This year, non-fungible tokens, or NFTs, dominate the cryptocurrency market. With sales exceeding $2.5 billion in the first half of 2021, it should come as no surprise that both the crypto community and major creators are launching NFT in hopes of increasing revenue and engagement. The growth of meta has also put pressure on the use of NFT, demonstrating the insane asset value of both major brands and social media platforms.
With NFT sales on the rise, the Ethereum blockchain continues to dominate the space. For example, a recent report from Cointelegraph Research found that Ethereum makes up at least 97% of every segment of the NFT market, which includes the gaming, collectibles, and marketplaces. It is also interesting to note that analyst firm Moonstream found that around 17% of addresses control 80% of all NFTs on Ethereum, which shows the huge difference that still exists in the NFT market.
While this is the case, it is important to note that irreplaceable tokens are still a very early and new concept. Despite the fact that Ethereum currently dominates the market, it has serious competitors.
For example, blockchain payment firm Ripple recently announced an investment in the NFT Mintable marketplace that will allow the platform to integrate with the XRP Ledger (XRPL) so that creators can sell NFTs safely and efficiently. Additionally, in September of this year, Ripple launched a $250 million Creative Fund to spur crypto innovation, especially for non-financial tokens.
Given Ripple’s recent involvement in the NFT space, Cointelegraph spoke with David Schwartz, CTO at Ripple, during NFT NYC to learn more about the company’s growing interest in irreversible tokens. Schwartz also discussed other topics, including the emergence of central bank digital currencies or central bank digital currencies, the goals of the Wrapped XRP (wXRP) token, and the upcoming roadmap for Ripple.
Cointelegraph: Thanks for joining David. First, what did you discuss during the NFT NYC talk?
David Schwartz: My talk at NFT NYC was mainly about carbon-neutral NFTs and solving the energy problem. Obviously we are not going to tackle the climate change problem in the blockchain area, but the least we can do is not make it much worse. This is not a technical problem – we know how to not use a lot of energy, it is simply a matter of convincing people to use more climate-friendly technologies.
Cointelegraph: Ripple now allows people to create NFTs in the XRP Ledger. Can you discuss this in detail?
DS: We’re a little late to the party, but not too late. If NFTs work, it’s too early for all of us. We first started looking at how people wanted to use NFT and realized that many of the problems people faced were related to very primitive technology.
“Every company that wanted to enter the market required a huge amount of specialized knowledge, and it’s not a good way to grow. So building this toolkit is what we focused on. Besides, money is sometimes an obstacle.”
When someone has a good idea with the right tools and the right team, sometimes they just need more money to scale. We can help them get around this to prove that the technology will work the way they want them to.
Cointelegraph: You also mentioned that the XRP Ledger is energy efficient. Can you explain why?
Jim: Yes, the reason that Proof of Work systems like Bitcoin (BTC) and Ethereum (ETH) are so energy efficient because they are specifically designed to create artificial scarcity. You may need an artificial rarity if you are trying to make a profit from something that should be deficient. You also need an artificial rarity for something to be valuable, and you have to convince customers that rarity is not artificial.
So Proof of Work creates artificial scarcity using something rare, which is energy. But when energy is used only to create artificial scarcity, it increases costs. The only reason you would want to do this is because you get some money. Only people who receive royalties promote this technology.
In XRP Ledger, no one receives transaction fees, so no one wants high fees. The commission literally covers the cost of processing the transaction. The point is that the XRP Ledger works without artificial scarcity.
Cointelegraph: Are there other benefits of using the XRP Ledger for NFT on Ethereum?
DM: Yes, one of them is scalability or number of transactions per second. However, there are things that you can do in Ethereum that you cannot do in the XRP Ledger.