Crypto markets have always been prone to extreme volatility. Bitcoin has been declared ‘dead’ numerous times over the past decade. However, this period, dubbed the “NFT Winter,” has taken a different trajectory. Despite the downfalls of Bitcoin and Ethereum, they remain resilient, while NFTs bear the brunt of skeptics.
The Fallacy of “NFTs are Dead”
Looking back at the crypto history, we find that many ICO tokens from 2017 lost their value by the winter of 2018/19. Fast forward to 2020, when many DeFi tokens met a similar fate. So, it’s partially expected that a large number of NFTs are facing this downturn. Since creating and launching an NFT Collection has become easy, we see a surge in supply, but supply ≠ quality, especially in this industry. NFT trading volumes have plummeted, dropping from approximately $1 billion weekly in mid-2021 to early 2022 to less than $100 million.
Beneath the Rubble: NFTs Rising
Despite the overarching negative sentiment, there are budding signs of life for NFTs. It is set to impact multiple industries, from music to sports and real estate to art, by enabling tokenization of assets. The music industry is expected to reach USD 6.002 billion by 2028 with involvement from key players like Warner Bros, Justin Bieber, Snoop Dogg, Eminem, Harry Styles, and more. While in the sports category, a third of surveyed sports fans in the United States claimed to have purchased cryptocurrency and/or non-fungible tokens (NFTs).
Other trending utilities include brand loyalty programs to create a whole new level of engagement among users. Brands across industries, from airlines like Etihad to beauty brands like L’oreal, have ventured into this space. Recently, a restaurant loyalty platform, Blackbird, raised 24 million dollars with a16z in the lead and Variant, Union Square Ventures, among others.
Ticketing is another popular and upcoming use case of NFTs. Backed by Animoca Brands, Get Protocol is a blockchain-based ticketing solution that utilizes NFTs to reward fans and ensure secure and transparent event ticketing.
Recently, Pudgy Penguins launched its first set of physical toys, first selling on Amazon in March and recently expanding to 2,000 Walmart stores across the U.S. Doodles teamed up with the relaxed footwear brand Crocs, merging the physical with the digital with a likewise similar collaboration between Gary Vee’s Veefriends and Reebok.
The Future: Evolving Beyond the Winter
NFTs are not merely a passing trend. Even though most NFTs may sell for just a few hundred dollars, the industry still holds much promise, especially for collectible lovers. In today’s digital age, from quintessential art pieces to album covers and tweets to trending memes, the canvas for NFTs is vast and ever-expanding. The end of this NFT winter will likely herald a new era where NFT projects are more mature, sustainable, and intertwined with mainstream commerce and culture.