At the beginning of May, The Wall Street Journal published an article that shook up the NFT world: “NFT Sales Are Flatlining: Is this the beginning of the end of NFTs?” Understandably, this has raised some concerns and made people ask themselves: Where is the market heading, and are NFTs still a good source of making money?
In a nutshell, NFTs are unmodifiable digital assets that represent artworks, music pieces or real-life objects. The truth is that recent claims that NFT sales are flatlining have been widely rebuked: On-chain data from Dune Analytics’s dashboard highlights that the NFT market is still robust, thanks to continuing developments in their utility. It also shows that NFT users and transactions are much higher than what’s reported by Nonfungible, the resource used in the WSJ article.
But although NFTs have exploded in popularity, only one in four Americans can accurately explain what an NFT is, according to a study by Money magazine and Morning Consult.
Community, Culture and Utility
The value of NFT collections is built on three pillars: community, culture and utility. When looking for value in NFT collections, it can be a combination of multiple or only one aspect. Some of the best examples out there are the most well-known. Bored Ape Yacht Club is a number one example of activating community; Both Generative art (Artblocks) and CryptoPunks have pushed forward NFTs in the cultural sphere, and the utility of gaming NFTs is an excellent indicator of how innovation can occur in the space.
The NFT market might be volatile, but there’s potential in that. Volatility allows investors to develop strategies like buy low, sell high, which creates the possibility for astronomic returns. On top of that, a volatile market presents the perfect opportunity to filter the strongest projects and holders from the weakest.
People are looking for greater functionality. Potential purchasers want to know: Does this NFT make me part of an amazing community? Will I get premium access to exclusive drops? Makers of NFTs will recognize the need for value-added drops, and we will see more creative uses for NFT utility appear. And NFT collections with none of the above value offerings will slowly be filtered out.
In 2021 alone, crypto job postings on Indeed surged by 118%.
Knowing the fact that giving value to customers has always been a non-negotiable part of marketing, NFT creators have started to design more engaging utilities. A prime example is entertainment and travel companies selling NFT tickets. This way, their customers can exchange their tickets without having to deal with customer service.
Furthermore, the metaverse has become a fast-growing industry — JP Morgan Chase recently said that the metaverse would generate $1 trillion in annual revenue for businesses spanning a cross-section of industries. It is NFTs that will become the building blocks of these digital worlds, and encoded utilities will unlock experiences such as VIP events or unique discounts.
Interoperability Will Be Essential
NFTs’ ability to create community and provide access perks online and in real life make them the perfect tool. As NFTs and metaverses develop, so will the complexity of their use, and interoperability between metaverses will be as important as their utility in real life.
Since the metaverse reflects the real world, interoperability is core to its success. The metaverse — the integration of borderless virtual worlds — aims at creating fluid socio-cultural interactions that go beyond our traditional physical world. Reaching more broadly, the metaverse will offer more variety in its content, and interoperability will expand the possibilities for utility, bringing a seamless experience and higher value for users.
Digital transformation and adoption of blockchain technology also mean the employment landscape is changing. More people are already working on NFT, blockchains, and cryptocurrencies than before, but it will become ever common. In 2021 alone, crypto job postings on Indeed surged by 118%.
Blockchain and NFTs will bring more transparency to the digital sphere as their ability to prove digital ownership will act as an economic incentive for adoption.
Gen Z is more likely to invest in cryptocurrencies and NFTs than stocks in comparison to millennials, and their investments will fuel markets as digital assets have become mainstream. Like assets, these sectors will grow as younger, digitally native generations mature.
Greater Ease of Adoption Is Needed
Web3 is a chance to reinvent and reimagine the undesirable parts of Web2.0 and smooth out the crinkles of UX. Because blockchain is a decentralized and trust-free environment, the existing Web3 technology has security trade-offs. When there are hacks or attacks, users have complete control over their data and funds, and there will be no intermediaries to turn to. In Web3, security is a primary priority and doesn’t set back growth and development.
The reality is the NFT market will strengthen and grow when it is easier for more people to adopt. Therefore, we need to make the NFT journey less complicated and more recognizable through ongoing education from providers and mainstream media.
Even though NFT marketplaces offer one-click login options, new users are bound to feel discouraged from using a platform if they have an issue while creating an account or trying to buy and sell NFTs. And the lack of live chat support can create the perfect storm for customer turnover. Twitter and Discord are the most effective social media channels to keep your audience up-to-date and explain the entire process of buying and selling NFTs. Additional education can be in the form of videos, how-tos and inline info buttons via websites.
The bottom line is that we are at the beginning of the NFT journey, and the market is maturing: We expect to see a future where many things will evolve into NFTs.