Why the rise of NFTs is also good news for Bitcoin
In 2021, NFTs exploded into the public consciousness.
Cryptocurrencies are significantly more valuable today, while non-fungible tokens are taking the world by a storm. Bitcoin took a while to get traction, but when it did, it went stratospheric. Similarly, NFTs have been around for a while and took a whole dimension this year.
This rise to prominence comes off the back of the general strength of Ethereum assets.
Notably, the growth of decentralized finance was one of the stories of the year for 2020. This sector revolutionizes lending, borrowing, trading, and other aspects of traditional finance through the blockchain.
NFTs have been around for years. Their newfound popularity is a testament to technology’s ability to digitize and democratize essentially just about anything. It is relatively nascent, but the learning curve for NFTs is significantly shorter.
This trend is because many investors already have a decent understanding of the blockchain and how digital assets work.
What Is An NFT?
Think of the $1 dollar bill in your wallet. There is nothing unique about it. You can change it freely with another dollar bill without consequence. Similarly, one can add another and exchange it for a $2 dollar bill.
That, in a nutshell, is fungibility. It is the ability to exchange one unit of currency or asset for another without loss in value. Those two things are the same.
Bitcoin is also fungible.
A Bitcoin holder can sell it for fiat or other cryptocurrencies, and the buyer can do the same. Individual Bitcoins don’t possess unique properties, and their value is all that is important.
Non-fungible tokens work the other way. Each token is a unique unit of metadata on the blockchain that represents a digital asset.
NFTs are digital files that track the ownership of a digital item, such as a JPEG (photo file). Therefore, an NFT is the proof of ownership of that digital item and cannot be interchanged like fungible assets.
The value of each NFT is different, and one NFT cannot be used in place of another. NFTs are not like other currencies but instead work to code digital ownership. Most NFTs rely on the ERC-721 and ERC-1155 standards. Other decentralized platforms have also released their token standards to take part in the NFT economy.
The Non-fungibility may sound limiting for NFTs.
However, they are versatile because they can represent anything digital. This representation ranges from rights to music royalties, domain names, artwork, sports memorabilia, and many others.
The key is for the art creator to convert it into an NFT and sell the rights at an auction.
One of the most viral videos from early YouTube, “Charlie bit my finger,” recently sold for $761,000 at an auction.
It surpassed other NFT sales in the meme genre, and the buyer said that he would memorialize the video on the blockchain.
Other recent notable NFT sales include:
- Auction house Christie’s made $69.3 million in March 2021 through the sale of work by artist Beeple as NFT
- The New York Times received crypto worth $560,000 for a digital image of their column for sale at a charity auction.
- Apropos sold nearly half a billion dollars in sales of NBA video highlights known as NBA Top Shots.
- Music distributor Ditto music created NFTs on their blockchain platform called Bluebox for users to buy shares in songs.
Therefore, NFTs are pretty massive. Selling art for $70 million as a digital asset is truly remarkable.
NFTs are now a billion-dollar market, an exponential rise from 2020 when they barely scratched $100 million. More artists, musicians, sports memorabilia owners, and other holders of digital art are likely to consider this form of monetization in the short term.
Retail investors who want exposure to art or music have a new avenue to own exclusive art and pursue future royalties. The beauty of NFTs is that they are unique, and no one can challenge the authenticity of your ownership.
Bitcoin Does Benefit From the Rise of NFTs
From the examples above, NFTs are playing a vital role in crypto going mainstream.
The entry of more retail investors is fantastic for all of crypto. Bitcoin is the superpower in crypto circles and will get some tailwind effect.
Bitcoin investments went to another level in the past twelve months.
Companies like MicroStrategy Incorporated (NASDAQ: MSTR), Square Inc. (Class A) (NYSE: SQ), and Grayscale Bitcoin Trust (OTCQX: GBTC) have made heavy investments into crypto.
Notably, online art trading platform Oriental Culture Holding Ltd is becoming a significant NFT-related stock.
Besides, some NFTs trade for cryptocurrency. They may not be interchangeable, but Bitcoin can facilitate NFT purchases just like fiat money. The launch of more NFTs vastly increases the room for retail investors to come into this space.
NFTs are creating ways for music and art creators to monetize their content.
This opportunity is wonderful for musicians seeking to escape the strangleholds of record labels who have called the shots for decades.
Therefore, NFTs are a unique disruptor. Content creators can sell their art, music, or other content directly to fans and investors without being at the mercy of the music industry.
Internet streaming had already spelled doom for terrestrial radio. Technology is once again coming to the rescue. Musicians now have more channels for monetization and enhancing their revenue streams.
If this narrative sounds familiar, it is because cryptocurrency is doing the same to traditional finance. Bitcoin created a new digital system to store value. Similarly, NFTs are a unique digital market that will transform the way art and music ownership play out.
This digital market will shape the next few decades of investment and money. The most exciting part is the empowerment of the common man or woman to create and monetize content. Decentralized finance is more equitable and accessible from anywhere globally.
VBit Mining Recognizes the Disruptive Power of Bitcoin
NFTs and Bitcoin are cut from the same cloth. They are both unique inventions that disrupt traditional control in their respective fields.
VBit Mining shares this vision and has made a foray into Bitcoin mining. Notably, mining is an intensive process that generates new Bitcoin.
Bitcoin is a unique store of value asset. It still has volatility, but a long-term study reveals a consistent trajectory for this asset. At its valuation today, it is one of the best-performing assets since its launch 12 years ago.
That said, Bitcoin mining is extremely competitive. One needs the latest equipment like Bitmain’s Antminer S19 Pro to be viable. We have a direct line to Bitmain and offer equipment reselling services because of how difficult it is to get elite equipment in the open market.
Additionally, mining is untenable without cheap electricity and cooling mechanisms. VBit Mining offers professional hosting services for prospective miners at our data centers in North America, located in naturally cool areas with cheap power. These two conditions vastly improve the prospects of any mining operation.
Besides, the VBit Mining website blog is a treasure-trove to learn more about Bitcoin mining. This industry has so much exciting and intriguing aspects to explore.
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