The year 2021 went down in history as the period of the NFT era. With a market volume of $41 billion last year, NFTs have secured a prime spot in the market.
NFTs have come a long way with NFT gaming, NFT arts, NFT memes, in-game items, collectibles and other digital assets. It allowed the gamers to trade valuable in-game items across several platforms. NFTs also opened a new global market for artists, musicians and digital creators.
Another push to the NFT market was the evolution of metaverse. NFT is helping create a decentralized financial economy in the metaverse. People are not only trading digital assets but also buying lands and real estate properties through NFTs.
The tremendous growth of NFTs last year calls for its market evaluation in 2022. While some people believe NFTs are just a façade and a wave floating on rumours, the market sentiment shows that it is here to stay and grow.
The development of Web 3.0 and the expansion of metaverse will help NFTs to remain in demand in future. Moreover, several popular brands like Adidas, Coca-Cola, NYX, Gucci and others have already entered the NFT space in 2021. These brands are here to expand their online presence and reach out to the target audience through the new NFT trends. Digital and physical asset tokenisation and gaming has gone to a different level with NFTs.
NFTs are more than just collectibles, arts and memes. All the above factors combined is forcing the developers to explore new possibilities of NFTs and keeping the market hot.
Why NFTs Era Will Continue In 2022?
In the third quarter of 2021 alone the NFT sales reached a benchmark of $11 billion. In the first and second quarters of 2021, the sales went up to $1.2 billion and $1.3 billion respectively.
NFT sales on Nifty Gateway by the end of March 2021 reached $105.71 million per month. Popular NFT collections like BAYC, MAYC, Cryptopunks, Clone X and others have a market cap of billions. As of today, Cryptopunks and BAYC have a market cap of 522,613 ETH and 947,682 ETH respectively.
Though NFTs were with us since 2014, their popularity peaked high in 2020 which exploded in 2021. If experts are to be believed, the rapid development of Web 3.0 and metaverse space will keep the NFT era alive in 2022 and years to come.
Investment bank Jefferies believes that the NFT market will cross $80 billion by 2025. The bank’s report also predicted that the year 2022 will see the NFT market go beyond $35 billion. The surprisingly NFT market is reaching close to the physical fine art market that was $50 billion in 2020.
Let us examine the reasons why NFTs will boom in 2022.
Expansion Of Metaverse
What started as the graphic rich and real-world experience integrated gaming platforms are now expanding into the metaverse. Metaverse is not only about games. It is emerging as a virtual world where your online avatar can live a parallel life.
Though Metaverse is in its initial stages, several metaverse platforms have been launched in the last few years. Big tech companies like Google, Microsoft, Apple and others are competing to make metaverse more accessible and offer a realistic experience. Companies won’t stop at Mesh, Horizon Workrooms and VR headsets. Developments continue to integrate several virtual spaces to form a unified metaverse with better interoperability.
NFTs have already established themselves as the major player in the metaverse economy. People are buying lands, real estate properties, concert tickets and in-game items through NFTs. A single plot on Decentraland costs as much as $2.4 million.
NFTs are playing a crucial role in executing the interoperability feature of the metaverse. With the help of NFTs people can move from one platform to another with the same avatar, wealth and digital possessions.
Singers like Ariana Grande, Marshmallow, Daler Mehndi and others are already performing virtual concerts on metaverse. Singers are even recording their hologram music performances and selling them as NFTs. Anyone who buys the NFT to the concert has the right to play the concert on his space in the metaverse. He can also release NFT tickets for the concerts.
Decentraland is hosting its first Fashion week from 24th March where popular brands will participate. People (in this case online avatars) visiting the fashion week can buy the digital item as NFT and wear it instantly just like clothes in real life.
NFT is the foundation pillar of the metaverse economy. It has enabled the seamless and safe trade of digital and physical assets online. NFT market will grow as the metaverse develops into its more mature version.
Ethereum 2.0 Will Solve Energy Problems
NFTs are hot in the crypto market as well as in the climate. Single NFT minting costs hundreds of Kwh and several kilos of carbon dioxide emissions.
A single NFT consumes energy equivalent to an average person’s monthly consumption in a month living in the UK. You can compare the footprint of 1 NFT to taking a flight of 2 hours or driving a car for 1000 km or even using a laptop for 3 years.
An average NFT transaction on SuperRare takes 82 kWh and emits 48kg of carbon dioxide. 2 out of 3 that is 67% of artists on SuperRare leave behind a footprint of 1 tonne of carbon dioxide. 18% of the artist on the platform have a footprint of over 10 tonnes of CO2.
Nifty Gateway based on the PoW Ethereum blockchain burdens the environment with tonnes of CO2 emissions. On Nifty Gateway, an artist releasing an 800 NFT collection uses approximately 140 MWh and emits over 86 tonnes of CO2.
It is not only about Nifty Gateway or SuperRare, any NFT minting on a blockchain network that is based on PoW costs a lot to our ecology. That is why developers are shifting to more energy-efficient blockchain networks that are based on PoS.
Ethereum 2.0 is the best alternative to the Classic Ethereum network. It will solve the network congestion, unreasonably high gas fees, scalability issues and built on PoS consensus.
Currently, the classic Ethereum network isn’t big enough for everyone to use it. Ethereum 2.0 will boost the NFT space by offering everyone to use the network with cheaper fees and higher output.
Moreover, the hurdles like high energy consumption, negative impact on the environment, network scalability and higher gas fees will go away.
Ethereum 2.0 will help in establishing an energy-efficient and cheaper NFT market in 2022.
Transforming The Gaming Industry
NFTs have changed the gaming industry forever. The valuable in-game items like characters, avatars, skins, tanks, diamonds and other game collectibles which were worthless in the real world are now worth millions of dollars.
The NFT era has empowered gamers to earn money by playing blockchain games. You can play games on Decentraland, Axie Infinity, Fortnite, Sandbox and have a decent income.
There are two options to earn with blockchain games. Either you play blockchain games, collect valuable items and trade your in-game assets as NFTs in marketplaces. Another way is to participate in play-to-earn games.
In play-to-earn games, you have to complete game missions. In return, you receive NFT rewards and tokens. You can then trade the NFT rewards and tokens with fiat currencies or cryptocurrencies.
In games like Axie Infinity, you can earn up to $15 an hour by breeding your digital pets. The Philippines have the largest base of Axie Infinity players. The revenue generated from Axie Infinity was so immense that the Philippine government decided to impose taxes on income received from Axie Infinity.
In August 2021, the NFT market of Axie Infinity crossed $1 billion. There are over 1 million registered daily active users on the platform.
Other play-to-earn games are Sorare, Guild of Guardians, Blankos etc. Blockchain games are decentralised and give the players more control over their assets. These games have become the core of the metaverse space too. Decentraland and sandbox were majorly blockchain games that have expanded to build their own virtual worlds.
NFTs will have a bright future as these games develop in future and merge with a more advanced metaverse.
Flourishing NFT Art Market
NFT arts have played a major role in taking the NFT era into a millennium. In the months of March to July, the sales of NFT art surpassed $150,000 last year. Last year, NFT art sales reached $11 million.
Beeple’s digital art – Everydays The first 5000 days sold for $69.3 million made history as being the most expensive NFT art. However, The Merge by Pak was sold on Nifty Gateway for $91.8 million surpassing Beeple’s record.
World’s famous auction houses and art galleries like Christie’s, Art Basel and others have entered the NFT art market. Online art exhibitions and NFT exhibitions on Metaverse has pushed the NFT arts market to new heights of success.
The unique functionality of NFTs has given artists and buyers a safe and secure way to sell and buy digital art. The digital token of right to ownership and authenticity saves buyers from fraud and gives artists their due credit.
NFT digital art markets like Nifty Gateway, Opensea and others saw an insane increase in sales. Opensea’s overall sales in the year 2020 were $20 million while in January 2021 alone the sales hiked to $8 million.
One such platform that is contributing to the NFT space is NFTICALLY. It is a global of kind NFT marketplace creator that empowers you to launch your own white label NFT store. The platform has witnessed an immense growth of 138% MoM in the past 6 months.
NFT art sales on Nifty Gateway in December 2020 were $29.54 million. However, it multiplied 2.5 times to reach $76.79 million in February 2021.
The numbers are proof of constantly increasing NFT art sales which is predicted to continue in 2022.
NFT Avatar Casting
According to the Stereoheadz founder Jace Kay, NFT avatar casting will take off in 2022. It will take the NFT era to achieve new milestones this year. NFT avatar casting is a way for beneficial than giving the IP rights.
NFT avatar casting allows artists to create their own versions of the NFT meme and earn royalties. Artists get a chance to contribute to the bigger NFT collection and be a part of the brand.
Stereoheadz and BAYC allow artists to mint their own versions of the collection and put it up for sales.
The popularity and the expansion of usage of NFTs will only grow with time and as the technology around them develops. The year 2021 only laid the groundwork to establish the NFT, the development of the ecosystem is still underway. We need more energy efficient minting, storage efficiency, interoperable and friendly regulations for NFTs to prosper in 2022.
80% of the consumers believe in the online presence of a brand. People are more interested in buying branded NFTs. That is why major brands like Adidas have collaborated with BAYC to release Adidas NFTs. It will expand their reach and interaction with the consumers in digital spaces. Analysts even consider that by the end of this year every company will need an NFT strategy.
Paul Veradittakit, the partner at Pantera Capital, said “NFT projects in 2022 will show substantially more diversity in use cases and will reconfigure how we interact with and think about ownership of digital media more broadly.”