Non-fungible tokens, or NFTs, have gained significant traction in the crypto space in recent months, with some tokens selling for millions of dollars. Even though the current enthusiasm for NFTs will eventually subside, the concept will live on, according to MyEtherWallet CEO and founder Kosala Hemachandra.
“NFT is currently a hot topic, but I’m sure the hype around it will soon wear off,” Hemachandra told Cointelegraph. “Similarly ERC-20-based tokens were a hot topic in 2017 due to ICOs, now it’s not news to anyone as people use those tokens on a daily basis.”
All non-fungible tokens are demonstrably unique and therefore different in value. They cannot be exchanged one for one with another asset of their type, because each NFT contains different verifiable characteristics. These differences affect the rarity of each token (and sometimes its usefulness within an ecosystem), even if they appear to be superficially similar at first glance.
“The value of an NFT is purely based on how much a person interested in it is willing to pay,” Hemachandra said, adding:
“If someone is really interested in an NFT sold in 2021, I am sure that person will pay any amount to buy it in 2030. That is why we cannot say that the cryptokitties of 2017 are not valuable now. I’m pretty sure even now some people would love to get hold of some of those unique items for a higher price if the current owner is willing to sell. “
CryptoKitties, the first functional implementation of NFT, was notably popular in the crypto space in 2017.
The NFT scene also resembles the initial coin offerings, or ICOs, in 2017, according to Nadav Hollander, co-founder of Dharma. “NFTs feel like they are going to behave much like ICOs: 6-9 months of increasingly valuable and disgustingly cynical sales, followed by a multi-year drop,” he said. tweeted February 24.
Hemachandra sees great potential for the NFT niche, although he questioned the logic behind the current market hype. “Is it ownership or ownership status? Right now, the appeal of NFT is the status of owning one,” he said, adding:
“NFTs are all the rage in the same way that lambos are all the rage for bitcoin purists. I think this current version of non-fungible tokens will continue to evolve into bigger and broader use cases. Things like real estate and proof of tangible property ownership; wherever NFTs can help enforce legal action. That’s when things will start to get really interesting. “