03.NFT Market

NFT market analysis

1. Non-Fungible Token (NFT)

NFT stands for 'Non-Fungible Token' and refers to a token that represents a digital asset with scarcity. NFT utilizes blockchain technology, but unlike existing virtual assets, a separate and unique recognition value is given to digital assets, so they are not interchangeable.

NFT [Naver Knowledge Encyclopedia]

NFT (Presentation Dictionary, pmg Knowledge Engine Research Center) A non-fungible token (English: Non-fungible token, NFT, ERC-721) is a type of cryptocurrency and refers to a specific non-fungible cryptographic digital asset issued by Ethereum. By storing the ownership of the digital file on the blockchain, it is made impossible for forgery and falsification to be permanently preserved, and the ownership can be verified in a decentralized form

Digitally owned certificates including ownership and history

NFT is based on a blockchain, so all relevant information such as ownership and sales history is stored on the blockchain. Therefore, since the original issuer can be checked at any time, counterfeiting is impossible, and by clarifying the ownership of assets, it has recently become a powerful means of digitally tokenizing existing assets such as games, artworks, and real estate.

Impossible Unique Recognition Value (en.wikipedia.org/wiki)

The unique ID and ownership of non-fungible tokens can be verified through the blockchain ledger. Non-fungible tokens have metadata that is processed through a cryptographic hash function, which can compute a sequence of 40 characters and numbers. Non-fungible tokens are also being used as tools to create the potential for asset interoperability in games, art, etc.

Unlike existing cryptocurrencies that have equal conditions depending on the issuer, NFTs contain separate unique recognition values ​​and cannot be exchanged with each other.

For example, Bitcoin has the same price and can be exchanged with each other, but when NFT is applied, one coin has a separate recognition value that cannot be replaced with other coins, and the price can be different. This technology can be applied to content fields such as pictures, music, and video, where authenticity and proof of ownership are important.

Advantages of NFTs

non-counterfeiting

Because it is difficult to reproduce, it can better guarantee scarcity and ensure that value is not compromised by counterfeiting.

easy to track

The data on the blockchain is public and transparent, and anyone can see the origin of the NFT, the time and number of issuance, the history of the owner, and other information.

Split Ownership Recognition

By recognizing ownership of the part, tokens can be divided and traded in the form of 1/n

increase in transaction circulation

Taking the game as an example, when an item is made with NFT, the player gains true ownership of the item and is free to trade in the NFT auction market.

Source: medum.com, KB Management Research Institute

2. NFT application examples

NFT inception

The beginning of NFT was started in 2017 by Dapper Labs and Dapper Labs.

Canada-based game development company spun off from Axiom Zen in 2018 to bring the benefits of decentralization to consumers.

CryptoKitties, the world's first game using blockchain-based cryptocurrency, was developed and released in December 2017. CryptoKitties is an Ethereum ERC-721 token-based DApp.

(source) https://www.cryptokitties.co/?utm_source=dapperlabs

'CryptoKitties' is a game that collects and breeds cats with different characteristics online.

online game

Released in November 2017, CryptoKitties was the first game to utilize NFT, and a rare CryptoKitty Dragon was traded for about 180 million won. Also, in 2018, Exi Infinity, which generates revenue based on NFT virtual assets, was released, and the most expensive item traded was 300 Ether, which was worth about 655 million won at the time.

entertainment

The uniqueness and rarity of NFT are suitable for the fandom-based entertainment industry, and are being released through the artist's limited edition NFT goods. In Japan, trading cards to idol groups are actively sold, and in Korea, Hive, BTS's agency, plans to conduct overseas NFT business through a joint venture with Dunamu.

Metaverse and Digital Real Estate

In blockchain-based metaverse game platforms such as Decentraland, The Sandbox, and Upland, certain assets are tokenized and traded. In the real world, there are land documents such as land ownership records, but in the world of metaverse games such as Decentraland, NFTs are replacing them. Ownership is recorded and stored on the blockchain, and you can put any building on the land you own, as well as trade with other users.

Beeple work Everydays:he First 5000 Days”

NFT of digital art work 'Beeple' The digital art field is the NFT field that is receiving the most attention. The latest work “Everydays: The First 5000 Days,” created by artist 'Beeple' Winkelman using NFT technology, set a record for NFT auction history of $69,346,250 at Christie's auction house in the United States. .

3. NFT Market Outlook

According to a report published by the NFT analysis site NonFungible.com and the BNP Paribas Latelier Institute, the volume of NFT transactions in US dollars quadrupled from $62.86 million in 2019 to $205.85 million last year. The data platform Chainalysis estimates that it will be worth at least 32 trillion won ($26.9 billion) in 2022, and Line Tech Plus expects it to reach about 230 trillion won in 2025.

NFT is expected to continue its growth by combining with new trends such as the metaverse.

Market research firm Strategy Analytics (SA) predicts that the 'metaverse economy' represented by VR/AR will grow to $280 billion (314.58 trillion won) by 2025, more than six times the current level.

4. Limitations of the NFT market

NFT models that have appeared in the market so far have many limitations in terms of value. This is because, fundamentally, there was no practical utility value in the structural limit where new value could not be created through NFT.

Until now, various profit models of NFTs in the form of X2E (P2E, M2E, E2E, etc.) have appeared, but users did not participate in the fundamental purpose of X, but only had the purpose of mining E (Earn). In addition, the over-designed token incentive structure led the community to become a base for holders with a return on investment rather than the development of the ecosystem, creating a risk of inflation. In addition, the value of traded goods and the need for proof of ownership of items on the metaverse still remain as challenges for the existing NFT market.

Therefore, in order to continuously create new value through NFT, we need a reliable NFT platform that not only provides NFT marketplace services based on the real economy, but also guarantees value in use and proof of ownership of items. Mega Project intends to present a solution that can innovate these limitations.