Apr 20, 2023
Non-fungible tokens (NFTs) experienced a meteoric come-up in 2021. The internet was alive with discourse, and NFTs became part and parcel of conversations surrounding Web3, cryptocurrency, and the metaverse. But the industry’s growth hasn't been steady and plateaued for much of 2022.
As with many industries, the NFT market suffered from the blows of macroeconomic pressures. Similarly, the metaverse dropped mysteriously off the radar, with many speculating that the platform was dead before it even began. Granted, it’s been a rocky few quarters for the NFT market, but 2023 has already seen the market in better stead. A few big launches boosted value and units in January, which shows that investors aren’t done with the industry. BCC Research still predicts a market value of $125.60 billion by 2027, with a CAGR of 27.7% (2022-2027).
Despite headwinds, the market boasts several attributes that will help guarantee some stability going forwards:
It also helps high-profile companies are taking notice. McDonald’s, Coca-Cola, Gucci and Ray-Ban have all started to offer NFTs. The game sector being revolutionized, the slow but steady rise in demand for digital artworks, and celebrities' growing influence in the space are also working in the market’s favor. While industry titans strive to make the metaverse a reality, NFTs will enjoy further boosts.
The future of NFT investments
Investors and businesses are still gauging whether the rapid increase in demand for NFTs is a result of the expansion of virtual reality or whether this is a stable sector. In early 2021, excitement and speculative activity with sales were high, but again, this peak naturally declined. But the future looks promising: as Generation Z matures, investments in NFTs should climb. Compared to millennials, Gen Z is far more inclined to invest in digital assets than stocks. Digitally native generations are more accepting of the idea of these industries, which will help push the NFT market to ongoing growth.
Research from Cointelegraph found that investing $1,000 in Bitcoin in 2017 would have resulted in returns that are more than 16 times higher currently. Comparatively, the 125,000x return on a $1,000 investment in a fictitious portfolio of NFTs represented a minuscule portion of all NFTs ever sold on the Ethereum blockchain. When the market opened to big NFT pitches in 2020, with a record $2.5 billion in global sales, only a small percentage of investors saw potential in NFTs. According to Google Trends, the number of people interested in purchasing NFTs increased by 426% in August 2021 when compared to the previous year. As consumers gain the opportunity to own a piece of a company, NFTs have emerged as a potent branding and marketing tool. For instance, as part of its digital marketing strategy, MG Motor India introduced 1,111 tokens in December 2021. In March 2022, Mahindra & Mahindra announced its foray into the NFT market.
For artists, musicians, and influencers, the apparent surge in the NFTs market represents a lucrative opportunity to monetize their previously free or devalued digital goods. Songs, music videos, memes, GIFs, artworks, and other digital assets can all be transformed into NFTs. American digital artist and graphic designer Mike Winkelmann, aka Beeple, is one of the artists who have made use of NFTs. Beeple sold an NFT for an eye-watering sum of $69.3 million — the third-highest price paid by a living artist. The first tweet ever sent by Twitter's co-founder and CEO, Jack Dorsey, was sold as an NFT for more over $2.9 million.
The landscape is ripe with potential. The road hasn’t been straightforward, and there’s no guarantee that future turbulence won’t arise. But the long-term importance of the industry appears clear.
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BCC Research is dedicated to analyzing the current and future potential of digital industries. Our recent report on the global market for non-fungible tokens provides an in-depth background evaluation of the industry, as well as diving into the future market potential.
Download your complimentary overview or download the report in full here.
As well as diving into the market for NFTs, we also provide insight into other sectors including the metaverse, big data, blockchain, and more. If you have a broader interest in these industries, then membership with our BCC Research Library may be the option for you. Please get in touch with our helpful team today to find out more.
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