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NFT coins face five major Challenges in 2023

NFT coins face five major Challenges in 2023

After a rough year, non-fungible tokens (NFTs) like Enjin coin and Rarible (RARI) are outperforming bitcoin. Last year’s 80%+ wreckage has left them far behind.

NFT’s January pep hasn’t improved

“It’s possible to make money by buying and selling NFTs, but they should not be treated as an investment tool,” says Tel Aviv-based blockchain gaming development platform Xternity CEO Sagi Maman. “NFTs do not have the same characteristics as traditional investments, such as stocks or real estate, which have the potential to appreciate over time.”

Top NFT Challenges

Casinos EnLigne in Canada reported that NFT sales fell 83% from January 2022 to January 2023.

The Canadian online gamer news and information portal reported on Jan. 16 that NFT sales peaked at $2.8 billion in January 2022 and dropped to $492 million in January 2023.

All NFT coins gaming, art, and collectibles were affected.

The crypto community believes NFT issuers should organize. NFT buyers faced the following headwinds in an email Q&A:

• Limited application: Most NFTs are used for digital art and collectibles, but they can be used in many industries. To gain mainstream acceptance, NFTs need more use cases and a wider audience. (Think celebrity cash-grab NFTs that serve no purpose and harm the industry as a crypto grifter’s playground.)

• Fake listings: NFT marketplace Magic Eden revealed this month that an unresolved issue allowed fake NFTs to be listed and sold as part of real collections.

• Expensive transaction costs: NFTs’ high transaction fees, especially on Ethereum, continue to hinder adoption, especially for smaller transactions. Layer-2 blockchains have more NFTs but no visibility.

• Lack of interoperability: NFTs are siloed across multiple blockchains, making them hard to exchange or use across platforms. NFT adoption requires platform interoperability.

• Regulatory uncertainty: Buyers and sellers face risk due to the lack of NFT regulations. Why shouldn’t an NFT be considered an investment in a GameFi-related token?

Shaban Shaame, CEO of Geneva-based infrastructure standard protocol Wakweli, says the NFT space has made significant progress in addressing issues like plagiarized works, fake collections, and spam.

NFT marketplaces and platforms use whitelisting and manual curation to combat fraud. Copymints, automated plagiarism detection systems, have restored ecosystem trust. Shaame says more needs to be done to boost NFT trust and authenticity.

NFTa are beyond Bored Ape

The initial coin offering was the only crypto story to explode and disappear. Hype has faded despite new coins entering the market. NFTs rocketed in 2021 and crashed in 2022 after a slow start. Whether it’s decentralized finance or new blockchain fads, investors pause and debate the sector’s viability when this happens.

NFTs stay in 2023.

Market participants believe big brands will drive NFT adoption.

Starbucks’ Web3 rewards platform is popular. The company sells low-cost NFTs for “coffee experiences.” After mastering crypto wallets, NFT may appeal to some new users.

Investors profit and lose. Investors and developers are more interested than consumers.

Coral Gables-based venture capital firm Bored Ape Yacht Club (BAYC) invests heavily in this sector. Coins were released last year. 9.6% lower this year. The best-known NFT digital art project.

Shaquille O’Neill invests. Post Malone too. He and DJ Khaled no longer use their Bored Ape profile pictures.

NFT ownership frustrates digital flex

Traditional investors are confused by Bored Ape NFTs’ six-figure payouts and the coin’s current loss. Rich people pay hundreds of thousands for a strange-looking ape that may or may not be printed on canvas and hung in their crib. The pen drive in the home office desk drawer may have been lost it. However, access to the online BAYC may make it worthwhile.

Cartoons were the most tokenized asset until now. Tokenized cartoon character Bored Ape. The token allows access to exclusive parties. “The fundamental value of an NFT is only as strong as the asset that backs the token,” says Asif Kamal, founder of Dubai-based Artfi, a blockchain-based art investment company. To say NFTs are dead misses the bigger picture that a growing portion of the world’s assets is coming on a chain in tokenized form. Ethereum Name Service NFTs are successful.

The Ethereum investable Name Service helps find NFT collections. ENS resolves long cryptocurrency addresses to IP addresses like Forbes.com. An Ethereum blockchain address with a jumble of letters and numbers that only an AI bot could remember can become The Bored Ape Yachties of Los Angeles.

“Just like with all crypto segments, the real gems are often blurred by speculators, whose only goal is to play on people’s fear of missing out,” says Lisbon-based GameFi startup Walken CEO Alexei Kulevets. “The good thing for NFT is that once the hype is over, the true value of the company and token will be revealed. We see tons of examples of this, despite all the nonsense out there,” Kulevets says.

Last year, NFT art sales fell. Casino EnLigne reported 18,000 digital art NFT sales in January 2023, down from 36,000 in January 2022.

Sales are also falling. The data shows an 87% drop in NFT art sales.

All of the crypto suffered last year. JP Morgan CEO Jamie Dimon called bitcoin a “hyped-up fraud” Thursday.

About MahKa

MahKa loves exploring the decentralized world. She writes about NFTs, the metaverse, Web3 and similar topics.

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