Whether it’s baseball players or shiny Pokemon cards, collectibles have been the cultural pillar of human behavior since the Renaissance. Souvenirs from famous movies or clothes worn by celebrities can be auctioned and sold, and the prices are jaw-dropping.Take the prototype Batmobile from the Batman TV show in the 1960s as an example. It is Sell 4.2 million US dollars. For collectibles, the concept itself is simple: the value of an item is based on its scarcity. The smaller its quantity, the greater its value.
It is this concept that is the driving principle behind explosive growth. Irreplaceable tokens (NFT). NFT is mainly bought and sold on the Ethereum blockchain, which is essentially a digitized collectible.Whether it’s crazy pop and Limited crypto punk avatar or Jack Dorsey’s first tweet, NFTs are large sums of money, and those who manage to obtain rare NFTs will always have proof of ownership because these data exist in the blockchain.
But how easy is it to get an NFT for yourself?
Natural gas is not cheap
Just like Bitcoin (Bitcoin) And ether (Ethereum), NFT can only be obtained through mining. For buyers and sellers who are experienced in the crypto space, the process of mining and paying gas fees—someone must pay a sum to process their crypto transactions—is nothing new. However, for buyers who have dipped their toes into NFT waters for the first time, the mining process may feel like being bitten by a shark.
Although this is not a common practice, some NFT releases use the binding curve to determine the price of the NFT. This is how to create liquidity in the NFT market. In layman’s terms, this means that the price of NFT assets is only determined by a limited amount of block space. As the demand for blockchains such as Ethereum continues to increase, network fees have a tendency to soar.
If you are a miner, you are free to choose high-value transactions, so miners enrich their pockets at the expense of the buyer. Now, this situation is normal for cryptocurrency natives. However, for cryptocurrency novices, the entire mining fiasco may be confusing, unacceptable and very unfair. If you are a novice in the market, this is not a completely unreasonable view.
So, how to re-adjust this power imbalance so that new buyers of NFTs do not have to bear high gasoline fees?
Save a position in the queue
When we launched the Shrug NFT to digitize the infamous emoji, the emoji has become a pop culture meme, and it is keenly aware of the above problems. Ultimately, when hundreds of people try to mine NFTs, we need to find a way to reduce the activity on the chain, thereby reducing gas costs. Early NFT platforms have been struggling to handle the transaction flow, which may result in a cumbersome experience and higher gas fees for buyers, which they need to pay to get their transactions approved.
The answer to these lingering questions lies in the implementation of the queuing system. Some NFT platforms have established infrastructure that can increase the speed of blockchain transactions, thereby bringing a better user experience. Create an agreement that allows buyers to wait in line to cast their NFT, while also providing a time window to resolve the main differences in the entire casting process, which currently puts buyers at a disadvantage.
The queuing system creates a fairer market because it minimizes the possibility of customers competing for the same NFT and losing gas fees. As NFT continues to be popular and capture mainstream imagination (and our wallet), it is important that the NFT platform makes their blockchain custody market a fairer and more attractive place for buyers looking for the latest digital collectibles .
The dominance of whales in the market
According to OpenSea rankings, despite the dazzling hype and large amounts of funds circulating through the NFT space, the “average” price of NFTs sold on SuperRare is 2.15 Ether, which is approximately US$5,800. This begs the question: Who is buying NFT? Is it possible for first-time buyers to be launched by a small group of buyers with deep cryptocurrency?
Even implementing a queuing system will not change the fact that the market is dominated by crypto whales. As the name suggests, a crypto whale refers to an individual or entity that holds a large amount of Bitcoin or other cryptocurrencies. This is a problem in the broader field of encryption, because it means that people who hold enough Bitcoin may manipulate currency valuations.
Especially for NFTs, most people who buy these non-fungible tokens are crypto whales. For example, only 2.3% of sellers on the Rarible market account for 50% of NFT sales. OpenSea can be said to be one of the largest NFT markets, which is further magnified on OpenSea, where only 1.9% of sellers account for half of NFT sales. Essentially, what is happening is that the whales bought the item very early, which ultimately had too much impact on the dealer market, effectively excluding first-time buyers.
As a result, people who don’t live and breathe cryptocurrency don’t participate so much in the market. This may be because they simply don’t have room to do so.
In order to reduce the dominance of crypto whales, more work needs to be done to educate mainstream audiences on how to purchase NFTs so that it will not become a reserve for these dominant holders. We have 197 shrugging NFTs left. We hope to attract new users into the NFT field, and they can use the experience of buying the first NFT as a starting point for entering the broader NFT market.
NFT has great potential to eventually bring the encryption world completely into the mainstream, because it essentially adopts concepts that many people understand in the physical world and digitizes the entire driving force behind it. Essentially, collectibles are an interesting and profitable activity for those who choose to participate. NFT should not be any different.
This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.
The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Simon Yu Is the CEO and co-founder of StormX. He has been working in the blockchain field since 2015 and has been an avid speaker and early builder in the industry. Simon has published special reports in magazines such as Forbes, Reader’s Digest, Nasdaq, and Business Insider.