Fungible: adjective: Refers to things that are consumed by use and can be replaced by a similar thing (commodity, cash).

Although it's been around for years, the sale in March 2021 of a 10-second video for $6.6 million shone a light on a market with the potential to make a lot of money. Public opinion went wild, experts called for a new digital El Dorado, and today we'll be talking about NFTs.

I - Technical and technological innovation

First of all, what is an NFT (Token Non Fungible)? How does it work and what is it used for?

The concept appeared in 2015 with the Etheria project, a virtual world in which it was possible to buy plots of land. The characteristics of these plots were recorded on the Ethereum blockchain, and you received a token corresponding to your plot. Each token issued is unique and cannot be replicated.

The essential characteristic of digital goods is that they can be duplicated. To be considered as NFTs, they must therefore be "certified" and made non-fungible or unique. This is achieved through blockchain. These tokens have found their way into a number of markets, which we'll look at below.

II - The digital art market

The first market to embark on the NFT adventure on Ethereum was the -digital- art market in 2017, with the now-famous Cryptopunks.

CryptoPunk 7523 is now the second most expensive NFT in history, selling for a modest 11.7 million $ in March 2021 at Sotheby's.

Although emblematic of this new movement, Larva labs' Pixel art is far from the only one to have enjoyed incredible popularity on social networks and among the crypto community.

Between 2020 and 2021, the number of projects and auctions multiplied, pushing back the boundaries of reasonableness to reach their peak on May 3, 2021, when no less than $100 million was spent on certificates on this day alone to create NFT tokens associated with works of art, which were then sold at prices averaging around a hundred thousand euros.

This sudden and exponential interest in digital artworks in 2021 is the result of a large number of factors, but among them is one whose contribution has enabled this market to be recognized within the most prestigious auction houses alongside masterpieces: one artist, Beeple.

Mike Winkelmann, known as Beeple or Beeple Crap, is a British digital artist and US citizen. When he sold a work in NFT for $69 million in cryptocurrency on March 11 at Christie's, he achieved the biggest sale ever recorded for a digital asset.

III - The sports industry is becoming increasingly monetized

Around the same time, another player is preparing to enter the field, one that is never far away when it comes to monetizing media content - the professional sports industry, of course!

It's hard to forget the days of Panini albums and the hours spent collecting stickers and trading players with friends. This is what several crypto-asset projects have set out to replicate, based on NFTs.

Based on the blockchain system, NBA Top Shot combines trading and collecting. The concept combines passion for the sport with business. The basketball league selects "moments" or video highlights of basketball players. Dapper Labs, the Canadian company behind CryptoKitties, then links them to a blockchain and sells them in packs on the official NBA Top Shots website. Prices range from 9 $ to 230 $.

According to Tedman, one of the founders of Top Shot, sales have reached $230 million. Much of this money, however, comes from traders exchanging collections after their initial sale. The company recently released 5,000 new packs, which are currently sold out.

And when it comes to soccer, the reigning world champion had to have its representative in the ecosystem. French start-up Sorare, founded in 2018, has announced the biggest fundraising round in the history of French tech, with over 500 million $ up for grabs.

It allows players to acquire and exchange collectible soccer player cards in the form of NFTs. You can then build your team and earn points based on the players' actual performances.

IV - Usefulness extended to gaming

This brings us to our final point, arguably the fastest-growing off-chain market of recent years: the video game market.

Gaming tokens are the cryptos of the moment, and the focus of much trading activity. The trend is therefore upwards. But, as is often the case in the crypto sector, it could quickly ease or even reverse.

Nevertheless, like sport, gaming is establishing itself as a mature field with substantial revenues. The gaming and sports worlds also share another asset: NFTs. In the first half of 2021, NFT sales are set to soar to $2.5 billion.

In virtual worlds such as Decentraland, users can display their NFT art collections, open businesses, walk with friends, visit monuments and attend events. The price of blockchain-based real estate in virtual worlds has thus surged with the boom in the NFT market this year.

Other games, such as Axie Infinity, seek to gamify financial mechanisms to enable players to generate income while playing in a "pay to play" and "play to earn" format. They use NFTs to create unique characters or equipment that users can buy and then resell or use to earn money in the game, then transfer it to their wallet.

V - To conclude

As a result, this native innovation of blockchain technology has managed to make its way up to the highest levels of the ecosystem, dethroning many markets in terms of sales volume, fees generated and capitalization.

Some decentralized protocols also allow NFTs to be used as a counterparty to underwrite loans, while others use them to tokenize future returns and thus create new financial vehicles in the ecosystem, respectively AAVE and APWine.

It is now a certification and value-creation tool recognized by many institutions as well as by the communities orbiting around crypto-assets.

There are still many potential uses for this asset class, and we're curious to see what the future holds!