NFTs
NFTs are here to stay – but not as we knew them before
Non-fungible tokens (NFTs) conquered the world in 2021 with buyers spending millions of dollars on digital collectibles in the art, entertainment, music and sports industries. As NFTs grew in popularity, the space gained attention from celebrities like Logan Paul, Justin Bieber and Serena Williams, catapulting digital collectibles into the mainstream. We’ve seen a new generation of collectors, investors and fans move from collecting physical items like baseball cards or Beanie Babies to spending over a million dollars on a single Bored Ape.
As of January 2021, NFTs are experiencing an all-time high trading volume of US$5.8 billion. But in just a few months, the market would come to a screeching halt. Following the collapse of Terra USD and Luna, the sharp drop in Bitcoin’s price, and the industry-shaking collapse of FTX, the NFT market has become one of the many victims of the “Crypto Winter” with trading volume plummeting. for US$395 million in August, the lowest value in 30 monthsand traders are preparing for more dive this month. This drastic decline is making artists, collectors and dealers wonder if the industry is dying for good.
While it’s true that profile picture (PFP) NFTs aren’t growing, the value of NFTs has evolved to transcend price and their uses are expanding far beyond a static image in someone’s wallet.
NFTs have the ability to tokenize real-world assets and can offer exclusive physical and digital experiences to holders. We are already seeing this concept of tokenization happen on a large scale.
Earlier this year, the European Commission released its Strategy for Sustainable and Circular Textiles, a new and innovative solution “to frame the future of the European textile and fashion industry with digital product passports”. Digital product passports will be used as a tool to share details about a product’s environmental sustainability, including data on the product’s composition and environmental impact. By implementing this measure, the industry will be able to better understand global sustainability goals and reinforce clarity for consumers, while advocating environmentally conscious choices. This form of digital assets – while not a traditional NFT – is where the future is headed.
As the digital asset business landscape continues to expand from traditional NFT use cases to the tokenization of real-world assets, mainstream and luxury brands are also taking advantage of this technology. NFTs offer brands a new way to interact with consumers and provide additional real-world benefits, rewards and experiences. ASICS, a renowned sports footwear brand, launched a large-scale brand Loyalty Program on the Solana blockchain, leveraging NFT technology to excite and energize the company’s core audience. Nike, Doritos and hundreds of other brands are finding ways to leverage Web3 and NFT technology to attract a new generation of consumers driven not by speculation but by utility.
In a rapidly evolving digital landscape, profile picture NFTs still have a place, but they will not be the product that drives widespread Web3 adoption. Public financial interest in NFTs as we know them has waned, but the desire and creativity of brands to leverage digital assets is increasing. Loyalty programs, exclusive experiences, digital content and rewards, our own digital identity and data ownership will define the next generation of NFTs and could truly be the killer use case that will onboard the next billion people to Web3.