Back in 2021, it was clear that the Future of NFTs looked bright. Every social media platform was talking about it. Many NFT projects gained a ton of momentum and cash since then. Celebrities, athletes, and popular brands, everyone jumped into the fray.
However later, around the beginning of 2022, we witnessed a significant drop in the NFT market. NFTs, cryptocurrencies, and almost everything else on the blockchain started collapsing. Why’s that?
Are NFTs still worth learning about? or better yet, investing in? What does the Future of NFTs really look like? Here is a brief evaluation of everything we know so far.
Recent Events In NFT World
If you analyze news about crypto and the future of NFTs, it’s all been up and down. The road has been quite bumpy. But, we will take a look at some of the facts.
The first-ever tweet turned into an NFT and was sold for $2.9 million. Recently, it got a highest bid of just about $280. Showing a significant decline in NFT trends.
NFT Land Sales from Yuga Labs, known as Otherdeed, almost broke Ethereum. Over 180 million dollars worth of Ethereum burned away.
Several NFT projects are under rigorous development and could launch any time.
Nike has managed to sell their genesis NFT, CryptoKicks, for almost six-figure value.
Marketplaces like OpenSea recorded all-time high transactions in Q1 of 2022.
If we look at these events, NFTs either have been relatively high or low, with no middle ground. But these events tell us a lot.
No More Trend-Driven NFTs
The Tweet NFT is just an example of where the future of NFTs is headed. It won’t be enough for people to get celebrities or influencers to endorse their NFTs anymore.
People aren’t looking for trendy NFTs because they understand that these collections are merely a short-term gain. With no long-term sustenance.
Ergo, anyone who ends up holding them could face a significant loss due to a market crash or any sort of NFT scam.
Everyone is looking for value-based NFTs. These are the NFTs that will offer valuable utility in the Metaverse. They could provide value cross-chain transfer, among other things.
Gas Wars – A Massive Irresponsibility
Each transaction on the blockchain costs some cryptocurrency. For example, on Ethereum, you might have to pay for some fragments of the crypto to transfer something. This cost is known as the Gas Fee.
Some people are willing to pay extra gas fees to boost the speed of transactions. You can even multiply the transactions. When too many people are doing it for the same project or NFT, it is known as Gas Wars.
An excellent example is the Yuga Labs’ Otherseed NFT land sale. People ended up burning over $180 million worth of Ethereum.
This shows that we can’t rely on people to make logical decisions. Ethereum’s burn mechanism backfired. Thus, many other systems implementing this mechanism might have to reconsider.
Value-Based NFTs Are In-Demand
Nike’s first generation of NFTs, the CryptoKicks, offers value to the users. It has the legal backing of the brand for apparel. You can equip these CryptoKicks across the blockchain universe on different avatars. Thus, you can show them off anywhere you like. Nike will keep solidifying their presence throughout the blockchain.
CryptoKicks are also customizable, with color vials available for users to buy. You can customize the entire color scheme of your virtual Nike sneakers.
Correlatively, Nike is also taking down any sneaker NFT or similar projects. Why? Because they might look like cheap knock-offs and gain by using Nike’s name. Thus, they plan on making these sneakers more exclusive in the Metaverse.
As a result, the CryptoKicks will become value-oriented and sustain long-term value. Hence, making them worth the investment.
Redeemable NFTs For Real-World Goods
This is an entirely new realm of possibilities that NFT projects. You can redeem NFTs for monetary gains already. But, they could tie up to authentic life goods. Nike had already hinted at working towards something similar when they sued StockX.
This is a new level for NFT projects, and people will appreciate the efforts if it works. The ability to not just monetize but also redeem real-life goods will always entice people. This could be the new frontier for the NFT world.
The Imminent Challenge Of NFT World – And Its Solutions
NFTs are facing multiple challenges mostly on the level of credibility. It is very tricky for a new industry to establish credibility and gain enough hype to survive. This becomes extra challenging when the industry is easily accessible. Many scammers have taken advantage of NFTs’ rise, pulling all sorts of schemes, and scams on NFT enthusiasts. This issue can eventually lead to the death of the NFT market.
Moreover, any promising future of NFTs is threatened by excessive fees. Transaction fees (Gas fees) are becoming too inflated for people pushing many newcomers out of the game. NFTs are virtual and suspicious enough without having to pay extra fees that you will never get back. But now with talks about layer 2 NFT and how they can reduce gas fees, it’s all down to protecting NFT holders from rug-pull projects and NFT hacks.
The Bottom Line – What Needs To Be Done?
NFT holders need a stronger feeling of safety. It isn’t possible for any industry to grow with many security concerns.
So establishing regulations protecting NFT buyers from losing their highly valuable digital assets. In addition, NFT creators should focus on long-term usability and NFT utility. It isn’t enough now for an NFT make a big reselling profit. Buyers expect their NFTs to offer quick perks and privileges. And honestly, they should get that. A-list NFTs cost literal fortunes, and investors don’t always feel like waiting to get their ROI. So, providing more value like events access, commercial rights, even in-games perks, is highly recommended.
Moreover, blue-chip NFT Projects like the NFT Land Sale and Bored Ape Yacht Club need to remain exclusive. This exclusivity helps keep such projectys and in conce Either that or tie up with a value-based system, like getting the backing of a brand.
Value-oriented NFTs, like Nike, will be the future of NFTs. It is an untapped area where people stand to introduce innovations. The idea of using NFTs to redeem real-life goods will always help entire people. This could be the next step.
Finally, adding Layer-2 protocols and other similar mechanisms will push the NFT world to a new era. It is a much-needed change.
What The Future of NFTs Holds
The first wave, or generation, of NFT projects, was uncharted territory. Nobody knew what could happen. But after the mistakes, it is time to learn from them.
If more value-based NFTs keep popping up, we can expect them to thrive. There’s no doubt that the NFT world is not dead. Currently, it is for those who have already made a significant investment or some quick profits. But the future additions, as mentioned above, can open the NFT world to new individuals.
People who want to learn about NFT and enter the world will undoubtedly appreciate it. So, NFTs are not dead, and there we’re looking at a bright future of NFTs.