NFTs (“non-fungible tokens”) are becoming increasingly popular as more and more brands and celebrities try to make money in this “digital gold rush.” However, the question is whether the enthusiasm will continue to spread or will it slowly fade away?
NFT certificates, which are unique digital certificates registered on a chain of blocks that confer ownership of an asset, grew to $22 billion in the market in 2021, according to DappRadar. Big brands like Coca-Cola, Nike, and Gucci have embraced them. However, one analyst expects the “angry” activity to subside in 2021 and that it will take several years before the NFT market stabilizes.
Veteran investors have warned of the NFT in a similar way to cryptocurrencies: that they have symptoms of an intolerable “digital gold rush.” NFTs give someone ownership of something uniquely digital – whether it’s a virtual artwork by Damien Hirst or a metaverse wearable jacket – even though that item can easily be copied. Ownership is recorded in a decentralized digital book known as the block chain.
Data from DappRadar, which tracks sales, shows that NFT trading reached $22 billion in 2021, up from $100 million in 2020, the market capitalization of the 100 largest NFTs ever issued. .
The most expensive NFT auction of the year was The First 5000 Days digital collage, created by Beeple, American digital artist Micah Winkelman, and it auctioned for $69.3 million in March, making it one of the highest-grossing artworks ever sold by a living artist. Another Beeple NFT business, Human One, was sold for $29 million.
DappRadar says that the main factor in the growth of NFT trading is the entry into this market of “mainstream” companies.
“Hollywood, sports stars and major brands such as Coca-Cola, Gucci, Nike and Adidas have established themselves in the field and have given NFTs a new level of exclusivity. The allure of these famous names has had a huge impact on the entire blockchain industry in generalThey wrote on DappRadar.
Football fans have been the target of marketing for NFTs, including NFTs backed by former English players John Terry and Wayne Rooney. However, experts warned them that these are risky assets and are not regulated in the UK. He said it will be several years before NFTs start behaving like a normal market George Monaghan, an analyst at research firm GlobalData.
“The activity of NFT in 2021 was very active. This will subside in the coming years, and NFTs will subside into something like today’s contemporary art market, where the consensus on value is more solid. However, it will be several years before any cryptocurrency market, let alone NFT, becomes comparable to anything that normal markets describe as stable. I wasn’t going to pay black day money yet into any of the NFT digital businesses,” He said.