The continuous growth in the demand for NFTs is a clear sign of the formidable popularity of non-fungible tokens. Furthermore, the market for non-fungible tokens in 2021 is not showing any signs of slow down. In the minor gap of three months, the combined market capitalization of renowned NFT products escalated by around 1785%.
Many of the NFTs of Beeple is selling out instantly, especially with the most high-profile NFT sale of $70 million in his name. In addition, celebrities are also joining the NFT bandwagon with their individual flagship NFTs, thereby creating favorable prospects for NFT market growth in 2021.
Such explosive trends with NFTs have been responsible for the radical growth in sales volume of NFT marketplaces as well as the values of NFT-based tokens. On the other hand, many experts have also pointed out that the favorable returns with NFTs are the result of higher speculation. So, could the NFT growth trend be a financial bubble waiting to burst? Let us find out more about the prospects for the non-fungible tokens market in 2021.
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Understanding the NFT Phenomenon
The year 2020 witnessed profound growth in popularity around NFT. The most interesting factor about the NFT community is the introduction of a wide spectrum of NFTs with ease of use for beginners. On the other hand, certain statistics report that around 57% of crypto users had never heard of NFTs. In addition, majority of the NFTs were used in gaming at 33% and collectibles at 47%.
Such numbers also indicate another perspective for growth of non-fungible tokens in 2021. Many individuals do not have any idea of interacting with NFTs, thereby implying that common knowledge regarding NFTs is restricted. So, more industries need to join in the adoption of NFTs across different spaces to ensure their expansion and stability.
Now, let u take a look at what NFTs really are before reflecting on the state of NFT in 2021. Non-fungible token is basically a fixed data unit that provides representation for a specific product or item. Non-fungible assets are associated with rarity or uniqueness. Therefore, it is not possible to exchange NFTs for other tokens, thereby differentiating them from tokens such as Bitcoin.
NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the token.
Non-fungible token represents a unique digital asset and is different from fungible assets such as Ether or Bitcoin. Fungible assets are equal in value and could substitute one another in transactions. However, NFTs are completely different and need massive virtual registries for their operations, thereby bringing in the need for blockchain. Blockchain platforms such as Ethereum, Bitcoin, and Flow have already established blockchains for NFTs.
The tokenization of real-world assets on the blockchain helps in ensuring secure verification of information related to specific entities. Non-fungible tokens have also been implemented for identification of various types of data such as audio and visual files. Furthermore, NFT has also found applications in many fields such as the gaming industry, art, and other industries, thereby establishing favorable chances for NFT market growth in 2021.
• Gaming Industry
The video game industry, valued at around $160 billion, is all set to grow more than $200 billion by the year 2023. The popularity of NFTs in the gaming industry is probably one of the reasons to consider the chances of a good run for non-fungible tokens in 2021. Players have many online games where they can play for winning points.
Constantly playing the games helps players in accumulating assets that they can trade with other players using NFTs. Players could accumulate more tokens with their experience and purchase better tools for improving their gaming expertise. Therefore, the gaming industry presents highly promising and lucrative prospects for the growth of NFT in 2021.
Digital artists had to experience various issues in ensuring that their work reached potential buyers. However, the example of Beeple has encouraged digital artists to perceive the simplicity of using NFTs to make transactions. Artists can use tokens for showcasing their work to new clients on blockchain platforms. Since tokens have a descriptive function, they can carry important data regarding the artwork.
NFTs can feature information such as the list of previous owners and the cost featured on the token. So, the potential for use of non-fungible tokens in 2021 in the art sector would continue to gain traction. Most important of all, the introduction of NFTs in the field of art could take away the role of middlemen. Lack of intermediaries and transparency regarding product information could help in improving the adoption of NFTs on a large scale in the field of art.
• Other Areas of Application
Some of the other areas of applications for NFTs include the real estate industry, gaming industry, and hack-proof data storage. The use of NFTs in identity management will also offer a credible advantage for the growth in adoption of NFTs. The individuality and security of identity certificate with NFTs allows better opportunities for using NFTs to prove ownership of assets. Non-fungible tokens are credible alternatives for revolutionizing information ownership and data privacy. Therefore, they can find substantial opportunities for growth in 2021.
Must Read: How To Buy And Sell NFTs
Growth in NFT Marketplaces
The major NFT marketplaces such as Opensea and Rarible have witnessed formidable growth in sales by 50 to 100 times in the last three months. For instance, Opensea has witnessed around $5 million as cumulative sales in the first week of January 2021. Since then, Opensea has seen a growth of its cumulative sales to $100 million. According to a researcher, Mira Christanto, Opensea supported a blockchain protocol named CryptoPunks & HashMasks.
Twitter co-founder and CEO Jack Dorsey has sold his first ever tweet as a non-fungible token (NFT) after a two week bidding war for $2.9 million (£2.1m).
The protocol offered issuance capabilities while also enabling transactions on Ethereum. The researcher added that cumulative sales for the organization had crossed the $100 million mark for more than 50,000 users. Therefore, many high-profile NFT projects and enterprises have started to make news, thereby presenting favorable signs for non-fungible tokens market growth in 2021.
Presently, the NFT market is collecting huge investments from exchanges, companies, traditional VC firms, and funds from the crypto as well as tech sector. Opensea has been successful in raking in an investment of $23 million in a round under the leadership of Andreessen Horowitz. The massive investment presents good news for the growth of non-fungible tokens in 2021. The trust of a leading venture capital firm in the long-term potential of the NFT market also strengthens the possibilities of non-fungible tokens market growth in 2021.
Another NFT platform, Recur, collected $5 million from some of the renowned crypto funds and individual investors. The platform involved notable names such as Gary Vaynerchuk, Delphi Digital, and Hashed for drawing investments to develop branded NFT Fan Experiences.
Similarly, an NFT platform on the Binance Smart Chain, known as Blind Boxes, has completed a strategic sale successfully. Subsequently, it was put up for public sale on a launchpad and achieved a $590 million valuation with full dilation. Achieving such a unique feat within days of launching clearly showcases the favorable prospects for NFT market growth in 2021. Interestingly, many other new high-profile NFT platforms are also about to make their mark.
How Will NFTs Fare From Here?
NFTs have definitely hit the mainstream news with a $70 million dollar digital artwork sale. However, they have been around in the crypto space since 2017. Used for collectibles known as crypto kitties, non-fungible tokens helped developers in creating unique assets. Gradually, the crypto wave completely dominated all discussions, and NFTs were nowhere to be seen. However, the existing trends show a promising path for non-fungible tokens market growth in 2021.
As of September 2020, the weekly volumes of NFT-based transactions reached the $1 million mark. In a brief gap of three months, the weekly volumes of NFT-based transactions reached $2 million in December 2020. Another interesting highlight in the present NFT transactions is the distribution of transactions throughout different apps and use cases. This was a comparatively better improvement in comparison to 2017, when trading volumes were drawn primarily from single applications.
Assumptions regarding the future for NFT in 2021 largely depend on the prominence they enjoy in the crypto space. Bitcoin features high valuation currently, and Ethereum 2.0 has been successful in launching its genesis block while decentralized finance (DeFi) continues to make a mark.
However, NFTs continue to dominate a certain section of news in the crypto and blockchain space. Furthermore, NFTs are also gaining the support of celebrities. A renowned YouTube star and gamer, Pewdiepie, recently announced his collaboration with Wallem, a blockchain-based game. The game utilizes NFTs for trading skins and other in-game assets.
All the trends existing in the present situation for non-fungible tokens clearly present favorable promises for them in 2021. However, the lack of awareness regarding NFTs can be a huge setback in driving their adoption across more industries. The growth of non-fungible tokens in 2021 should not be the only benchmark for establishing their potential for growth in the future. So, it is essential to draw clear objectives for adoption of NFTs and to understand their capabilities. Just like every new technology, people will take time to realize the larger advantages posed by NFTs. Start learning more about NFTs and their use cases with our NFT Fundamentals Course right now!