An interesting spin on the monetization of blockchain technology is NFTs. NFTs are unique non-fungible tokens stored on a digital ledger. They can be photos, videos, audio, and other types of digital files. Before we get into it, let’s first define this funny word “fungible?”
An example of a fungible token is a dollar bill. There are many dollar bills, they all have the same value, and they can be exchanged at any time without any effect on the owner’s finances. A perfect example of a non-fungible token is art work. Paintings are unique, and so are the prices.
NFTs are the next generation of art… digital art. Buyers verify and publically prove ownership on a blockchain ledger, which then becomes tradable. To simplify, any digital file can be added to a blockchain ledger and bought or sold like a cryptocurrency. Rather similar to how artwork prices can be inflated far beyond material value. So, blockchain is now an art gallery too, and like physical art galleries, some are better than others.
The Solana network of assets has risen to seventh position as the largest digital token, and traders are currently optimistic that the blockchain could be a major competitor for Ethereum. Solana proponents claim faster speeds and lower transaction costs, which make SOL a better choice for decentralized finance (DeFi) and digital collectibles (NFTs).
Solana’s NFT Monkey Business (SMB) sold for 13,027 SOL ($2 million), shocking many people. Thanks to the continuing global media frenzy, SOL prices rocketed to the point where a $1,000 Solana investment in January 2021 is now worth over $91,000.
The majority of NFTs exist on the Ethereum blockchain. A rise in demand for NFTs and DeFi apps further strengthened Ethereum this year, which jumped 36% in August, more than doubling Bitcoin’s growth for the period.
The Ethereum blockchain saw the highest ever sale of an NFT. The artwork called “Everydays — The First 5,000 Days” sold in February 2021 for a massive $69.3 million. While this dwarfs Solana’s best-seller, cryptocurrency investors saw a much lower ROI. A $1,000 Ethereum investment in January 2021 is now worth $4,645.
Most traders believe the NFT fad is already on the way out, but inflated art sales have survived for centuries, and this is just the beginning of the digital art revolution. Of course, this doesn’t mean you should start investing your hard-earned money on NFTs. But if the movement continues, both Solana and Ethereum will benefit, which will probably reflect in their trading prices. After all, when something is in demand, the price usually rises.
If you think NFTs are here to stay, then both Solana and Ethereum are worth monitoring.