Nfts
Will the market rebound in 2024?
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Despite the lasting slowdown and the negative context, like OpenSea cutting half of its staff last week, the market is projected to nearly double from $1.6 billion in 2023 to $3.2 billion by 2027. NFT volume in October was at its highest level since late August and 38% higher than the previous week. lowest in September, based on Nansen’s data.
The main appeal lies in the inherent properties of tokens – providing proof of ownership and guaranteeing provenance, which are essential in sectors like art, gaming and customer engagement. NFTs are still seen as a gateway to fostering a more transparent and accountable digital ecosystem.
Speaking about the obstacles to market growth in 2024, Matt Medved, co-founder and CEO of media company nft now, told me in an interview: “Many of those who are not part of this niche community associate NFTs to cookie-cutter PFP projects and Absurd Prices. Similar to the early days of crypto, some even call the entire industry a “scam.” Education is key to helping the mainstream market understand the power and potential of digital ownership, emerging use cases, and the paradigm shift we are seeing with Web3. »
John Wu, president of development company AVA Labs, highlighted the transformative potential of NFTs in an interview with me: “NFTs offer artists a way to establish ownership of their digital creations, create new sources of income and to involve communities around the work of artists. “.
Here are five other trends that experts predict for the NFT trajectory in 2024.
Integration with Real World Assets (RWA)
The integration of NFTs with RWAs unveils possibilities for transforming physical (illiquid) assets into highly liquid on-chain tokens and facilitates instant cross-border investments. The transition from purely digital assets to a mix of digital and real assets could expand the reach and appeal of NFTs, bridging the gap between the traditional financial realm and the burgeoning blockchain space.
“RWAs are an incredible NFT use case, turning illiquid RWAs into highly liquid on-chain tokens, enabling instant cross-border investment in all kinds of infrastructure and other projects,” the platform’s Max Thake told me blockchain peaq, in an interview.
In real estate, the tokenization process aligns with that of millennials preference for more flexible investment and ownership models, transforming market dynamics. Meanwhile, in the art and collectibles space, tokenization provides a fractional ownership mechanism, allowing a wider range of investors to participate in the ownership of high-value artworks. This not only strengthens market liquidity but also ensures price transparency.
Need for regulatory clarity
Experts are calling for friendlier infrastructure and clearer regulation for NFTs. A clear regulatory framework is seen as crucial to protecting consumers and investors, ensuring a level of stability required for the NFT space to mature and grow.
This sentiment highlights the critical role of a clear regulatory framework in cultivating a stable and reliable NFT ecosystem, which in turn could propel the industry towards a more sustainable growth trajectory.
Although it is unlikely that we will see regulatory action regarding NFTs in 2024. “To push for a fairer regulatory approach to NFTs, the industry must first focus its efforts on educating policymakers about the value and nuances of NFTs, distinct from those of cryptocurrencies. and regulations are justified, creating a level playing field that takes into account the individuality of different Web3 technologies is a complex task – and one that should not be rushed,” Rusty Matveev of blockchain app Calaxy told me in a interview.
Market Growth Leads to Value-Based NFTs
The initial cosmic growth of NFTs, often driven by speculation, is evolving into a more value-driven market. In 2024, projects should introspect on the real value and utility they provide. This shift leads to more sustainable and valuable NFT projects that are resilient to market fluctuations.
“NFTs have a use case that spans fashion, rare gemstones, and pharmaceuticals: preventing counterfeiting. From high-value clothing and handbags to anti-malaria drugs in Africa, counterfeiting is a major problem. In the rare gemstone market, NFTs could be used to authenticate whether a stone comes from an ethical mine that does not rely on child labor,” Richard Gardner, CEO of Modulus, told me in an interview.
In another example, authors and educators have transferred their works to NFT formats and given rise to NFT publishing marketplaces such as Book threadwhich provided a platform for these digital formats.
This thought process is instrumental in steering the NFT market in a more value-driven and sustainable direction, where projects thrive on the utility they provide rather than speculative hype.
“What will happen next is a calmer, more reasonable, more sensible search for use cases where NFTs can add real value…we will see more and more NFTs that have value because of their usefulness, not mere speculation,” Thake added.
Environmental concerns
The carbon footprint associated with the calculations necessary to validate transactions and create new tokens on the blockchain. It is projected that an average NFT will emit 211 kg of carbon dioxide (CO2) over its lifetime due to the processes involved in its creation and acquisition.
Ilya Rybchin, partner at business consultancy Elixirr, highlights an ethical conundrum facing environmentally conscious consumers. In our interview, he mentioned that “many of the consumers interested in NFTs are also environmentally conscious. For them, investing in an asset that produces a huge environmental impact creates an ethical dilemma.” Companies must therefore take into account the environmental impact.
Brand and artist collaborations
Collaborations between established brands, artists and digital art communities are seen as a significant step towards promoting NFT adoption and creative expression.
The recent launch of Web3 artist residency by Adidas highlighted the convergence of art and fashion to a broader audience of creators and investors. Collaborations help foster a more inclusive NFT ecosystem, leading to broader acceptance of NFTs.
“Initiatives such as Adidas Digital Art Studio Residency have the potential to be an important catalyst for the revival of the NFT market. Engaging artists and creators in such programs will help promote NFT adoption and creative expression” , Rusty Matveev told me in an interview.
Matt Medved believes that innovation and culture are driving market growth. As he noted in an email he sent me: “NFTs have helped bring blockchain technology mainstream by engaging the creative industries and introducing a new generation of creators and builders to Web3. As we conduct more of our daily lives digitally, the ownership layer will be important. in all categories. Fortune 500 brands like Starbucks and Lufthansa are launching loyalty programs across the board. Gaming, music, and fashion are multi-billion dollar industries currently adopting this technology.
Although experts agree that the future of NFTs will not look like the 2021 surge, some are talking about a potential market recovery in 2024. This positive outlook comes from projects focused on utility and value, creative collaborations and real-world product demand. applications.