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The present and future of NFT
https://lh5.googleusercontent.com/PfxrXNZSV5K5pgDcLUfSF4sJePJQfyqagl1xrzZ3jzt24ynAittIM7zsqschWb41xMGmSSyAc_ZwZGj6o74sxAz1QCb6KJT8VHnu2MEuT0Ul-HKtXPMa6jhON4dgTdNBrBpJnKevwvM8pH9ONGy0OSf_n9QxuuQuN66LhuVQVp77ih2VaMm_LV7F0UBfEA

NFTs continue to gain popularity, so we continue our series of articles about non-fungible tokens. Earlier, we conducted detailed NFT research and explained why the new format, despite rumors, is not a scam. We also talked about the future of the industry with the NFT marketing agency Monaproof founder.

Today we’ll discover what is happening on the NFT market, how it goes in the middle of crypto winter, and what prospects it has.

What is NFT

A non-fungible token (NFT) is a token type that represents a digital “cast” of a file, for instance, an image or a music track.

Each NFT exists in a single copy and cannot be replaced with another token. We can edit or convert pictures to another format, but it doesn’t work with NFT. It is impossible to change pictures or other files in non-fungible token format because each NFT has its own unique number and each of them can’t be replaced.

Information about the NFTs' ownership and tokens’ unique numbers are stored on the blockchain. Earlier, we published a detailed NFT format explainer with pros and cons overview.

NFT categories

There are two large standard categories of NFT: art and collectibles, and GameFi. There also are more detailed classifications. Here is one of them, presented by nftgo:

🕹️ Game, 

👾 Collectibles,

👤 Profile Picture Non-fungible Token (PFP),

🖼️ Art,

💫 Metaverse,

🪙 Decentralized Finance (DeFi),

📃 Intellectual Property (IP),

🤳 Social,

🎻 Music,

💼 Utility,

🌍 Land,

🌐 Domain Name,

⚽ Sports,

📸  Photography.

PFP and collectibles are in the lead, according to statistics. Here are some popular examples of the mentioned categories: Bored Ape Yacht Club and CryptoPunks.

https://lh3.googleusercontent.com/eeW3FgTL5l9DRGyNH2kLBsvzGf2ky1AYuIJ8QXmAjl6l_nvYIgtPjHYhzkZQUrx_DaIyLu7bK1I4B07ebr05lLvMU2-XUjX3ciH1XK6_8GxcqU7B6xM32FJJXPx6hk0BtcypgtcOBoXBix23FwpggRTilbuXx6E8iEg1DbqSI2C7IYhJn67KuoCjVpSLwKoAF6TtLE0

Market capitalization of the NFT category. Source: nftgo.

NFTs from art and collectibles categories are dominating the market for the longest period of time. Bored Ape Kennel Club and Bored Ape Kennel Club are examples of such projects.

The highest rates of non-fungible token demand came in August 2021. The leaders were GameFi projects, including Axie Infinity and Gods Unchained.

https://lh4.googleusercontent.com/eI-bZkVyuSwD2Z_4w4AF_d2N4T-q0r7D60vlqZ9Gusg4WolgrWvP5HkV3D6El9iGUAx9eROdd8Jf2yZMTpK_Wn-zr1E8TFNcj4CkyP40Giq0kC8S80EEaDygu9Ni0d7HphSVk-XaxdxVyAOr0Wp0ubOIFOoDmeb-KOgJzRjkdI4bmcYAA_MkoupgYay_wzyEKw_y6yQ

Weekly trade volume of NFTs by categories: art and collectibles, and gaming. Source: The Block.

This is how the NFT market currently looks, but we expect new types of tokens to emerge as the market evolves. 

Most common use cases for NFTs

NFT is highly demanded in many areas. Here are some options:

🤖 In games. NFT helps to store characters and game attributes, improve them, and sell them on marketplaces.

🖼️ Art industry. NFT is usable for selling digital art, music, or videos. The hype that non-fungible tokens are surrounded helps promote art. At the same time, the format helps to protect copyrights.

🪐 Metaverses. Developers use social and gaming NFTs to fill digital worlds. Tokens can be used as avatars in social metaverses, as well as characters, objects, and home decorations in games.

🎟️ Sales. In particular NFTs can be used in ticket sales. In that case, tokens are going to be physical tickets’ digital alternatives.

🤳 In marketing. Digital token distribution is one of the relevant options to attract an audience to the project. It is not easy to say how long this method will be in demand.

📃 For workflow organization. The format allows you to validate data. For example, NFTs can be used to determine and validate real estate ownership, or a college degree. It seems like NFTs have a great future in this direction!

There are other ways to use NFTs as well. For example, Twitter users can set non-fungible tokens as avatars. Users of Facebook and Instagram can exchange with their NFTs. Perhaps in the future, non-fungible tokens will penetrate all social networks. At the same time, it is possible to assume that NFT hype will decrease, so other platforms will not follow the trend.

NFT Statistics

Trading Volume

Non-fungible tokens’ top rates of popularity, according to the trading volume, occurred in August 2021, a period of general digital asset market growth. The activity declined in May 2022, against the backdrop of crypto-winter. The changes affected the income of non-fungible token market representatives. For example, the auction house Christie's reported a 96% drop in NFT sales in 2022.

Also, statistics indicate a decrease in the whales’ activity, those are the large sellers on the non-fungible token market.

https://lh4.googleusercontent.com/P4kP98tZsyYI-FYmB-hnpY5WRGaJJIpcd1vh3KrT1JbbKYD13ZoHGVrgNFJlGV0fdNztgLUzybR83suWoDwte7UzTamddKJrL0UHyHn8trvTqaXrLARqVyPtjBnOhRUfydba_dIaF0d0tVuM0MBsxYkcD3JqVpFA_UKRoA1bOKUHX0G1xq3vOObBY-FeBvFXNP3Nuuo

An average NFT prices and market sellers' activity. Source: nftgo.

Some crypto community members believe that NFT sellers may deliberately inflate prices in order to fake the demand for the token. They resell NFTs to themselves to create new notes of the token sales in the ownership list. It helps to mislead a potential buyer with incorrect data about the real level of demand for a certain NFT.

In January 2022, more than 80% of NFT volume came from fake deals. Here is how fake NFT trading volumes (black bars) look against the background of legal transactions, according to Dune:

https://lh5.googleusercontent.com/xIVvwiae1Hg4nP2QAKpqOfRK2Wt0SO7PAKz8RpkH_vDkTIyTAn2m6JrEdESBf3o_tx5MRE-3MqgtteCNxzqse9AVtkjSVTfhtn3YAjW42-BYPa8EKt3q5Yu4JuCkzZbsR1Jwaa_hUCompLqgn_oIhcPCvC0wCaeXdsVZI4cTKIVK6KwfyHWHQFr9hmfHm7lnjXEvikQ

NFT trading volume was adjusted for wash trading. Source: Dune.

Here you can find more details about the NFT scam and methods to avoid it.

Sentiments

As for the end of December 2022, there are more sellers than buyers in the non-fungible token market. A significant portion of NFT owners are in loss. The market participant’s mood barometer shows negative signals.

https://lh6.googleusercontent.com/MfG2OWUAqhsnDw32Lzqv3r2gaPMnIUSK0DRRM-XcXvsw-ZBlUhb2gRj8kO4FLerBN8HXaUG2EJm3_MJw_sgZTE4rQk4DvJY7HYBzdd66xyg74ta_hskLLdEmR_DPgtEz_QmjZ8FZoA0vXdj-9rzEAtUBs7z7QpX_mp53GvH7HwD29da2DJLlzQCISD_32jZ0EVXXxBw

NFT market sentiments, buyer and seller statistics, and profit vs. loss data. Source: nftgo.

At the same time, the NFT holders number continues to grow, despite the general market downtrend.

https://lh6.googleusercontent.com/Ro0x6fUAdr1EV7CYfsuhOPcviwQW0bdeaz3QxUqDb7PhGErddkTDbjSSVglRmIwPYaEmHn_2Ut_vNJG2Swd7T2zqtZ9E1558dSOj9pU19T1_OqkzwrIqgOimm_bFlXKfEh5me-ULNJwQQoFHOcQ2tuAXQgMdf0X3-DxJe4CiDFOic1Ba2cpBYsV6hOBA4tr3TSxWVls

NFT market holders and traders balance. Source: nftgo.

Blockchains

Ethereum is the most popular blockchain on the NFT market. The top three also include Solana and Polygon. Here are the most popular NFT-collections by blockchains, according to crypto.com:

💠 Ethereum: Bored Ape Yacht Club, Bored Ape Kennel Club, Mutant Ape Yacht Club.

☀️ Solana: DeGods, Famous Fox Federation, Okay Bears.

🎱 Polygon: CyberKongz VX, Decentral Games ICE Poker All Access Wearables, ZED RUN.

Stable and pretty decentralized, Ethereum is keeping its leadership position despite expensive transactions.

Ethereum’s main competitor on the non-fungible token market is Solana, which suffered from the FTX crypto exchange collapse in November 2022. The trading platform’s founder, Sam Bankman-Fried, was one of its main investors. In the aftermath of the project's collapse, the Solana (SOL) token lost roughly 200% of its value. The problems that the blockchain platform may face cause many users to transfer funds to Ethereum, which appears to be stronger.

https://lh4.googleusercontent.com/BICwmH6nbwzMN8NPWRqfmKeF1gUC-jRMOl9wgQh--sLPE4gz0JzyJPSIzXWqwmdcoG6T3PIF6xzIL_fHH010KL_dtYP-1hIuXEBnKpVmRlZsUrd4bx74H7OGPhcdKBY9wpJ1erhBXSa66U-rGih41AjMUZ2j7b4u3pgMzl6vjRG5L5n37bhEp1HYtU17TlSaJ9OiMYI

NFT trade volume by chain. Source: The Block.

The largest NFT sales

The #9998 token from the Cryptopunks collection remains the most expensive lot in the history of the whole NFT market. On October 29, 2021, it was sold for 124.46K Ethereum. As of the end of December 2022, the token is available for 250K ETH.

Cryptopunks is a 10,000-token NFT collection created by Larva Labs in 2017. Each Cryptopunk is a pixel image of a human head.

https://lh5.googleusercontent.com/JGCFelq64W1CxSSXH0inr_SUz18rAL0RhT2mrzJLcKCUlpNAeXNfu5uE94w3ar0X8HzYPVfRIoX6M7dt8XeCJdfozVEmyg5vCVxQOEIEtkWaAGdKGWRtS-mbCbcz1kEwov7x1vslNw-KtNfz0e_904lbgWWAq9Ruvbrc9qoDQe86G3L6O-qrk-B0aGiOFQ

Cryptopunks #9998 token on OpenSea.

The following are the top ten most valuable NFT tokens in market history according to nftgo:

https://lh4.googleusercontent.com/LAe5hYnTm-eHYZd02Zta51qOqRHwHfc2WaNVAdyoECnJQyi1N2ogRyMK28QZvuAOJQdQmNInV2V1pEtbuy_MMMc7KhA0pPNZsLFxzxGCWtOt16Au1ab68gEs-Mq0NjXU2Lk-5o2HVfrZoFDlwmmUepVQ9eHJEDJbVYTx-ig7p49YjDk0RPjOtF8j1wvneOHviCrU8Ks

All of the top 10 tokens are marked with a red flag, which relates to the possibility of a fake price.

NFT-marketplaces

Opensea is the biggest NFT-marketplace. It outperforms competitors with trading volumes and the number of active users. Here are the top three popular NFT collections on OpenSea:

👾 Mutant Hound Collars;

🧑‍🎤 CryptoPunks;

🐕 Bored Ape Kennel Club.

https://lh3.googleusercontent.com/AocT7Mxw2r_KEgxGLEV2ZSKP0GpSNuhvA7HptL7wVdS-ya_oqIxvhQKbev1ZZ01n8BbzO-S6oEbM4CeFKqdNKqUUlyWDGZUKtHvb6KG23QqMy3V0a_R8rlPuPeWku2StgdlFgRXmFNIWErC507KDTcH4jbZ08BaxuME8M413Gj7EoqrIx-ZqMi9OdCKfRR5yQn3eyHc

NFT-marketplaces statistics. Source: nftgo.

NFT's Potential 

The development of format-using areas is critical to the future of the NFT market. Here are its possible growth drivers:

🌟 Metaverses. Analysts estimate that the virtual world market will be worth $1,607.12 billion by 2030. Meta (former Facebook) became the direction’s flagship. Despite the losses, the company does not plan to stop its metaverse development.

📁 Document flow. Many consider NFT to be the third generation of Internet (web3) echo. The format can become an indispensable part of the document management system's functioning in the future: it will allow you to get rid of paperwork and deal with papers without involving third parties in the process.

🕹️ GameFi. Analysts estimates, the gaming projects market with money-making tools has the potential to grow up to $38 billion by 2028.

GameFi's development was greatly facilitated by the coronavirus crisis. Due to job loss, people have been forced to look for alternative sources of income, and many have found a solution in GameFi.

Low-income countries' citizens, including those in the Philippines, showed particular interest in games with money-making tools. As a result, local authorities had to create a regulatory framework for taxing players who left a large number of jobs. The pandemic has subsided, but the established GameFi player base has remained and continues to support the popularity of the direction.

Predictions

Analysts see further non-fungible token market growth potential. For example, Statista believes that NFT revenues will reach $8.412 million by 2027. The company's website states that their forecasts are based on an analysis of market behavior.

https://lh6.googleusercontent.com/hNuyVOKZxBJ-_Do0XyY0Ns4X3qPnELwL5NDwQWP6NLOmpjvk57er7QWwyHfU6DHsB1914NLkjdNpryRmVPZMIvZXYIxF9ccPykRFLC79utiPIhJ2emiNhIbfHBoyEIpC5pBE6m_sQkLFCMfOq4uZSUkbw52dS4d40ure_0FkDOwFhEQ-yF8GHmGsg3Pbic-Qk3rqTho

NFT market forecast. Source: Statista.

Verified Market Research also sees non-fungible token market growth potential. Its volume will reach $231 billion by 2030, according to analysts. Grand View Research shared a similar forecast. They believe the NFT market will grow up to $211.72 billion by 2030.

Conclusion

The NFT is already used in many areas. For example, non-fungible tokens are used to fill the metaverses and organize GameFi’s gameplay. Both directions, according to analysts, will continue to grow for many years, pushing NFTs along with them. Therefore, we can reliably assume that the non-fungible token market will continue to grow as well.

Maria Kachura
Maria Kachura

Visit her on Facebook or hit her up via Email.

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