On March 11, 2021, Christie’s auction house sold its first NFT. Although the sale was a historic first for an emerging sector, the $69 million price tag was the highlight of the moment. About ten months later, interest in the term ‘NFT’ peaked, according to Google Trends.
NFT is short for Non-Fungible Token. The story of NFTs is just one of the many offshoots of blockchain technology – others include decentralized finance (DeFi). But this story is not all about glory and money. NFTs have become increasingly ingrained in popular culture, and numerous digital platforms have come up to facilitate their sale.
It would be a serious disservice to you if we launched straight into the discussion of the top NFT marketplaces without explaining NFTs and why they are popular. So, read on for a short description of NFTs and why they are revolutionizing the world of art, sport, and more.
Non-fungible tokens, in simple terms
A non-fungible token is a unit of data linked to a piece of art stored on a blockchain. The data has markers that certify the digital asset’s uniqueness, making it uninterchangeable or non-fungible.
Let’s use an example for a better understanding. Suppose you want the original copy of J.K. Rowling’s Harry Potter and the Philosopher’s Stone, and you know a friend who has it. This is a unique piece of literature, and only one exists. If your friend asks for the book back and you return a similar item but not the original one, the friend will be furious. The friend will be upset because the returned book lacks the original item’s value. In other words, it is impossible to interchange a collector’s item with intrinsic value.
Similarly, the fact that NFTs are uninterchangeable enables them to hold onto their value. Thankfully, the fundamental design of blockchain technology enforces the non-fungible nature of NFTs.
The inventors of NFTs – Kevin McCoy and Anil Dash – intended for NFTs to “empower artists to sell digital works.” But this was back in 2014 when the concept was still alien to many. As of this writing, there are four main types of NFTs. They are:
- Digital art – this is the original NFT. It is also the most common use of the technology. For example, the NFT that fetched $69 million at Christie’s auction last year was digital art by Beeple.
- Music – some artists pre-release their albums on NFT marketplaces before launching on traditional media. The NFT grants the buyer a share in the album, and the returns are realized when the album starts selling on traditional streaming platforms. For example, Kings of Leon sold multiple NFTs representing a share of the album ‘When You See Yourself’ in March 2021.
- Collectibles – together with digital art (artworks), collectibles were the pioneers of the NFT niche. NFT collectibles are similar to traditional collectibles, only that the former is represented by units of data stored on blockchains. Some NFT collectibles already launched include Cat Colony, Bored Ape Yacht, Curio Cards, and more.
- Video game and virtual land assets – these are the latest craze in the NFT ecosystem. The NFTs became popular, particularly after giant tech companies like Facebook (now called Meta) consummated their interest in the metaverse. Also, NFT-based video games are in vogue. One of the significant players in this sector includes Axie Infinity with games like Sorare and CryptoKitties.
There are many more types of NFTs that we can exhaust, and the list is growing every waking moment.
According to a Reuters report, NFTs sales volume skyrocketed in 2021 to $24.9 billion, against $94.9 million the previous year. One of the primary reasons for the upsurge is a better organization in the ecosystem – there are more organized platforms for buyers to snap up the NFTs. Let us discuss some of the top marketplaces powering the NFT wave.
OpenSea is the largest NFT marketplace by all accounts. At writing, the platform had recorded $23.5 billion in sales volume since its inception in 2017, with 1.4 million traders.
Catherine Sison Pariño, Alex Atallah, and Devin Finzer founded the company in 2017 and unveiled it in a December 29, 2017, press release. From the onset, they set out to create a marketplace where users would sell NFTs “directly at a fixed price, or through an auction, based on the Ethereum ERC-721 standard and the layer-2 scaling solution for Ethereum Polygon.”
According to the founders, the space and time for OpenSea were ripe, given that major NFT collections like CryptoKitties and Decentraland were already in the picture. As such, the marketplace arose to fulfill a need – the need for a central place for enthusiasts to indulge in the NFT wave.
The New York-based company enables users to collect, sell, and even discover NFTs from various collections. Users can sign up for free and browse the vast collection. The web platform also includes educational material to guide creators and artists who wish to create (or mint) NFTs.
OpenSea supports more than 150 payment tokens, including WHALE and Uni Coin (UNI), although the core currencies are USD Coin (USDC), Dai (DAI), and Ethereum (ETH). Unfortunately, you won’t be able to trade on OpenSea with fiat currencies like the US dollar (USD) or the euro (EUR).
Trung Ngyugen, Aleksander Larsen, and Jeff Zirlin founded Axie Infinity in 2017. The three created a development team called Sky Mavis that built Axie Infinity on the Ethereum blockchain.
According to the founders, the vision behind Axie Infinity was to create a game like Pokemon on the blockchain. As such, the platform was initially a game.
However, the game’s popularity grew spontaneously, notably because players earned tokens for the playtime. The economic opportunities present in the game attracted even more players from all corners of the world.
Initially, Axie Infinity was a pet community. The game’s developers built fantasy creatures called Axie that players could collect, train, raise, and battle. Furthermore, they built unique genetic data linked to each Axie and stored on the blockchain. Even better, players have complete control over their game assets.
In 2021, Axie Infinity ruled the gaming sector of the NFT universe, generating more than $3.5 billion in sales volume. At writing, the marketplace boasted $4.17 billion in sales volume since its founding, highlighting the extraordinary year 2021 was to the platform.
Because of the overwhelming popularity in 2021, the AXS token – Axie Infinity’s native cryptocurrency – surged 18,000% year over year. Also, the platform claims 2.8 million daily active players at present.
CryptoPunks began as an NFT project under Larva Labs. In 2017, Larva Labs gave away all the 10,000 punks to anyone with an Ethereum wallet. However, the owners started selling the punks on secondary markets and among themselves, giving rise to the CryptoPunks NFT marketplace.
A Punk is an algorithmically generated 24×24 pixel art image of guys and girls looking punky. There are also Zombies, Apes, and other odd-looking aliens. Every punk’s code is hosted on the Ethereum blockchain, which is unalterable.
CryptoPunks is one of the largest NFT marketplaces by sales volume, having raked in over $2 billion since its founding. In 2022, Larva Labs sold CryptoPunks to Yuga Labs. Furthermore, all NFTs on the platform are sold out, although interested buyers can bid on them through third-party marketplaces.
Rarible is a Moscow-based company with Alexei Falin and Alex Salnikov as the founders. The NFT marketplace is built on Ethereum and has a native token called RARI that facilitates value exchange.
Unlike other popular marketplaces like OpenSea and CryptoPunks, Rarible users must use the RARI token to complete transactions. Some of the NFTs you can find on the marketplace include virtual land, memes, and digital artwork.
Additionally, Rarible has built-in software that enables users to mint new NFTs and list them. The software then leverages the Ethereum blockchain to create new tokens. Users can then transfer the tokens to preferred wallets. However, one should note that Rarible collects transaction fees every time one uses the Rarible software to transfer tokens.
NBA TopShot is a digital platform that is a product of a collaboration between Dapper Labs and the US National Basketball Association (NBA). The platform went live in October 2020, intending to provide a landscape for trading sports collectibles. Essentially, NBA TopShot is an NFT marketplace where users can trade popular NBA images called Moments. By April 2021, the marketplace had over 800,000 users and a $500 million sales volume.
The platform’s primary objective is to pair NFTs with real-life experiences. Thus, the NFT ecosystem will likely extend into video highlights and virtual tickets. Unlike most NFT marketplaces, NBA TopShot is closed – users cannot trade assets across marketplaces. Also, the primary currency is the US dollar.
Beyond the attention-grabbing sales and FUD, the future of NFT seems brighter than ever. Specifically, more marketplaces are emerging, focusing more on improving user experience and solving security challenges encountered so far. Also, more choices for users will eventually weed out the unpleasant players, increasing the NFT ecosystem’s potential to evolve into something bigger.