As the crypto markets plummeted, many NFT collections also lost value. Top crypto VCs and Web3 founders discuss the future of NFTs. We have prepared the evaluations and comments of the experts for our readers.
Along with the crypto market, NFT tokens also lost value
Celebrities from Snoop Dogg to Reese Witherspoon have used six-digit JPEGs as their profile pictures. This created an unbelievable headwind for NFTs last year. Beeple’s ‘Everydays: The First 5,000 Days’ NFT has sold for more than $69 million at Christie’s. Also, Dolce & Gabbana and the NBA have jumped on board with their own collections. However, as the broader crypto market plummeted, NFT tokens also moved along. According to Messari, Ethereum is widely used to buy and print digital assets. ETH is down 78.7% since its all-time high (ATH) in November.
According to the DappRadar industry report, top-of-the-line NFT collectibles have also dropped in value. Bored Ape Yacht Club (BAYC) floor prices fell 38% last month. OpenSea, one of the largest NFT markets, experienced a 65% drop in trading volumes and a 14% drop in user numbers in the same time frame. However, Hopeful Web3 VCs and founders say that NFT tokens will stay in space until 2032, despite falling prices. In fact, they suggest it will eventually hit the mainstream.
“Entrepreneurs will use NFTs in ways we haven’t thought of yet”
Benjamin Cohen, founder of crypto venture firm Web 3 Equities, says the majority of NFTs won’t be featured on social media accounts as a way to stretch a collector’s fortunes. Instead, they’ll have a wide variety of use cases, including music, gaming, ticketing, virtual real estate, house titles, medical records, and even collateral for loans. Virtual real estate developer Republic Realm has announced that it has purchased a property in its metaverse game The Sandbox for $4.3 million. In March, an anonymous borrower took out an $8 million loan backed by a collection of 101 CryptoPunk NFTs. Benjamin Cohen has this to say about it:
Over time, entrepreneurs will use NFTs and smart contracts in ways we haven’t even thought of yet. They will also find creative ways to use them far beyond the scope of status symbols.
“Businesses will find great ways to incorporate NFTs into their day-to-day business”
Josh Katz, CEO of blockchain ticketing platform YellowHeart, also shares his views, although they have established different firms. Katz also agrees with Cohen that NFTs will move towards more utility uses. By weeding out ticket NFTs and third parties like Ticketmaster, Katz says people will eliminate ‘middlemen’. Working with musicians like Kings of Leon and Maroon 5, YellowHeart has announced a partnership with Tao Group Hospitality to sell tickets to their venues as NFT. Josh Katz explains:
Businesses will find great ways to incorporate NFTs into something we do every day right now. Most projects will have will launchers. It is possible to cancel the queue for tickets, get to the venue early or get a free beer.
“In 2032 NFT tokens will be more accessible than they are now”
According to Stephen Young, founder and CEO of NFT loan marketplace NFTfi, in 2032 NFTs will be more accessible than they are now. Thus, most internet users will be able to afford them. “A lot of NFTs are expensive right now,” Young said. Because blockchains are expensive and slow. That’s why sensible use cases require high-value NFTs,” he says.
To print or buy an NFT on Ethereum, investors and creators have to pay gas fees. These costs arise when performing any function on the Ethereum network. Sometimes it’s even possible that these fees are more expensive than the NFT itself. However, other Blockchains and Layer-2s like Solana or Polygon have faster transaction times at lower costs.
Mainstream adoption and barriers
Andrew Steinwold, managing partner of NFT investment firm Sfermion, says gaming will be the most immersive use case. “I think NFTs in games are a really simple selling point for the user,” Steinwold says. Blockchain gaming, unlike the broader crypto market, has been stable in recent months. According to the DappRadar report, around 1.15 million daily active wallets interacted with Web3 games in May. However, it fell 5% compared to the previous month. Popular games include Splinterlands and Illuvium.
Steinwold says video games are ‘fun and easy to understand’ for people of all ages. He notes that this lowers the barrier to entry into his ecosystem. Blockchain-based gaming or games integrating tokenized assets into Blockchain grew 2,000% last year, according to data. We’ve witnessed tremendous growth in NFTs. However, there are bad actors who pose many obstacles to mainstream adoption.
Critics are wary of the ecosystem due to security concerns, allegations of fraud and money laundering. Earlier this month, Yuga Labs, the creator of the Bored Ape Yacht Club, said its Discord server was compromised and a hacker dumped $360,000 worth of Ethereum-based NFTs at the time. In January, the anonymous founders of an NFT collection called Frosties disappeared after withdrawing $1.3 million worth of funds from their investors. Blockchain research firm Chainalysis comments in a recent report:
Money laundering, and especially transfers from sanctioned crypto businesses, pose a huge risk to NFTs to build trust. Markets need to be watched more closely by regulators and law enforcement.
Love them or hate them, NFTs don’t seem to be going away anytime soon. Investment bank Jeffries projects a market cap of over $80 billion by 2025. It also forecasts a massive percentage growth over the next five years.
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