How NFTs Took Off
Although NFT technology has been around since 2014, hype and awareness only really started funneling through in 2020 with the exponential demand for established profile picture projects such as CryptoPunks.
This adoption phase accelerated dramatically when Beeple sold an NFT for $69 million dollars in March 2021, confirming the model of NFTs to the broad public. Projects like CryptoPunks, Bored Ape Yacht Club, and CryptoKitties took off and everyone spotted a unique investment opportunity that offered hefty gains.
These OG projects didn’t necessarily offer much more than an expensive profile picture, but that sense of belonging within a community as well as the potential of the asset to multiply in value caught the attention of millions.
NFTs experienced a faster rate of growth than cryptocurrencies. This was probably due to them being easier to understand, as well as having a greater community element to them. The social aspect of NFTs is what drew many to dip their feet and acquire their first jpeg token.
The rest is history, and NFTs have since become a considerable percentage of many blockchain investors’ portfolios. The introduction of NFTs allowed the creation of a market around new types of transactions and buying and selling of products that could never be sold before - and boy, it went crazy.
This crazy period also made many realise the benefits that NFTs could provide to the art industry and many others.
Where Are NFTs at Right Now?
With so much that has happened in NFTs in such a short period of time, the vast majority think the time to make money off them has passed. Although the market might be saturated with millions of projects and teams looking to leverage jpegs to build capital, the jpeg market continues to perform.
Trading volume on leading marketplaces such as OpenSea (Ethereum) or Magic Eden (Solana) may have slowed down since the peak months from 2021 and early 2022, but these platforms continue to process obscene amounts of volume, a telling indicator that these dApps will continue to grow comfortably in the coming years while having the necessary capital to adapt to the evolution of tokenised digital assets.
However, as mentioned above, the market is becoming saturated with projects. There has been a clear sighting of easy money to be made from selling NFT collections, resulting in many fraudulent teams overpromising and underperforming within their projects after they sell out.
This saturation has resulted in many projects struggling to sellout their collections. There is simply not enough liquidity within the market to sustain so many collections selling out and we’re beginning fewer projects grow astronomically after their mint.
There are however seriously impressive teams that have utilised NFT collections to build funds for their projects - providing fun and easy ways for collectors to invest in teams that are solving problems in and around the ecosystem. These projects continue to perform well on secondary marketplaces and this is mainly because of their promising and future-thinking roadmaps, along with the added benefit they provide for their NFT holders.
The concept of 'utility' within NFT projects is becoming the leading indicator of the success of an NFT project. Projects that can't provide their holders with attractive and more tangible benefits are quickly falling behind.
NFTs’ ability to prove ownership of any asset, whether digital or physical is now very much realised and we’re beginning to see some of the biggest companies in the world explore their potential.
NFTs Are Evolving
Many struggled to believe how an image could be worth so much as they didn’t really provide much else apart from being invited into a community. This ‘meta’ of NFTs is slowly moving on and investors are looking to gain more in terms of utility from their NFT investments.
NFTs are now being used to represent ownership in industries such as real estate, offering a more effective way to wrap up deeds and transfer ownership between property owners. With use-cases like this only just getting started, it’s hard to believe that we won’t be interacting with NFTs in the near future.
NFTs enable transactions to happen in innovative ways that are more efficient and valuable, and these transactions can be linked to all kinds of industries.
Along with aiding real-world use cases, NFTs also provide a fundraising mechanism that makes a lot of sense. Small companies or projects can look to NFT collections to raise capital and reward their investors in efficient and unique ways. Rather than pitching to angel investors, NFTs provide a crowdfunding tool that enables anyone around the world to invest in something they believe in.
So, Is It Too Late to Get into NFTs?
Although the market for profile pictures and jpegs may have passed its prime in terms of turning mind-blowing profits, the use of NFT technology in real-world scenarios is only just beginning. For that reason, it is definitely not too late to get into NFTs.
The number of huge industries diving into implementing NFTs is proof that there’s a place for NFTs in our society. In fact, many believe that all consumer products will have ‘digital twins’. A digital token that accompanies the product itself.
The best thing one can do right now within the current NFT ecosystem is to understand why NFTs, along with blockchain technology has the potential to solve so many problems around the world today.
You may be slightly late in selling your jpeg for millions of dollars, but the potential to invest in companies that aim to solve problems, while leveraging NFT technology is still very much on its way.