NFTs
Will the market revive in 2024?
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Despite the lasting recession and the negative scenario, as OpenSea cutting half of its staff last week, the market is designed nearly double from $1.6 billion in 2023 to $3.2 billion in 2027. NFT volume in October was the highest since late August and 38% higher than the lowest week in September, with based on Nansen Data.
The main attraction lies in the inherent properties of tokens – providing proof of ownership and ensuring provenance, which are essential in sectors such as art, gaming and customer engagement. NFTs are still seen as a gateway to promoting a more transparent and responsible digital ecosystem.
Speaking about the obstacles to market growth in 2024, Matt Medved, the co-founder and CEO of media company NFT Now, told me in an interview: “Many of those outside of this niche community associate NFTs with pre-made PFP projects. and absurd prices. Similar to the early days of crypto, some even call the entire industry a “scam.” Education is critical to helping the mainstream market understand the power and potential of digital property, emerging use cases, and the paradigm shift we are seeing with web3.”
John Wu, president of development company AVA Labs, highlighted the transformative potential of NFTs in an interview with me: “NFTs provide a way for artists to establish ownership of their digital creations, create new revenue streams, and engage communities around the artists’ work.”
Here are five other trends experts are predicting for NFT’s trajectory in 2024.
Integration with real-world assets (RWAs)
The integration of NFTs with RWAs unlocks possibilities for transforming physical (illiquid) assets into highly liquid on-chain tokens and facilitates instant cross-border investments. The transition from purely digital assets to a mix of digital and real-world assets could broaden the scope and appeal of NFTs, bridging the gap between the traditional financial realm and the growing blockchain space.
“RWAs are an incredible NFT use case, transforming illiquid RWAs into highly liquid on-chain tokens, enabling instant cross-border investment in all types of infrastructure and other projects,” Max Thake of blockchain platform peaq told me in an interview.
In the real estate sector, the tokenization process aligns with the millennial generation preference for more flexible investment and ownership models, transforming market dynamics. However, in the realm of art and collectibles, tokenization provides a mechanism for fractional ownership, allowing a broader spectrum of investors to participate in the ownership of high-value art pieces. This not only increases market liquidity but also ensures price transparency.
Need for regulatory clarity
Experts call for easier-to-use infrastructure and regulatory clarity for NFTs. A clear regulatory framework is considered crucial to protecting consumers and investors while ensuring the level of stability necessary for the NFT space to mature and grow.
This sentiment underscores the integral role of a clear regulatory framework in cultivating a stable and reliable NFT ecosystem, which in turn could propel the industry onto a more sustainable growth trajectory.
While it is unlikely that we will see any regulatory moves regarding NFTs in 2024. “To promote a fairer regulatory approach to NFTs, the industry must first focus efforts on educating policymakers about the value and nuances of NFTs, separate from those of cryptocurrencies. . and regulations are warranted, creating a fair playing field that takes into account the individuality of different Web3 technologies is a complex task — and one that shouldn’t be rushed,” Rusty Matveev of blockchain app Calaxy told me in an interview.
Market Growth Leading to Value-Based NFTs
The initial cosmic growth of NFTs, often driven by speculation, is maturing into a more value-oriented market. In 2024, projects must introspect about the real value and utility they bring to the table. This shift leads to more sustainable and valuable NFT projects that withstand market fluctuations.
“NFTs have a use case that concerns fashion, rare gemstones, and pharmaceuticals: preventing counterfeiting. Whether we’re talking about high-value clothing and bags or anti-malaria drugs in Africa, counterfeiting is a huge problem. be used to authenticate whether a stone was ethically sourced from a mine that did not rely on child labor,” Richard Gardner, CEO of Modulus, told me in an interview.
In another example, authors and educators transitioned their works to NFT formats and gave rise to NFT Publishing Marketplaces, such as Bookwirewhich provided a platform for such digital formats.
This thought process is critical to steering the NFT market in a more value-oriented and sustainable direction, where projects thrive based on the utility they provide rather than speculative hype.
“What happens next is a calmer, more reasonable and sensible search for use cases where NFTs can add real value… we will see more and more NFTs that are valuable by virtue of their utility rather than pure speculation,” Thake added.
Environmental concerns
The carbon footprint associated with the calculations required to validate transactions and mint new tokens on the blockchain. That’s it designed that an average NFT will emit 211 kg of carbon dioxide (CO2) over its lifetime due to the processes involved in its creation and acquisition.
Ilya Rybchin, partner at business consulting firm Elixirr, highlights an ethical conundrum facing environmentally conscious consumers. In our interview, he mentioned that “many of the same consumers interested in NFTs are also environmentally conscious. For them, investing in an asset that produces a tremendous environmental impact creates an ethical dilemma.” Therefore, companies must take environmental impact into account.
Brand and artist collaborations
Collaborations between well-established brands, artists and digital art communities are seen as a significant step forward in promoting NFT adoption and creative expression.
The recent launch of Web3 artistic residency by Adidas highlighted the convergence of art and fashion for a broader audience of creators and investors. Collaborations help foster a more inclusive NFT ecosystem, which leads to more widespread acceptance of NFTs.
“Initiatives like the Adidas Digital Art Studio Residency have the potential to be a significant catalyst for the revival of the NFT market. Involving artists and creators in such programs will help promote NFT adoption and creative expression,” Rusty Matveev told me in an interview.
Matt Medved believes that innovation and culture drive market growth. As he noted in an email to me, “NFTs have helped bring blockchain technology into the mainstream, engaging the creative industries and introducing a new generation of creators and builders to web3. in all categories. Fortune 500 brands like Starbucks and Lufthansa are launching loyalty programs left and right. Gaming, music and fashion are multi-billion dollar industries that are currently embracing this technology.”
While experts agree that the future of NFTs will not look like the bull run of 2021, some talk about the market’s potential revival in 2024. This positive outlook stems from utility and value-driven projects, creative collaborations, and demand of the real world. forms.