2021 proved to be a fruitful year for the NFT market with its total value reaching $15.70 billion: it’s expected to reach a whopping $147.24 billion by 2026.
So why are forecasts still so bullish when waves of bad press for NFTs as a concept has made it the subject of widespread derision?
Do people have a point when they say it’s little more than a way to own a JPEG which can be copy pasted and used as a profile picture by anyone?
There’s a strong argument for NFTs having hit the mainstream too early. People got rich overnight and suddenly everyone else wanted to get in on the get-rich-quick scheme. Veterans of the crypto space know this is often when things start to go south.
When you have artists coming out and saying NFTs represent an “ecological nightmare pyramid scheme”, that sort of discourse sticks.
But artwork is in fact one of the weaker utilities NFTs can bring. Critics say most projects don’t even store the art on the blockchain, rather a link to the picture. This is fair criticism although there is potential value in owning the rights to a piece of art in this manner.
Use Cases Abound
What mainstream commentators don’t yet realize is the sheer utility of NFTs as a concept.
These can be integrated into everyday processes: your concert tickets, gaming cosmetic items, hotel reservation or any other kind of asset which can be represented digitally and irrevocably belongs to you because the blockchain says so.
Scalpers currently enjoy free reign over the supply of secondhand tickets to sporting and musical events, but what if there was an immutable record of every price point the ticket has ever been sold at? Moreover, when represented by an NFT a ticket can be easily transferred without any concern over whether it’s a fake and a new identity can be added in the process.
The array of use cases for NFTs is why the market is projected to explode over the coming years. Many companies and startups are already preparing for the new digital landscape.
But Remain Wary
As with all hyped up blockchain fads, disreputable actors storm in and try to turn a profit from the perceived gold rush. NFTs may not be going anywhere, but this does not mean every project is going to the moon. The advice remains consistent with previous years: do your due diligence.
Experience tells us even celebrity representation and slick marketing does not remove the possibility for a rug pull or scam, or simply it just being a bogus project which isn’t heading in a positive direction.
You can never be sure, and indeed there will be NFT related startups that fail despite being well-founded. Look at the team behind each project, consider if their NFT offering actually solves a problem and then make an investment decision.
And remember, if you see it being advertised on mainstream media you’re probably too late.