NFTs have been all over the news in recent months. With NFT-based artworks and other digital items like memes, GIFs, videos and music files being sold for astronomical amounts, NFTs are busy changing the landscape of collecting and trading rare items in the online world. If you are still unsure about the what, why and how of the NFT market, keep reading for the full breakdown.
What are NFTs?
Non-fungible tokens (NFTs) are unique digital assets that can be bought and sold online while granting the buyer full ownership over this non-tangible item. ‘Non-fungible’ refers to the unique quality of the asset, in contrast with fungible assets such as bitcoin. Fungible assets can be traded for another identical asset with the same value. A dollar bill, for example, can be exchanged for another dollar bill or two half dollars without losing its value. Non-fungible assets, on the other hand, cannot be duplicated or interchanged with something else. There can only be one of each.
The first fully-fledged NFT project was launched in 2015, although several years went by before the market really took off. The Ethereum blockchain coined the term ‘non-fungible token’ in 2017 and NFT trading slowly started picking up speed. The market experienced rapid growth during 2020 with over $250 million being spent on NFTs — an amount that was nearly matched within the first quarter of 2021. The NFT market is projected to reach a value of $1.3 billion by the end of 2021.
How do NFTs work?
NFTs are part of the Ethereum blockchain with each NFT being a unique token. NFTs can be any digital asset, although the biggest hype at the moment revolves around digital art trading. While digital files can be duplicated, there can only be one original. NFT assets are tokenised and assigned a digital certificate of ownership, which is stored on the blockchain and cannot be forged due to the extensive security network. Smart contracts can also be applied to NFTs to allocate a percentage of any future sales profits to the artist.
The authenticity of assets like digital artworks adds to the appeal of buying and owning NFTs. For some, NFT trading is merely a means of building their digital art collection, while others approach it as an investment opportunity. An NFT of the Nyan Cat meme, for example, sold for over $500,000 while the founder of Twitter, Jack Dorsey, auctioned an NFT of the first-ever tweet for $2.5 million. Digital art sells for millions of dollars. The digital artist, Beeple, broke NFT records earlier this year with a $69 million sale.
How and where can NFTs be bought?
To start buying and selling NFTs, you will need a digital wallet that can store NFTs and cryptocurrencies. Depending on the currency requirements of the NFT provider, you may need to purchase cryptocurrency like ether (ETH). NFTs can be purchased on a wide selection of NFT marketplaces. In the gaming industry, Sorare is the world’s largest sports-based NFT platform by sales volume.
Founded in 2018, Sorare is a fantasy football game that allows participants to collect and trade NFTs of their favourite players. Each player card is registered as an NFT on the Ethereum blockchain. All player cards are officially licensed with over 180 major clubs around the world. Among the 600,000+ current registered users on Sorare, more than $150 million worth of NFT cards has been traded since the start of 2021. With $680 million of funding recently secured, the Sorare founders have voiced their plans to expand the platform into new sports from 2022.
How does NFT trading work on Sorare?
Sorare users — known as managers — can buy and sell NFT cards on the platform as a trading investment or as a gaming strategy. Sorare hosts weekly tournaments in which managers can enter their fantasy football teams made up of five player cards. Managers can earn points during tournaments based on the real-life performances of the football players that are represented by the cards. Investing in the best player cards will therefore improve the chances of scoring points and winning prizes.
Besides the performance of the real-life players, the dynamic value of the NFT cards traded on the Sorare platform is also influenced by rarity. A limited number of cards are released per player per season, categorised into four different levels of rarity: Limited (1,000 released per season), Rare (100 released per season), Super Rare (10 released per season) and Unique (only one released per season).
While Sorare uniquely combines the football fan world with cryptocurrency, the objectives of NFT trading on the platform are similar to that of the wider NFT market. Sorare managers typically focus on one of three goals: collecting, trading or gaming. Like art collectors, NFT collectors on Sorare set out to secure player cards that are of particular value to them. Traders, on the other hand, are focused on buying and selling cards at a profit while gamers combine the two objectives to assemble the best lineups and win prizes during tournaments.
SorareSharp is a leading mobile app for crypto fantasy football managers on Sorare. With auction alarms, player news and projected lineups, SorareSharp helps players achieve better trading results while saving time and easily tracking profits. The app is available for download on Google Play and App Store.
