NFTs suffered a significant downturn after the 2021 bull market, yet certain specialists believe they may stage a resurgence.
In 2021, Nonfungible tokens (NFTs) experienced an extraordinary surge in popularity, marked by soaring prices. However, the subsequent market correction has led to uncertainty regarding the possibility of a resurgence.
NFTs, unique digital tokens securely recorded on a blockchain to establish ownership and authenticity, are impervious to duplication or substitution. Owners can freely transfer and trade them.
As of the present moment, NFTGo’s analytics platform reveals a 40.59% decrease in the NFT market cap denominated in Ether over the past year, accompanied by a 40.81% drop in trading volume. When expressed in U.S. dollars, the market cap has fallen by 41.16%, with a staggering 66.77% reduction in trading volume. Concurrently, market sentiment registers at a lukewarm 13 out of 100, earning an overall rating of “cold.”
Arno Bauer, a seasoned solution architect at BNB Chain, emphasized that NFT projects are increasingly delivering value from a utility standpoint. He contends that this expansion in functionality is where the future potential of NFTs primarily lies.
Bauer went on to state that the NFT market is displaying “encouraging indications of innovation and creativity,” a promising sign for the technology’s growth and evolution.
He further noted, “Market sentiment, the shifting cultural embrace of digital ownership, and the prospect of NFT integration into various facets of our lives all contribute to a positive outlook for the future of NFTs.”
In conclusion, Bauer affirmed, “Despite the current appearance of subdued market conditions, the ongoing innovation and potential for integration with both the digital and physical realms suggest that NFTs are far from reaching their peak. Their continued relevance and growth remain highly likely.”
NFTs in the long term
In terms of long-term utility, Bauer expresses confidence that NFTs are poised to undergo significant evolution, with an increasingly robust connection to real-world assets, including property ownership and distinctive physical items.
At present, NFTs have achieved remarkable success within the art realm, commanding astonishing sums in sales. For instance, the digital artist Pak astoundingly sold “The Merge” NFT project for a staggering $91.8 million on Nifty Gateway in 2021, while Mike Winkelmann, also known as Beeple, fetched an impressive $69.3 million for “Everydays: The First 5000 Days” through a Christie’s auction house that same year.
Moreover, NFTs have also found their way into the world of blockchain gaming, where they represent in-game items such as weaponry and armor. Speculation abounds that this technology is poised for a leap into mainstream gaming. Furthermore, various forms of musical assets are now being offered as unique NFTs.
Bauer envisions that as technological capabilities continue to advance, enhancing both utility and ownership security, NFTs will undeniably become more enticing to mainstream markets. He goes as far as speculating that NFTs may soon become linked to financial instruments, symbolizing shares in companies or investment funds, as well as social accomplishments, where they could represent badges of achievement across various domains.
In Bauer’s confident perspective, the potential of NFTs extends far beyond the art world, and their ability to tokenize distinctive assets and establish verifiable ownership is set to spawn a multitude of applications across diverse industries.
He asserts, “Through collaborations with traditional sectors, technological advancements, the establishment of clear regulatory frameworks, and robust educational initiatives, NFTs have the potential to significantly enhance their utility and adoption.” Additionally, addressing sustainability concerns could broaden their appeal to a wider audience, according to Bauer.
NFTs have the potential to make a comeback
Jason Bailey, the visionary co-founder and CEO behind ClubNFT, a pioneering NFT tool and self-custody solution, exudes confidence in his assertion that “NFTs are poised for a triumphant return to the mainstream.” Drawing parallels to the cyclical nature of crypto and NFT markets, reminiscent of past tech rebounds, Bailey firmly believes in their resurgence.
Supported by data from the renowned data gathering platform Statista, the trajectory of the NFT market is nothing short of spectacular, with projections indicating sustained growth in revenue, user adoption, and market capitalization.
As of 2023, the NFT user base stands at an impressive 13.95 million, and this figure is anticipated to surge to a staggering 19.31 million by 2027.
However, Bailey acknowledges that NFTs face certain challenges, exacerbated by the rampant speculation that has permeated the market. He maintains that these hurdles must be surmounted before NFTs can rightfully take their place in the mainstream.
In Bailey’s view, the complexity inherent in NFTs and their ecosystem renders virtually everyone vulnerable to undisclosed risks. He emphasizes the critical need for simplifying the NFT experience to ensure safety, stating, “NFTs will not attain mainstream adoption until we replace complexity with a straightforward, default-safe approach.”
He expounds, “For instance, it’s crucial to recognize that the security of an NFT is often precarious, except for the exceedingly rare fully on-chain NFTs.”
Bailey underscores the intricacies involved in safeguarding digital art from disappearance and preventing NFTs from malfunctioning, emphasizing that the process can be cumbersome and prone to errors.
In the long term, Bailey envisions NFTs, or similar technologies, as invaluable tools for validating digital documents like marriage certificates, diplomas, and licenses.
Overall, he firmly believes that NFTs offer solutions to an array of pressing issues plaguing digital ownership, including scarcity, authentication, provenance, and incontrovertible ownership, making them impossible to overlook.
Bailey emphasizes the urgency of constructing the necessary infrastructure during the bear market to ensure seamless onboarding and protect NFT enthusiasts from malicious actors during the next NFT bull market. He asserts, “Once these challenges are surmounted, NFTs will indisputably become mainstream, for the locomotive of digital ownership set its course decades ago, and there’s no halting its momentum.”
Meaningful projects could be a game changer for NFTs
In a confident assertion, Andy Ku, the visionary founder and CEO of Altava Group, a digital content Web3 ecosystem, asserts that the previous NFT market highs were mere products of a hype cycle. Consequently, he posits that it will be a formidable challenge for any individual NFT to scale such lofty peaks once more.
As per the latest data from CoinGecko, several top-tier NFT collections have witnessed substantial declines in value over the past year. At the time of this discussion, notable drops include Bored Ape Yacht Club down by a significant 67.1%, CryptoPunks by 33.2%, Mutant Ape Yacht Club by a noteworthy 59.2%, and Azuki by 49.3%.
Ku’s outlook revolves around the belief that the NFT market’s resurgence hinges on the emergence of more substantial and purpose-driven NFT projects that cater to a broader audience. He confidently asserts, “NFTs must transcend mere digital art or profile pictures; they should deliver tangible value and utility. I am particularly bullish on asset-backed NFTs and membership-based NFTs.”
He continues, “The fundamental value of NFTs as immutable representations finds a perfect fit in the realms of assets and memberships.” In fact, there is already a burgeoning trend in the adoption of NFTs for subscription-based models and loyalty programs, with examples flourishing in sectors such as hospitality venues and fitness centers.
Ku enthusiastically elaborates on asset-backed NFTs, emphasizing, “Master artworks, real estate, and precious metals like gold represent prime examples of assets that command trust among people. NFTs can serve as irrefutable proof of ownership for these assets while being incredibly portable.”
In sum, Ku’s confident vision underscores the potential of NFTs to evolve beyond their initial hype, finding renewed vigor through innovative applications and tangible benefits that extend far beyond the realm of digital art.