Crypto decentralized applications create a new paradigm of data transparency that didn’t exist within the typical web 2.0 applications. I have argued earlier than that is a key feature that will define the subsequent generation of consumer platforms. In this publish, I will try make this more concrete by showing you an example of this data transparency at work. In particular, we will dive deep into the data behind the meteoric rise of NFTs.

NFTs have skyrocketed into the mainstream consciousness over the previous few months. From Time magazine creating TIMEPieces, to TikTok setting up a creator-led collection, to Steph Curry shopping for a Bored Ape, NFTs appear to be everywhere. In case you are unfamiliar, NFT stands for non-fungible token and is defined by the ERC721 and ERC1155 interface standards. In less technical phrases, they’re unique, hence non-fungible, scarce, digital assets on the blockchain that can be owned and switchred.

The idea of digital ownership shouldn’t be new, and has been widely utilized in gaming contexts to permit players to customize their experiences by way of skins, upgrades, etc. The crypto version of digital assets and ownership is a meaningful evolution from this, because they’re provably unique and not ruled by a single centralized entity. The very fact one owns something on the blockchain could be independently verified by anybody who can access the blockchain ecosystem— making them much more portable throughout applications. For example, one might imagine a world the place the owner of an NFT avatar is the only one who’s able to make use of that avatar throughout all their favorite social platforms. In that world, NFTs grow to be augmentations of the digital identity, and could be extended to many more applications beyond just avatars. However, this potential is essentially unfulfilled in the present day, and many NFT collections are, quite frankly, shallow projects that try to make a quick buck. This is why NFTs are such a polarizing topic — some believe that they pave the way for the metaverse and other consider they are nothing more extremely over-priced JPEGs. I will not try to nudge you in a single direction or one other, but I’d like show you the way crypto data can be used the understand both the macro trend and micro tendencies in NFTs.

NFT marketplaces

The primary channels via which individuals have interacted with NFTs so far have been exchanges like Opensea, Foundation, SuperUncommon, Rarible, etc. Some NFT smart contracts, most notably Cryptopunks, also implement their own exchange capabilities. These exchanges are decentralized applications on the blockchain that enable customers to discover, buy and sell NFTs. By decoding the transactions, traces, and logs generated by these smart contracts, using the techniques I described in this post, we can create a dataset that contains the details of every single NFT trade within the Ethereum ecosystem

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