concept artist Kimberly Parker, which analyzed OpenSea data and sales information in other markets, found that nearly 80 percent of NFTS sold for less than $500, Only 1.8% of primary sales, or NFT's first sales, cost more than 0.5 ETH (about $894 at the time of the study). There is no shortage of top-tier scarce assets, while plenty of long-tail assets remain unsold. This is very similar to the state of the traditional art market, which is notorious for being top-heavy and winner-takes-all. Decentralization does not mean equality of opportunity.

On a macro level, the NFT circuit as a whole is on the rise, there is no doubt about that.

But its long-term value is still unclear. In the long run, the value these NFTS are given depends crucially on what their connection to the offline world is. This connection could be as simple as a community that supports its creation and communication. If the community lacks engagement, much of the value associated with NFT is lost. So NFT may become a form of store of value, but before that we go through a phase where real world social relationships and community values are transferred or reflected up the chain.

We are at the beginning of the development of NFT, and it is impossible to predict how NFT will change economic behavior and patterns on blockchain in the future.

NFT's ability to forge ownership of digital assets, easily stored and protected, has transformed the way many artists and creators make a living, bringing wealth and opportunity. However, the development of NFT track will also face more uncertainty and greater risk than crypto assets. The vast majority of NFT projects have a very short life cycle, and after the boom period, liquidity becomes so bad that they are likely to become JPG images in the wallet.

Therefore, we should be aware that the wealth effect brought by NFT may be huge, but the risks brought by various uncertainties should also not be ignored!

NFT track FAQ

Q1: How do you determine the scarcity and value of NFT?

The value of an NFT depends on what it represents. In the case of digital currency art, the value measurement is very similar to that of any other type of art. We need to consider the creator, the artistic merit of the work and the demand of various collectors. If an NFT is issued in limited quantities or is part of a collection, an NFT with a specific number is usually more collectible.

Q2: Where can I get NFT?

获得 NFT 的途径一般有市场购买、项目方赠送以及自行铸造。NFT 市场出售众多非同质化 Token ，创作者既有著名艺术家，也有业余爱好者。在众多产品中，规模最大的是基于以太坊的 NFT 平台 OpenSea。新的市场平台一直在不断上线，如果有兴趣购买著名艺术家的作品，请务必验证市场的真实性。

Q3: How to verify the authenticity of NFT?

General verification is required through the blockchain browser to view NFT. Valid information includes the date of casting and the wallet address of the corresponding NFT. You can also see if the NFT matches based on the transaction history ID. This method is more reliable than simply examining photographs or documents related to the collection. When it comes to assets, be sure to reject trust and check for yourself.