Non-Fungible Tokens (NFTs) were a smash hit in 2021 but fast forward to the present and their popularity has been on the decline. In fact, considering current market trends, altcoins are arguably more interesting or more appealing.
To put into perspective just how popular theywere in 2021, here are a few examples. Someone recorded facts, made an NFT symphony and sold it for $85. Another sold one of a twig image for $12,000. Even more outrageous was when someone sold a rock NFT for 400 ETH (roughly $1.3 million at the time).
The Bored Apes Yacht Club is one of the best examples of wildly popular projects. Its marketcap surged as high as $4.2 billion at the start of May 2022 and has since dipped to $251.5 million at press time.
The Bored Apes Yacht Club’s decline reflects the state of the total NFT market. The segment’s total dropped from just over $10.813 billion in December last year, to about $3.36 billion at press time. It was well over $30 billion at its peak.
Why the NFT Market is Just a Fraction of its Former Glory
To first understand what drove the NFT gold rush, it is vital to understand what drove their popularity in the first place. They made their way into the market at a time when market excitement was at all-time highs.
Everything was appreciating, which explains the high risk appetite that drove into the unusual purchases. The appeal of a new frontier full of opportunity, coupled with easy money from stimulus cheques fueled investor appetite. In other words, the first wave of was mostly underpinned by heavy speculation.
Despite the declining sentiment around NFTs, the segment remained active. However, demand was still weak compared to 2021 levels. Moreover, they may still play a huge role in multiple industries in the future.
The pursuit of value through utility
Some projects like Bored Apes Yacht Club have adopted some mechanisms to ensure that they attach value to their NFTs beyond just art and speculation. However, their future could potentially be back by utility.
One of the supreme examples of an industry that could benefit immensely from this is the gaming industry. Characters and other items such as tools within games could exit as NFTs, bringing in-game purchases to a whole new level.
They could also find their way into real-world utility. For example, German automotive manufacturers, Mercedes Benz and BMW have reportedly been exploring its use cases to keep track of vehicle ownership history and vehicle parts.
The fashion industry was recently hit by a massive scandal over the legitimacy of luxury items. Well, Nike and Louis Vuitton have also reportedly dabbled in it particularly their use to verify the legitimacy of their products.
Owning a home is one of the biggest investments that an individual can make in their lifetime. What if you could buy a house with Bitcoin and could transfer verifiable ownership through an NFT? The Proppy real estate platform explores this approach.
These examples were just some of the few ways in which they can be used. The potential applications could span multiple industries and segments that require the tracking of data. This means they could play a vital role in the maturity or at least their role in bringing more value to the WEB3 space. That being said, NFTs in the art industry will likely continue to exist.
