NFTs are bringing the mainstream to crypto in a way Bitcoin cannot
These days, it seems non-fungible tokens (NFTs) are making headlines everywhere, from crypto forums and news sites to even the most traditional news sites. Indeed, in recent months NFTs have achieved what even Bitcoin has struggled to do in 12 years: they have managed to bridge the world of cryptocurrency and traditional finance. Today, we are seeing names as big as Visa making forays into the NFT space and, as their popularity continues to explode, can it be that NFTs will pave the way to mainstream adoption of digital assets?
It is perhaps surprising that a relatively new and somewhat esoteric part of the digital asset market is enjoying so much popularity with investors that have not ventured into cryptocurrencies before. NFTs have managed to bridge this divide by appealing to a wider demographic than any other digital asset so far, with links to the creative, sports, and online gaming industries opening NFTs up to millions of new users.
NFTs are units of data stored on a digital ledger that certify a digital asset to be unique and not interchangeable. This allows NFTs to represent one-of-a-kind digital items such as digital art, including photos and videos, and even tweets. Increasingly, NFTs are also making some noise in the world of online and mobile gaming.
The digital gaming revolution
The gaming industry is a great example of how NFTs can potentially bring new revenue streams into the world of digital assets. According to research from Newzoo, the online gaming market is set to surpass $200 billion in revenues in 2023, with the market counting more than 2.6 billion gamers worldwide in 2020.
This is a huge proportion of the world’s population — more than a third, in-fact — that could be brought into the world of digital assets via NFTs, and we are already seeing evidence of this happening. For example, the mobile game Axie Infinity is now apparently the most valuable NFT collection ever, having generated $1.7 billion in total sales.
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Axie Infinity is a game that can be played on an Android phone, iPhone or PC, with similar rules to Pokémon. It involves battles against computer-generated or real-life opponents using a team of three creatures called Axies with various skill levels. What makes this different from other online games is that the Axies are in fact NFTs, and gamers earn tokens through gameplay which can be used to breed more monster NFTs. What could be a better incentive for digital asset adoption?
NFTs have many applications in the gaming world, from in-game customization, such as enhancing a character with so-called “skins”, to allowing gamers to sell or purchase digital property in a virtual world, such as part of a virtual map.
Bridging the gap
Increasingly, we have also seen interest in NFTs from unexpected sources. For example, last month, global payments corporation Visa announced that it had bought a CryptoPunk — an NFT-based digital avatar — for nearly $150,000 worth of Ether (ETH). The firm expects NFTs to play a major role in the future of retail, social media, entertainment, and commerce.
Visa is far from the only well-known company making a foray into the NFT space, though. Last week, 254-year-old New York auction house Christie’s announced it will be handling the sale of Art Blocks’ NFTs on October 1, to be paid for in ETH. Christie’s has already enjoyed some big successes with NFTs, having sold one created by digital artist Beeple for $69 million back in March. Thus, it is perhaps no wonder the auction house is charging full steam ahead into the brave new world of digital assets.
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NFTs also appear to be propping up the price of several digital tokens, including Solana’s native token, SOL, which has soared in the last few weeks. One of the reasons for this looks to be Solana’s recently launched NFT marketplace, Solanart, as well as its Degenerate Ape Academy, an NFT project representing a collection of 10,000 unique pictures of cartoon apes. The apes have turned out to be extremely popular, with Solana selling one of its apes for $1.1 million on Saturday, September 11. In addition, solanart.io is positioning itself as an open sea alternative on the Solana blockchain.
Huge growth potential
Although we have seen astronomical growth in the size of the NFT market in recent months, with sales volumes shooting up to $2.5 billion in the first half of 2021 alone, this market remains very much in its infancy. However, some are predicting the NFT market could get 1,000 times bigger to match the global demand for collectible items. As such, NFTs represent an opportunity for those looking for “the next big thing” in digital assets, though of course returns are never, ever guaranteed.
Perhaps most interesting, though, is the way that NFTs seem to be igniting the mainstream imagination. Unlikely as it is, digital collectibles seem to be bridging the gap between traditional and digital finance and attracting a far wider demographic into the world of digital investing than Bitcoin has so far achieved. And as they increasingly become a gateway for more mainstream adoption of cryptocurrencies, it will become ever more difficult for naysayers to dismiss them as just another fad.
