Print
Email
The non-fungible token (NFT) surged in popularity in 2021. This was largely driven by the high-risk appetite of investors and the rise in the prices of cryptocurrencies. However, after the initial hype, which followed their rise in popularity, NFT sales have dropped significantly in 2022. According to TechInsight360 estimates, NFT sales declined by 41% in H1 2022 when compared to same period last year.
There are a number of factors responsible for the decline in NFT sales, one of which is the consistent increase in interest rates by central banks over the last few months. This has prompted investors to dump their risky assets, including NFTs and cryptocurrencies. Notably, the price of Bitcoin is hovering around US$19,000, which is significantly down from its November 2021 peak of US$69,000. Furthermore, the decline in NFT sales has also resulted in revenue loss for marketplaces. For instance,
Along with macroeconomic challenges and intense cryptocurrency sell-off, the lack of clear use cases for NFT is another factor responsible for the decline in NFT sales. Notably, NFT utility is a critical component to the long-term growth of the sector. This is because it adds value and functionality to the technology. Digital artwork is one of the most widely known use cases for NFTs. Play-to-earn games are another, which also gained widespread popularity in 2021. However, for the NFT market to reach mainstream adoption, there need to be more use cases that can add value to NFTs.
In terms of real-world utility, NFT ticketing is a promising use case, which is gradually gaining momentum. Notably, NFT ticketing offers eventgoers and fans an immersive experience. Furthermore, ticketholders can receive extra benefits such as access to merchandise, backstage area, and other items. Additionally, NFT ticketing can reward various stakeholders, including artists and event organizers, with recurring royalties.
Blockchain technology makes it easier to know when and where the NFT ticket was purchased. Moreover, through smart contracts, NFT tickets can hold a fixed price, thereby preventing scalpers from inflating the prices of tickets in the secondary market. With so many benefits to offer, NFT ticketing is expected to gain widespread momentum over the next three to four years.
TechInsight360 expects that putting more focus on NFT utility will bring positive changes in the sector, thereby again driving the popularity and growth of the industry from the long-term perspective. Furthermore, NFT utility will also encourage ownership among people globally, which will subsequently serve as the catalyst to drive more widespread adoption.
In addition to increasing the focus on the utility of NFTs, brands also need to have a strong strategy that spans their business model for particular use cases. Notably, many of the brands have entered the NFT industry without a proper strategy and plan. This has resulted in confusion among consumers as well as investors, thereby the decline in popularity over the last few quarters.
While the sector is expected to remain under pressure due to the impact of current macroeconomic factors and a decline in consumer and investor confidence in NFTs and cryptocurrencies, TechInsight360 expects the market to rebound from the medium-term perspective. However, brands and businesses must put more focus on the NFT utility to drive mainstream NFT adoption over the next three to four years.
To know more and gain a deeper understanding of the global NFT market, click here.
TechInsight360’s reports combine detailed view on market opportunity, best practices, emerging business models, and market innovation to help clients identify unique opportunities.
