NFTs were the talk of the town in 2021 and 2022 and there was news that people had become millionaires from NFTs. However, in 2024, it looks like NFTs have lost their limelight. What happened to them? Was it just a gimmick? Is it still there, acting dormant and waiting for the right to move to return? Or Will Artificial Intelligence (AI) take the spotlight from NFTs?
Source: Today.com, dated: 8th April 2022
Before understanding the scenarios, let’s have a quick understanding of NFTs.
Understanding NFTs: A Brief Overview
Non-Fungible Tokens (NFTs) act like special digital certificates that show you own something unique on the internet, such as a one-of-a-kind online artwork or a rare video. Imagine it as a unique stamp saying, “This is exclusively mine!” People use NFTs to display and exchange their exceptional digital treasures in the online world.
NFTs Now-a-days
According to dappGambl (Source: Dead NFTs: The Evolving Landscape of the NFT Market), 95% of NFT collection is worthless and is estimated to be held by over 23 million people.
It may sound impossible because in just 1.5 years the whole concept eroded. On further research, it is evident that NFTs value has eroded, as the trade volumes are down after 2022.
As of 2024, the total value of trade is less than $250 million (mn) and if we compare it with mid-year 2021 to 2022 the average total value of trade was around $1.5 billion (bn).
Hype or Scam: NFTs devalue
It would be wrong to say that it was a scam, however, it was launched before time and to understand in detail let’s break it into 3 parts one is time, second is economics and third is target market:
- NFTs experiencing similar to Dot-com bubbles burst
For many, it would be difficult to believe that once, the dot-com industry failed however now this dot-com has become a necessity of life. So let’s understand “Dot-com”.
The Dot-com bubble, the period between 1995 and 2000 during which the value of stock market shares in Internet service and technology companies—then known as “dot-com” companies—rose at an astronomical rate and was eventually unsustainable. These companies included “start-ups,” or fledgling businesses with a disappointing track record of profitability or unrealistic business plans.
So NFT is experiencing the same as Dot-com, so it has to be remodelled or recreated into a new industry.
- Demand and Supply
A fundamental concept in economics, supply and demand define the cost and accessibility of goods.
The quantity of an item or service offered on the market is known as its supply. The quantity of an item or service that consumers wish to purchase is known as demand. The cost of products and services affects both supply and demand.
According to dappGambl (Source: Dead NFTs: The Evolving Landscape of the NFT Market), of the collections we identified, only 21% were fully spoken terms of having 100%+ ownership. This means that 79% of all NFT collections – otherwise known as almost 4 out of every 5 – have remained unsold.
Because there is more supply than demand, potential investors are becoming pickier and carefully evaluating the design, uniqueness, and potential value of NFTs before making a purchase, creating a buyer’s market.
- Target Market
The potential of NFTs extends far beyond the art world, impacting various industries:
- Gaming: NFTs are revolutionizing in-game economies, enabling players to truly own and trade virtual items.
- Music: Musicians are using NFTs to release exclusive content, connect with fans, and generate new revenue streams.
- Fashion: Luxury brands are leveraging NFTs to offer unique digital wearables and experiences.
- Ticketing: NFTs offer secure, tamper-proof ticketing solutions, eliminating fraud and scalping.
- Supply Chain Management: NFTs can track the provenance of physical goods, ensuring transparency and authenticity.
Conclusion: Beyond the Hype, a Future Filled with Potential
While the NFT market might experience fluctuations, its underlying potential remains strong. NFTs offer unique solutions for ownership, identity, and engagement, making them more than just a fad. As the technology matures and new use cases emerge, NFTs have the potential to revolutionize various industries and redefine how we interact with the digital world.
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