NFT industry is maturing
The long-term boom in NFT emerging in 2021 is almost over. The NFT market is on a new path — gradual-growing stability, where there are even signs of monopoly.
Indeed, NFT is showing solid signs of becoming a sustainable industry. Thus, big names are acquiring NFT projects; world-famous galleries are implementing NFTs, and analytics companies are already creating NFT-indexes, indicating a smooth upward shift amid the other market segments.
What is really behind the NFT market and how big of a chance does it have to become sustainable, which breaks all the common “laws of volatility” in the crypto industry?
Collectibles and art as boom drivers
Indeed, it was the collectibles that brought NFTs to the mainstream, the most sensational of which are CryptoKitties, CryptoPunks, Bored Ape Yacht Club, and recently Moonbirds, the price of which has exploded. In addition, the influence of social networks and the attention of celebrities and influencers did much to make the NFT hype lasting and large-scale. Thus, the “yesterday-emerging” NFT market at the end of 2021 approached the top in sales almost to the same extent as the art market, which has been forming for years.
According to NonFungible, with a focus on tracking historical NFT sales data, NFT collectibles have made more than $6.2 billion in sales since 2017, while digital art has reached $1.9 billion.
So, the boom has resulted in the market being flooded with sales, which jumped by more than 200 times in 2021. Thus, according to DappRadar, NFT sales hit $11.6 billion in Q4.
As Mason Nystrom, a crypto data researcher, said, “This year witnessed the NFT market explode from a sub-billion-dollar market to a multi-decillion industry”.
Collectibles and art come out on top in sales and become the progenitors of the NFT industry on its own. Today it already goes far beyond digital art: NFT slowly but surely continues to conquer the gaming industry, sports, education, finance, e-commerce, which is rather a sign of market maturity than its fading.
Bored Apes and CryptoPunks merger — a shift to centralization
It was the recent merger of Bored Apes and CryptoPunks that became the monopolistic base that never defined the NFT market.
And so begins the story of the cryptocurrency concept’s transition from decentralization to one with signs of centralization. This may still be a rather crotchety statement, but the rudiments have taken root.
Firstly, the vast majority of all NFTs sales are concentrated on two platforms: the mature OpenSea marketplace and the recently launched LooksRare. If LooksRare is more associated in the community of crypto-illiterate users as “wash trades”, then, however, the real market is considered OpenSea.
To know more about the fledgling LooksRare marketplace amid the stable OpenSea — read the article created by OneArt.
Secondly, a recent event has stirred up the NFT world with the creators of Bored Ape Yacht Club, Yuga Labs, acquiring the “brands, copyright in the art and other IP rights” for NFT projects created by Larva Labs — CryptoPunks and Meebits. As a result, two of the most valuable and widely known collectibles ended up under the ownership of one company, which intends in this way to add value to the collectibles.
Bored Ape Yacht Club and CryptoPunks are considered the top hot NFT collectibles that went viral and generated impressive revenue for 2021.
Investors are at the forefront
The NFT explosion has not left investors from all over the world behind. Thus, small transactions of less than $10,000 account for more than 75% of the market. Like any market, the NFT market has also become a source of so-called “whales” or simply — big players. So, by mid-2021, there were already about 360,000 NFT owners who had purchased 2.7 million NFTs.
Pranksy (a pseudonym on Twitter), one of the influence players, invested as little as $600 in 2017 and has now caught a big payoff — the current value of his investment has turned out to be $20 million.
Big brands step into the NFT world
The NFT fever has hit well-known brands that have created their NFT or have chosen an investment approach to be not only at the forefront of the flash but also to turn the initial steps to the world of NFT in their brand recognition within the world of Web3.
Thus, the “crypto-jammed” big names have begun a new approach to winning their target audience through the perks provided to holders of certain NFTs — access to virtual limited collectibles, access to VIP packs, holding virtual sessions, and the list goes on and on. Now it’s like a bonus that users don’t mind getting their hands on.
Louis Vuitton, Gucci, Adidas, Nike have already launched their virtual brands; McDonald’s, Burger King, Coca-Cola are creating author’s NFTs; banks purchase land in metaverse, and celebrities fill trademark applications to enter the metaverse. It seems like everyone is going to be involved.
Digital art is already commonplace
Digital art in the world of crypto — aka generative art — is becoming more and more adept at modernity, where algorithmization, technology, and code come to the fore. If digital art used to be perceived as something “out of the ordinary,” violating the whole concept of art, today, NFT-driven generative art also evokes a “wow” effect, but in its way.
You can’t help but pay tribute to the maturity of NFT art, not only to digital artists like Joshua Davis or Zach Lieberman but also to “brick-and-mortar” galleries that have taken up the challenge of transformation.
For example, Furtherfield gallery in London blends art and technology; Bitforms and Upstream show paintings by artists created with augmented reality. NFT-based generative art projects Art Blocks and Botto provide a direct opportunity for creators to express their creativity, create paintings, and trade them via NFTs, making the art monetized.
The increasing emphasis on digital art and the search for a way to compromise between real art and digital one rather indicate that NFT-based painting is not a one-time effort, but an adaptable reality that is not about to go away.
2022: NFT keeps on being mainstream
In the past insane year for NFT, which many analysts regarded as a bubble about to burst, NFT showed its usability in many sectors, and the entrance of many well-known companies into the game only confirms the fact of slow albeit steady adaptation.
The NFT sector does not seem to be about to embark on a stage of stagnation after going through a boom and moving smoothly into the next — a mature phase. Instead, 2022 is expected to be just as successful.
Statistics show that 94% of customers already dealing with NFTs say they are somewhat or very interested in buying NFTs in the next 12 months, as do 42% of those who have not yet purchased them.
In turn, analysts are positive about NFT-related projects in 2022. Activate Consulting predicts NFT to continue to be mainstream this year as well: “Every technology and media company will need an NFT strategy”.
JP Morgan Chase, the advertising partner of The Ascent, a Motley Fool company, also expresses a positive view of the development of this industry: “The NFT universe will undoubtedly continue to grow in the coming years”.
NFT projects in 2022 will show substantially more diversity in use cases and will reconfigure how we interact with and think about ownership of digital media more broadly,” said Paul Veradittakit, partner at Pantera Capital. Thus, NFTs are likely to grow in price, sales volume, breadth of use cases, and interoperability.
Finally, with the acute issue of fraud within NFT marketplaces, the environmental issue due to the process of token creation — minting, the legal issue of ownership still needs to be addressed.
But the key to the resilience of the flexible market is to build a solid foundation that enables easy adaptation to the still-changing, albeit more stable NFT industry. OneArt is already at the end of its journey to develop such a backbone, or rather an infrastructure — a branded NFT app is on its way.