NFTs or unique digital assets have already attracted lots of attention in crypto markets. They include artwork, trading cards, etc. that are verified and stored using blockchain technology. NFTs exploded in popularity in 2021. Many artists have created, collected and traded NFTs for millions of dollars, some with the hopes to profit in the future. However, the future of NFT market remains skeptical to experts and artists.
Since the introduction of NFTs to the market, massive amounts of money has exchanged among collectors. Since 2017, according to the reports on Non-Fungibles, NFT collectibles have generated over $6.2 billion in sales while digital art has generated over $1.9 billion, which suggests historical sales data of NFTs.
The immense hype and speculation of NFT market may highlight the idea that NFTs are causing changes in the world since they have grown too big and too fast and more people are joining the market every day.
Knowing all these, many argue that people should get a share in the market whenever they get the chance and, on the other hand, some warn about the hype of NFT market and suggest that investors should be careful about the changes NFTs cause in the future.
How NFT will change the world?
The introduction of NFTs provides opportunities for new business models that develop based on the new technologies and market requirements. NFT markets provides loyalties for both artists and investors which in fact was not met in traditional artwork market. Some other influencing characters of NFTs which may cause changes to our world are as the following.
Further, NFTs has changed the world as they digitize literally everything. They also create a platform to transact in a trustworthy and transparent manner, with anyone, anywhere, and any time, while it is possible to prove ownership via the blockchain.
Some other characteristic provided with NFTs includes decentralization. NFTs live on the blockchain which acts as a digital ledger to prove ownership, tracks every transaction, and cuts out the middlemen. It is not controlled by the governments. So, the markets bring more benefits for the artists and investors.
Blockchain technology creates ultimate transparency, so transaction with trust is possible now between all parties. Such transparency leads benefits for everyone who trades NFTs. Since everything artists and investors own is displayed digitally for the world to view, both businesses and consumers can appreciate the transparency provided with every transaction occurred with NFTs on the blockchain.
Transparency, in turn proves ownership. All the data recorded on blockchains regarding NFTs allow people to prove their ownership of the assets they own. So, thanks to digital wallets and blockchains, it is super easy to confirm verification and ownership of digital assets.
Another feature to NFTs which can make changes to the world is royalties it provides. NFTs allow artists receive royalties from secondary sales of their original art. It is provided through the smart contracts considered while producing the NFTs for the first time. Therefore, artists may get their share when their art work increase in price later. A good opportunity for artists, isn’t it?
Last but not least, the collectability aspects of NFTs makes the entire transaction process more enjoyable as it is always fun to collect things and, besides, it makes the assets more valuable.
Since many of these aspects regarding NFTs are almost new to the world, when they are applied to the market and influence the real life, the changes will be promising.
Will NFTs be valuable in the future?
In 2009, Bitcoin was first introduced as a peer-to-peer (P2) payment network. Along with the public approval of Bitcoin (BTC) , other blockchain projects, like Ethereum, also emerged, which provided smart contracts, decentralized applications (dApps) and decentralized Finance (DeFi).
Later in 2017, NFTs launched with Cryptokitties – a game based on the Ethereum blockchain that allows users to create, adopt, buy and sell digital cats with unique attributes and characteristics. These digital cat (or NFTs) can be traded on NFT marketplaces like OpenSea and Rarible. The process even developed more with “CryptoPunks”, 10,000 computer algorithmically generated characters which uses Ethereum wallets on trade.
However, the initial hype of NFTs was in early 2021, when the kitties and punks rapidly increased in value, especially by the end of 2021. It is widely believed that the concept of NFTs significantly satisfies human needs of ownership and authenticity so that experts argue that the NFT space is a great business opportunity, where people can make decent money now and in the future.
The other concept which buzzed the trends in 2021 in the NFT world is the Metaverse. It recorded over billion dollar sales with virtual lands in the second half of the year with Facebook announcement to rebrand as Meta. Many experts agree on the increasing prices of the lands with further adoption of the MEtaverse in 2022. As an example, the Sandbox, the leading decentralized metaverse project, is experiencing 1,200 per cent increase since the Facebook announcement till early 2022.
Considering many other successful projects, such as virtual land games and play to earn games, which have attracted a lot of users, it could be said that although NFTs are in their early phase, evidence prove their value to the market. Further, experts announce that NFTs are going to attract a much larger audience in the coming years which suggests their potential to increase in value in 2022.
Will NFTs die?
Like many other markets in the world, NFTs also have attracted huge amounts of money, or crypto. The advantages with NFTs, as already discussed, seems to amuse more artists and investors to big and small investments in NFT market. However, NFT market may also experience some fluctuations along with the cryptocurrencies. Since the market is still new, some investors seem confused with such normal pauses and, eventually, underlying problems. Some even sound more radical to predict the disappearance of the market due to existing problems such as decrease in the number of NFT developers and investors, high gas fees on trading NFTs, and, more importantly, environmental concerns. Now, let’s discuss some of these possibilities.
One of the most unlikely scenarios is that people lose their interest in making or keeping art. Art has always been a part of life for almost all people around the world. Nowadays, with the changes in life requirements, NFT art is even more attractive to most people. Although there are lots of worthless NFTs which probably never sell, people definitely pay for strong art developed by great artists. Since the world is shifting to technology, people also adapt their interests to digital art, or NFTs. This guarantees the ongoing nature of trades in NFT market.
Another short coming with NFTs is high fees to mint a token. Many argue that in some cases the fees could cost more than the production value of the token. However, recently some market places such as Foundation lowered their gas fees in favor of artists and investors. Therefore, we may expect to see NFT minting fees reduced or completely disappeared in future.
The processing power required to create and store NFTs has been questioned to be bad for the environment. Experts revealed that server farms run off the same power grid as houses, and extra computing power means a more significant strain on the system. Considering the limitation in energy production, it could be a reason for NFTs to end up someday.
Are NFTs just digital Art?
One of the misconceptions about NFTs is that they are just digital art or digital photos. In the eyes of the public, without adequate knowledge of NFTs, they believe NFTs holders just paid millions for a JPEG or image. While digital artists were the first to use NFTs to their advantage, the technology has grown to be much more.
One of the areas where NFTs are gaining popularity is real estate. Real estate NFTs are a category of NFTs representing real-life properties as tokens stored on the blockchain. Tokenizing these properties offers several advantages both to the property owner and interested members of the public. One of the major challenges facing the real estate sector is confirmation of ownership. Anyone could pretend to be the actual owner of a property just to defraud unsuspecting members of the public. To prevent this, buyers often have to dig through numerous paper works to confirm the real owner of the property.
However, intending buyers of tokenized real estate properties do not face such challenges. Buyers can easily confirm the property’s owner through the NFT stored on the blockchain. Also, in cases of dynamic NFTs, the NFT can be changed from time to time to show the developments on the properties and whatnot.
A similar use case is found in logistics, where NFTs can be used to track the movement of goods from place to place. It also removes the hurdles of sorting goods at the port or confirming the authenticity of the goods shipped.
Popular brands like Nike use NFTs as a gateway into the metaverse. In 2023, Nike is expected to release a marketplace to sell virtual apparel, such as clothes and sneakers. These virtual clothes and sneakers are for avatars used within a metaverse. Other brands like Starbucks use NFTs to incentivize and reward their customers.
Summarily, NFTs have seeped into every aspect of day-to-day human life. As NFT technology advances, more applications will emerge to simplify many of the challenges we face today.
Conclusion of NFTs Future
The NFT market shows that it will be here with no sign of fail. The nature of NFTs and its increasing number seems to causes changes to the world. The critics with NFTs are already available, though they are not strong enough to end the hype with NFTs.