NFT: what future for works of art certified on the blockchain?

The NFT market has collapsed in recent months. Weighed down by the fall in cryptocurrencies, the sector is in the red, despite the marked interest from brands and companies. Will the world of non-fungible tokens manage to get its head above water? We take stock.

The non-fungible token (NFT) industry has grown at lightning speed over the past year. Driven by the interest shown by many celebrities, brands and auction houses, the market attracted a plethora of investors. Some collections have quickly become very popular within the crypto community. This is the case of the famous Bored Ape Yacht Club or CryptoPunks. At the same time, dedicated marketplaces, such as OpenSea, Rarible or Magic Eden, have emerged.

In this very enthusiastic context, some non-fungible tokens were sold at exorbitant prices. We remember in particular a work by the artist Beeple, which sold for the sum of 69 million dollars in March 2021. Over the last year, sales of NFT generated $25 billion, say DappRadar experts. In 2020, non-fungible tokens had still brought in “only” $94.9 million. A year earlier, the market was almost non-existent, despite the appearance of the first NFTs in 2017 on the Ethereum blockchain.

Read also: This building for sale in the form of NFT has lost 40% of its value

The collapse of the NFT market

Unfortunately for investors, the NFT market then crashed. In 2022, the exchanges of tokens on the blockchain have been greatly reduced. According to data collected by analysts from StockApps, NFT sales down 41% in the second quarter of 2022 compared to the last quarter of 2021. Sales were still $3.9 billion in May, compared to $884 million a month later, points out NonFungible, a site specializing in market research. On OpenSea, the industry’s leading marketplace, the drop in trading reached an impressive 99% between May 1 and August 28.

It’s not just volume traded in dollars that has plunged. This is also the case for the number of buyers and sellers as well as the number of sales. These decreases mainly come from collectibles which have lost interest since the beginning of the year. ”, explains NonFungible in a report published this summer.

The profitability investors specializing in NFTs logically fell over the period, notes StockApps. Resale is no longer as lucrative, either on Ethereum or the Solana blockchain, although some collections still manage to generate excitement. For industry watchers, this is the most notable trend of the past six months.

The non-fungible token sector has followed the movements recorded by the cryptocurrency market. After the peak recorded in November 2021, with Bitcoin approaching $70,000, the market plunged. The crash of the Luna ecosystem and the bankruptcy of several lending platforms, such as Celsius, have deeply marked the industry and scalded new entrants.

The downward trend in trading volume is due to the fall in the cryptocurrency market. Most investors are afraid to take risks with crypto-assets. NFT is a victim of this context”estimates Edith Reads, analyst at StockApps.

Like cryptocurrencies, NFTs suffer from economic crisis and rising inflation. The looming recession in most countries has deprived both retail and institutional investors of liquidity. Faced with the sluggishness of the markets, hanging on to the decisions of the central banks responsible for containing inflation, investors are turning away massively from the most risky assets.

Multiplication of projects

However, NFTs are not dead yet. Despite the collapse of the speculative market, projects betting on digital assets on the blockchain are on the rise. eBaythe leader in online auctions, thus opened its own marketplace of non-fungible tokens in the spring of 2022. We should also mention the initiative of Napster, which aims to return to the forefront thanks to blockchain and NFTs, or the colossal success of the Sorare platform, which offers to exchange football cards online.

World-renowned brands also continue to invest in non-fungible tokens. For instance, Coca-Cola launched a collection of NFTs. Meanwhile, Nike launched virtual sneakers as blockchain-authenticated digital assets. A host of luxury brands, including Lacoste, Tiffanys and Lamborghini have entered the sector with open arms.

We will also note the arrival of non-fungible tokens on Facebook, the social network which has more than 2.9 billion users worldwide. US users can already share digital collectibles on their wall. NFTs have also been deployed on Instagram, which has more than two billion users. Eventually, NFTs will be offered to Facebook and Instagram users in the whole world. Mirroring Meta, Apple recently opened up to NFTs. The Cupertino giant will allow sales of digital works through iOS applications from the App Store. Like Meta, Apple will take 30% commission on all sales.

A renewed interest thanks to the metaverse?

Could Internet users’ lack of interest in NFTs be short-lived? The analysts of Juniper Research expect blockchain networks to record 40 billion NFT transactions in 2027, against 24 million in 2022. In five years, the market would represent more than 13 billion dollars, against less than 3 billion currently.

“The NFT market is likely to make a strong comeback. Expect a return to growth when things start to pick up in the cryptocurrency market.”says Edith Reads of StockApps.

The rise of the metaverse, whose economy is largely based on NFTs, should help revive the interest of investors and Internet users in the years to come. It was in anticipation of the implementation of the metaverse that Meta deployed NFTs on its social networks. At the same time, Mark Zuckerberg’s group integrated these into Horizon Worlds, the first version of his digital world. It is possible to buy virtual clothes through Meta Pay to customize the avatars.

NFTs are also essential to the development of virtual real estate in the metaverse. Indeed, every digital parcel of worlds like The Sandbox or Decentraland is an NFT. Ultimately, the adoption of the metaverse should mechanically accelerate the adoption of NFTs, prophesies Juniper Research. The analyst firm expects metaverse-linked non-fungible tokens to see the strongest growth in the NFT industry in the next five years. In 2027, there are expected to be more than 9.8 million NFT transactions in the metaverse, compared to 600,000 this year.

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NFT: what future for works of art certified on the blockchain?


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