When NFTs exploded last year, everyone wanted a piece of the cake. Creators were minting NFTs, and investors bought as many as possible. For many, NFTs were the next big thing in the crypto ecosystem. Today, there are questions on whether NFTs can stand the test of time. This article will discuss NFT’s history, current status, and future prospects.
NFTs in the Past: How the NFT Wave Started
Contrary to what many think, the NFT wave did not start in 2021. The history of these tokens dates as far back as 2017, when Cryptokitties was released. Cryptokitties is a blockchain game that allows players to purchase, breed, and sell virtual cats. The game was very successful. In its prime, Cryptokitties accounted for about 12% of Ethereum’s total transactions. However, while Cryptokitties experienced immense success, NFTs did not become popular until 2021.
The NFT wave peaked in 2021 when news broke out that NFTs were being sold for high amounts. For instance, Beeple’s ‘Everydays: The First 5,000 Days’ NFT sold for a whopping $69 million. One of the NFTs in the Bored Ape Yacht Club (BAYC) collection also sold for about $3.4 million.
These high prices attracted investors and creators, as everyone was looking for a way to make huge returns. Creators minted NFTs to sell their art, and investors bought the NFTs to sell them at a profit. Some others leveraged the NFT wave for something different. For instance, NAS released a music NFT collection.
In terms of trade numbers, the NFT ecosystem was booming. In 2021, the NFT market was valued at $41 billion. This figure represented a 3,000 percent increase between 2020 and 2021.
NFTs in the Present: Has the NFT Wave Fizzled Out?
The intensity of the NFT wave experienced in 2021 has significantly reduced. Between January 2022 and September 2022, the trading volume of Opensea, one of the largest NFT trading platforms, was reduced by 97 percent. This reduction in the NFT wave can be ascribed to some factors.
First, the NFT intensity experienced last year was primarily due to FOMO (Fear of Missing Out). Since NFTs were often tagged as the next big thing, investors were purchasing the assets for fear of missing out on a juicy investment option. The FOMO intensity significantly reduced this year.
Another contributing factor is the bearish crypto market. Many crypto assets have been in the red this year. For instance, BTC was around 16,965 at the time of writing this article. This is a huge difference from 2021, when BTC experienced a record high of 65,000 in 2021. Due to the bearish market, investors are more reluctant to buy up more NFTs.
NFTs in the Future
While the NFT wave has undoubtedly reduced, NFTs are unlikely to fizzle anytime soon. This is because NFTs have other use cases that can sustain their existence. They can be used for identity management, supply chain management, and ownership authentication in the fashion industry. These use cases will likely maintain NFT’s utility over the next few years.
Conclusion
There is no doubt that NFTs are revolutionary. They have introduced a new brand of crypto assets different from the fungible tokens investors are used to. While the NFT wave has reduced compared to last year’s intensity, NFTs are here to stay.
