Everyone is keen to explore the potential gains that crypto assets have to offer. Up until a few years ago, Bitcoin was the face of the crypto market. The market regarded it as one the most popular cryptocurrencies for trading as well as investments. However, in 2021, the scene in the crypto industry has been evolving. With the increasing craze for NFT and DeFi tokens, it is evident that the public is starting to make a shift towards altcoins.
However, it isn’t clear what it has in store for its investors. This article will discuss the recent shift of attention towards altcoins, namely NFT and DeFi tokens, and what this means for the crypto market. If you want to invest in DeFi tokens, this might be the right fit for you, so read on!
What is an NFT?
Let’s start at the absolute basics. NFT stands for Non-fungible token. But that doesn’t make it any clearer, does it? So let’s dive in further. Non-fungible mostly means that it is not unique and can be replaced with something else. For a better understanding, take, for instance, Bitcoin. It is fungible.
This means that you can trade one Bitcoin for another, and you will still end up with the same thing. However, for a trading card, which is non-fungible. It’s like you give up a Squirrel and receive a 1909 T206 Honus Wagner, which StadiumTalk calls “the Mona Lisa of baseball cards.”
How Do They Work?
Most NFTs are part of the Ethereum blockchain. It is worth noting that other blockchains are capable of implementing their own NFTs. An NFT can be anything digital. Whether it’s art, music, games, or even you downloaded and turned into AI. However, most of the frenzy today is around using tech to sell digital art. So does this mean you can sell those tacky tweets you wrote as a teenager? Well, yes. Not sure if anybody would be interested, but you can for sure put them up for sale. The founder of Twitter sold one for $3 million. However, the preponderance of the conversation is about NFT as an evolution of fine art collecting, only with digital art.
The Popularity of NFT
As mentioned earlier, anyone can tokenize their work to auction, as recent headlines of multi-million-dollar sales have fueled everyone’ curiosity.
On 19 February, an animated Gif of Nyan Cat, a 2011 meme of a flying pop-tart cat – sold for more than $500,000 (£365,000). This was followed by musician Grimes selling some of her digital art for more than $6m. Christie’s sale of an NFT by digital artist Beeple for $69m (£50m) set a new record for digital art. French firm Sorare, which sells football trading cards in NFT, has raised $680m (£498m).
So it’s pretty clear that the current population is art connoisseurs, even though most of them might sound silly to a lot of people. This sudden popularity of NFT has, of course, given a push in its price.
NFT players Axie Infinity, a blockchain-based game centred around virtual pets, and Flow, a platform supporting NBA Top Shot and CryptoKitties, have delivered extravagant returns in 2021. Popular NFT marketplace OpenSea reached a $1.5 billion valuation after a $100 million Series B funding round led by Andreessen Horowitz.
In addition to NFT, another category of altcoins that has shown brilliant performance in 2021 are DeFi tokens. In July, the world’s largest crypto asset manager, Grayscale Investments, revealed its new fund, offering institutional investors index exposure to the booming sector of decentralized finance through a basket of ten DeFi tokens, including Aave and SushiSwap. Matic, India’s homegrown crypto, has stayed within the top 15 cryptos in the world for a while.
Let us look into DeFi Tokens in more detail.
What are DeFi Tokens?
Decentralized Finance (DeFi) is the foundation of the decentralized crypto market. The market for the DeFi tokens has been improving profoundly in current times due to the revolutionary surge in the popularity of decentralized finance, used mainly in decentralized applications operating on smart contracts for enabling different transactions. One can think of DeFi tokens as a distinctive form of currency for decentralized platforms only.
Why Have People Been Shifting Towards DeFi Tokens?
DeFi tokens offer a wide array of advantages to their users. Some of these include.
#1 Superior Access To A Wide Range of Financial Services.
Decentralized platforms have accentuated the role of DeFi tokens in enhancing the accessibility of investment and commerce to all individuals. Users can leverage them for several uses such as network staking, gaming, savings, synthetic assets, and even insurance. These tokens generate financial services within reach of people with the capabilities of blockchain.
#2 Make Use Of The Aborning Profitable Technology Trend
The next reason for choosing DeFi tokens for many people is that they want to capitalize on the new technological trend in the FOMO generation. Nobody wants to miss out on DeFi, which showcases the potential it has for explosive growth. There is no possible way for you to ignore the radical developments in the world of decentralized finance.
#3 Stability Of Price
Most of the DeFi tokens function within smart contracts on the Ethereum blockchain. Accordingly, DeFi has appalling abilities for scaling up the significance of ETH through affiliated price developments.
Conclusion
Even though Bitcoin remains a popular cryptocurrency, the increasing enthusiasm for Defi tokens and NFT shows a paradigm shift in the crypto market. While it is still left to see how this shift will impact the price of bitcoins in the foreseeable future, it is indeed a smart choice to keep some of your assets in NFT or DeFi tokens to gain the potential benefits that these altcoins have to offer.
