NF idea what an NFT is? Then read on. Top cryptocurrency data aggregator CoinGecko has put together a bunch of answers to apparently burning NFT questions.

Heading the list of most Googled non-fungible token queries is, as you might expect, “What is an NFT?” And according to the crypto-data site, this one receives an average search of 948,000 times per month globally.

Here’s a response from CoinGecko’s head of research, Zhong Yang Chen:

“NFTs are unique, non-fungible tokens on the blockchain, often used as digital representations of assets such as art, collectibles, music, video game items, and real-world assets such as property deeds, luxury items, diamonds, and more.”

That’s a good summary, although we still actually quite like Paris Hilton’s description of them, too:

“[An NFT] is basically a digital contract on the blockchain… so you can sell anything from art, to music to experiences, physical objects…” Hilton explained to The Tonight Show host Jimmy Fallon in August 2021.

Of course, the burning question we haven’t answered is: “What the hell does non-fungible mean?”

Which leads us to “What the hell does fungible mean?”

According to Investopedia, fungible goods are items that are interchangeable because they are identical to each other for practical purposes. Think our old mate, the dollar. Every dollar is like every other dollar. A commodity such as wheat is fungible because no matter where it comes from, it’s the same product.

Goods such as artwork or diamonds are non-fungible because they are unique and can’t be replaced.

 

How do you create an NFT?

As for the second-most searched NFT question, it’s: “How do you create an NFT?”, which is apparently Googled 287,000 times each month.

“NFTs can be generated through the deployment of smart contracts,” said Chan. “NFT marketplaces such as OpenSea, x2y2 and Magic Eden makes the NFT creation process more user-friendly, where the user can upload files and mint them as NFTs on the blockchain.”

In third place? “Where to buy and sell NFTs?” is Googled 116,400 times a month on average.

“NFTs can be traded on a variety of marketplaces across different blockchain networks such as OpenSea, Magic Eden, LooksRare, and even on some centralised exchanges such as Binance or FTX,” confirms Chan.

 

Most expensive NFT? Why are NFTs valuable? 

Not on the list of Googled questions is: “Is this article a shameless attempt to ride off the coattails of some high-ranking NFT-related SEO action?” CoinGecko probably has an answer for that one, too, but we didn’t ask. In any case, let’s continue…

“What is the most expensive NFT?” had 102,000 monthly searches, followed by 64,000 searches each month for “Why are NFTs valuable?”.

These are good questions.

“While most attention on NFTs are focused on profile-picture collections like the ‘Bored Ape Yacht Club (BAYC)’ or ‘CryptoPunks’,” responded Chan, “the most expensive individual NFT is Beeple’s ‘The First 5000 Days’, a collage of art created daily for over 13 years, which sold for $69 million.”

That Beeple sale was back on March 2021, as we reminded ourselves the other day when writing about Apple’s 30% sales-commission sideways move into the NFT space, and Christie’s new NFT-auction platform.

Frankly, we still can’t quite believe it. And, 18 months later, we’re betting Beeple still thinks the following:

Incidentally, if you think NFT trading volume might be down in the current depths of this crypto winter, then you’d be right. Another excellent crypto analytics firm has some info on that front.

Dune Analytics data shows that the total weekly trading volume of NFTs has plunged to US$114.4 million. That’s a 98% decrease from the US$6.2 billion worth of weekly volume that was occurring in late January this year and a far cry from the US$146.3 BILLION level of trading frenzy that happened in early April.

Which was all right before a little episode involving the complete implosion of Terra Luna and several other correlated, over-leveraged crypto firms and entities.

But back to that other question: why are NFTs valuable? As you might know, not all of them are. In fact, it might be more than fair to say a substantial amount of them are barely worth the paper they’re not printed on. That’s not to say we don’t think NFTs can be cool and have good use cases.

Here’s Chan from CoinGecko’s response:

“As with physical art and other collectibles, an NFT becomes valuable if others perceive that it has value. The creator, the community surrounding the NFT, along with other factors, all influence the inherent value of the NFT.

“In the case of game NFTs, it could represent game asset ownership within the game or metaverse, and the game development or metaverse roadmap can drive the NFT value up or down.”

Word.

 

Are NFTs bad for the environment?

This apparently receives 32,000 monthly global searches. And it’s a fair enough question, but it’s one that unfortunately seems to be tied to a mainstream assumption that all of crypto is lumped in the one energy-chewing basket thanks to the perception of Bitcoin mining. Which admittedly does chew up the equivalent annual energy of a medium-sized country. Or the Griswolds’ Christmas lights.

Aside from Solana, which rivals Ethereum for NFT trading volume, most NFTs are minted on the Ethereum network. Up until very recently Ethereum was a Proof of Work (mining) network like Bitcoin.

Now that we’re in a post-Merge world for Ethereum, however, the NFT energy-inefficiency argument carries far less weight.

We’ll give you the final word on that, Zhong Yang Chen from CoinGecko:

“Environmental concerns surrounding NFTs are because NFTs are minted on the blockchain. However, the most popular chains for NFTs such as Ethereum (post-Merge), Solana and Polygon are all now based on the Proof-of-Stake consensus mechanism, which are energy-efficient. Users can opt for more energy-friendly networks to mint NFTs.”

 

 

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