Over the past two years, non-fungible tokens (NFTs) have become one of the most active and visible aspects of Web3.
The data stored on the NFT blockchain can be associated with files that include various forms of media such as photos, videos, and audio. In some cases, it may be related to material things. The owner of an NFT often owns the ownership of the data, materials, or objects associated with the token, and these tokens are usually bought and sold in niche markets. NFT growth was meteoric in 2021, but it has not been very stable since then and appears to have fallen sharply in 2022.
Why NFTs have skyrocketed in popularity in 2021
In 2021, the two most active markets for NFTs were collectible art projects and the video game industry. NFTs have ushered in a new era of video games, which has led to the proliferation of new types of games, such as blockchain-based games that allow you to earn money that gives players gaming advantages. Users now have the opportunity to own in-game assets for the first time and potentially benefit from those assets by trading them on NFT platforms such as OpenSea.
Axie Infinity, which included both NFTs and their original cryptocurrency, has become the most popular crypto game overall. The total turnover of the Axie NFT market is $1 billion. In addition, according to a report published by Cointelegraph in March of this year, games accounted for two-thirds of NFT transactions for blockchain games in 2021.
The gaming industry can help make NFTs popular due to their huge popularity. Pavel Baines, executive producer of Mixmob, a strategy card racing game, told Cointelegraph:
“NFT in crypto games is a huge tool and probably one of the top three factors driving the mainstream adoption of crypto. Right now, the biggest hurdle we’re facing is that the games aren’t very fun to play. Some people will say: “Oh, the setup process is bad … Using a wallet.” Encryption is not perfect. You must get rid of it. I don’t believe it. Kids will go through pain to get what they want if it’s fun.”
Fear of missing out also seems to play a big role: the massive success of photo-evidence rallies such as the Bored Ape Yacht Club (BAYC) has risen from a new price of $300 to $3.4 million per rare golden monkey. .
Whatever it is, there are usually two types of followers: those who see the potential in a trend and want to stick with it, and those who join because others do. NFTs are no different.
How NFTs worked in 2022
NFT sales remained very strong in the first half of 2022, with cryptocurrency users spending $2.7 billion mining cryptocurrency during this period. But, despite a strong start to the year, there were also shortcomings in the NFT space.
Earlier this year, BAYC ground floor prices fell below $100,000, but only to recover, with the cheapest Bored Ape recently selling on OpenSea for 73 Ether (ETH) ($125,000).
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Users have also lost their boring monkeys this year due to user error. Fat finger mistakes have resulted in hundreds of thousands of boring monkeys being sold at a much lower price. For example, Ape #835 was sold for 115 Dai on March 28, and Ape #6462 sold for $200 (USDC) coin on May 15.
OpenSea’s daily NFT volume is down nearly 99% in September from its May 1 peak of $405.75M, with daily volume at press time of $10.29M. In terms of individual pools, BAYC currently has only $400,000 in daily turnover, according to DappRadar. As of 07:20 UTC October 3rd, according to DApp Explorer, there is no CryptoPunks trading volume.
According to experts, depending on the current market conditions, fluctuations in the cost of NFT projects can be expected. Yaroslav Shakula, CEO of Yard Hub, a platform for NFT, Web3 and blockchain entrepreneurial ideas, told Cointelegraph:
“NFTs have certainly been hit by the bear market, but in many cases less severely than cryptocurrencies and traditional altcoins. What happens next depends on the global political and macroeconomic situation. All tech stocks and risky assets are now moving against the US dollar, so price volatility can be expected. NFT in the short and medium term.
Despite these low volumes, NFTs still have a clear picture.
Many people may have noticed a significant increase in the number of profile pictures of people on Instagram and Twitter that include a picture of a monkey, a bear, or another NFT picture.
In January 2022, Twitter announced that users would officially be able to use NFTs as profile pictures through Twitter Blue.