Market Analysis
Oct 25, 2022
In the history of the Internet, the introduction of NFTs, or tokens that cannot be exchanged for other tokens, was a watershed moment. NFTs, which are based on blockchain technology, are a novel asset class that has caught the attention of institutional investors, C-suite executives, collectors, and others who value scarcity. New NFTs are being created, and existing ones are being traded for over $200,000 every single month.
Before diving into this piece, you may want to catch up on some relevant stories, like the banning of the virtual online casino Slotie and the launch of ZkSync's Mainnet this month.
The NFT boom will result in an equally active market expansion, forecasted by Research and Markets, from $20.44 billion in 2022 to $211.74 billion in 2030. Why are consumers willing to pay over the odds for NFTs, and what factors are fueling this growth?
The market gains stability.
We are ready to write off new ideas as impossible when they appear. Many individuals in the 1990s argued that the internet wouldn't become popular. Coincidentally, conventional investors were slow to embrace cryptocurrency and NFTs when they first appeared, but this sector is thriving now. Because of this, it has a high possibility of becoming a standard in the field of finance. Existing NFTs already "tokenize" and represent real-world assets like artworks and luxury goods, bringing more of their ownership characteristics into the digital realm and facilitating faster, safer transactions. As a result, people are increasingly willing to try out new real estate experiments as a means of injecting much-needed liquidity into a market that has long been constrained by transaction costs.
The ability of NFTs to serve as unalterable evidence of ownership and provenance has the potential to address a long-standing issue in the realm of property in underdeveloped nations. Hernando de Soto, a Peruvian economist, was an early proponent of the idea that blockchain technology might provide a low-cost means of formalizing property rights for the poor. He thinks this would free up around $10 trillion in "dead capital" throughout the globe.
Video games absorb NFTs
How the gaming industry will react to NFTs is a topic of much conjecture. Blockchain games like Ember Sword already have some firms giving digital assets as part of the game, but the trend has not caught on with gamers at large. Some authorities are wondering what may occur in such a scenario. The gaming industry is worth billions of dollars, and NFTs might be a great addition to the virtual world by giving users access to rare items for their games. However, this may cause some people's distinctions between playing for enjoyment and playing for money to blur.
NFTs become a vital part in web3
There are venture capitalists that see a bright future for the NFT sector, anticipating not just its continued existence but also its expansion and centrality. Because they anticipate that we will rely more on technology in the next years, they have designed their business accordingly. It's possible that in the not-too-distant future, we'll be able to purchase not only digital images, films, and gaming assets online, but also actual property and shares of stock. This effectively means that the whole metaverse will be a kind of NFT token that can be purchased using bitcoin. It's not yet apparent how this revolution will coexist with our lives in the "real world," but it's happening.
Market crash
There are still others in the industry who have doubts about NFT's prospects and who think that the cryptocurrency bubble will burst like all others before long. Artists and new investors are cashing in on the current craze, which has led to JPEGs selling for millions of dollars. However, unlike actual artworks, it is still possible for others to manufacture plausible reproductions, which might reduce their future value. Fortunately, signs are pointing in the other direction, and NFT continues to expand in spite of its detractors.
The interest in art NFTs isn't limited to a niche audience. Instead, technological advances are reshaping how we think about art and making it easier for more people to create and appreciate it. However, for these forecasts to come true, the industry must keep encouraging new participants, teach artists and collectors how to get started, make technology more user-friendly, and, most importantly, never lose sight of the objective of connecting great work with people who will genuinely love it.
The NFT adventure has just begun, and the market is developing; in the future, many other types of products are likely to develop into NFTs.
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