While the initial hype that surrounded non-fungible tokens (NFTs) in 2021 may have died down in the last couple of years, a number of people in the space continue to make bullish bets on the industry’s future.
Of course, the U.S. Securities and Exchange Commission’s (SEC) recent statement on potentially classifying NFTs as securities has stirred some speculation and volatility in the market, but it has also drawn attention back to it.
In more recent years, NFTs have moved beyond their speculative origins, expanding into use-case applications like gaming, real estate, the luxury industry, museums, ticketing, and intellectual property.
Fad or valuable (and potentially profitable?) products in their own right? Let’s revisit the world of NFTs.
Key Takeaways
- Initially driven by speculation, NFTs are evolving into tools with practical applications in gaming, real estate, and more.
- NFTs provide artists with irrefutable proof of ownership and authenticity, protecting their work from unauthorized reproduction and forgery.
- The value of NFTs could be compared to that of traditional art – emphasizing long-term ownership and appreciation.
- And then there are NFTs increasingly used for tokenizing real-world assets like property, adding tangible benefits and liquidity.
- The future of NFTs lies in their practical applications rather than speculative excitement.
The NFT Space Is Going Through a Metamorphosis
The life cycle of NFTs thus far could be compared to that of a butterfly. Born as caterpillars, they started out as something different from their future form, undergoing a transformative cocooning process before reaching that final butterfly stage.
It seems that the current stage in the life cycle of NFTs could be compared to that cocooning stage — appearing dormant but quietly undergoing transformation, preparing to emerge in a new and evolved form.
The study further emphasized that the average lifespan of an NFT is also notably shorter than the average span of more traditional crypto projects.
“The average lifespan of an NFT is notably short. The average lifespan of an NFT is now 1.14 years, which is 2.5 times shorter than the average lifespan of traditional crypto projects. This short lifespan reflects the intense speculative nature of NFTs, where rapid price fluctuations and the novelty of digital assets fail to sustain long-term value.”
However, such findings could also be argued.
NFTs, unlike cryptocurrencies such as Bitcoin (BTC) or Ethereum (ETH), are not meant to be traded constantly. While BTC and ETH function as digital currencies and stores of value with high liquidity, NFTs represent unique digital assets, often more akin to owning traditional art or collectibles.
Just as you would not trade a Monet or a Picasso every day, NFTs hold an intrinsic value that is less about constant market activity and more about long-term ownership and appreciation.
Speaking with Techopedia, Anndy Lian, an inter-governmental blockchain advisor and author of NFT: From Zero to Hero, highlighted that the NFT space is currently undergoing that exact “metamorphosis” process.
“We are actually seeing a shift happening right now, moving away from pure speculation and towards more concrete use cases. For example, digital artists are using NFTs to prove ownership and authenticity of their work, and the gaming industry is exploring NFTs for in-game items and unique experiences.”
Needless to say, NFTs continue to be novelty-driven and playful; however, their focus is undoubtedly starting to shift gradually toward utility and long-term value.
NFTs Continue to Open Doors for Artists
For years, one of the most prominent issues in the arts industry was proof of ownership. Artists often struggled with unauthorized reproductions, forgeries, and disputes over who truly owned a piece, especially in the digital era where copying and sharing artwork online became effortless.
NFTs provide undeniable proof of ownership for artists’ digital creations, arguably a silver bullet for those who have struggled with copyright infringement in the digital age.
Glam Beckett, the creative director of Sad Girls Bar, an NFT collection recognizable for its monochrome, hand-drawn female profile pictures, added that NFTs are an additional revenue stream and a way for many artists to attract new audiences and collectors.
In addition, NFTs help artists unleash more of their creativity, allowing them to experiment with animation, artificial intelligence (AI), and music.
Rhiannon Fletcher, an up-and-coming NFT artist was also bullish on the possibilities the technology gives new creators.
“The NFT movement is the most significant artistic revolution we have seen since the invention of the photograph. Artificial Intelligence is breaking down barriers, and the blockchain, with its provenance and smart contracts, is providing the tools that artists need to be fully independent.
“The global community forming around the NFT art scene should also not be dismissed. Online communities are on the rise, allowing people to connect in real-time from anywhere.”
Beyond that, the technology powering NFTs also serves as a direct line to collectors, cutting out traditional gatekeepers like galleries.
“This means artists can build closer relationships with their audience and potentially earn a more significant share of the profits from their work.
“The ability to program royalties into NFTs is also revolutionary, allowing artists to earn a percentage every time their work is resold,” Lian said.
NFTs Are Moving into RWA — It’s a Positive Change
While some people may not be such big fans of the initial NFT phase of profile pictures with collections such as Bored Apes Yacht Club and CryptoPunks emerging at the top, they do understand that they have played a crucial role in helping the industry develop into what it is today.
“I often equate PFP [profile picture] NFTs … to a bar selling coasters or matchbooks with their logos. PFPs served their purpose by driving the first sales cycle and drawing attention and eyeballs to the technology.
“Without this initial buy-in and hype, NFT projects would not have gotten the funding to work on the underlying tech,” Fletcher explained.
Fletcher added that NFT ticketing and real-world assets (RWAs), on the other hand, add more positive momentum to the industry as people start interacting with the technology in real-world situations.
“I have friends on Facebook who have attended concerts with NFT tickets, even though they are vocally against crypto.”
Lian added that RWA tokenization through NFTs has also the potential to streamline transactions and unlock liquidity in traditionally illiquid markets.
2021 NFT Craze Fueled By FOMO
There is no doubt that the 2021 levels of mainstream NFT frenzy were fueled by speculation and fear of missing out (FOMO), seeing how collections would sell for an unthinkable amount of money.
Despite that, saying people are no longer interested in the “OG” NFT movers would also not be entirely true, as headlines emerged on September 9, 2024, that a CryptoPunk was bought for 550ETH ($1,265,786.46 at the time of purchase).
Lian is also bullish on the future of NFTs, highlighting that the assets can totally achieve mainstream appeal again, but in a different way — rooted in their utility and tangible benefits.
“Think about it: most people do not care about the technicalities of blockchain. They care about what it can do for them. If NFTs can seamlessly integrate into our digital lives — enhancing gaming experiences, streamlining ticketing, revolutionizing digital art — then mainstream adoption will follow naturally.”
Fletcher compared the initial NFT boom to BTC, noting that BTC was also “pure speculation in its beginnings,” with first news cases grounded in casinos and poker games.
“Non-speculative NFT projects will ultimately become integrated into everyday life. In 20 years, we will wonder how we ever got along without them, much like many people can’t imagine a world before the Internet.”
The Bottom Line
With an overwhelming amount of discussions within the crypto communities that this could be the end of NFTs, it surely does feel refreshing to be met with such positive remarks.
I have always been fascinated with NFTs. I truly enjoy how a groundbreaking technology such as decentralized finance (DeFi) can integrate so easily with the cultural industry, opening doors for artists, creators, and musicians.
So, with all of this in mind, I leave it to you: could we really be entering the “golden age” of NFTs?
Source: https://www.techopedia.com/are-nfts-entering-a-golden-age-expert-roundtable
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
