Towards Next Generation Asset Class – Can NFTs Outlive Hype as New Gold of Crypto Economy?
The NFT market grew by more than 2,000% to surpass $2 billion in Q1 2021 sales. It sprung to $2.5 billion by the first half of 2021. NFTs maintained more than 1% of the Ethereum and 0.17% of the Bitcoin market capitalization in 2020. NFTs unfold a new frontier in the use case of blockchain technology to monetize digital creative content. Slowly but surely, they are proving to be bigger than an art fad by finding real-time use cases in new horizons.
The explosive trends in news, deals, and company filings related to NFT in 2021 indicate a big jump in the interest for the new crypto asset, which can be primarily attributed to its enablement of novel ways to commercialize digital creative content, as well as favorable returns from high speculations. Anyone like an artist, musician, GIF maker, graphic designer, or AI expert can create an NFT to represent their digital creative work and list it in a marketplace for others to bid or set a fixed selling price.
What are the market dynamics in NFTs?
NFTs are digitally unique, no two are the same. Forging an NFT containing a digital media file like art or music is almost impossible. It eliminates the need for middlemen and can be sold on any NFT market or peer-to-peer. While cryptocurrencies carry a monetary value, NFTs are valued as per their uniqueness and aligned as a collector’s item. While surfaced for the first time arguably in 2012, NFTs shot to fame in 2017 and from then became increasingly popular among artists, collectors, and investors. In 2021, public awareness of NFTs reached peaks after Indian entrepreneur Vignesh Sundaresan purchased an art NFT for over $69 million.
NFT marketplaces are the platforms where NFTs can be created, displayed, and traded, while NFT wallets are where NFTs are stored and maintained. OpenSea is a free marketplace that offers ownership of a variety of assets including artwork, sports collectibles, virtual worlds, trading cards, and domain names. Many of the emerging wallets such as Fortmatic, Walletconnect, and Enjin claim to offer advanced security features such as biometrics and auto lock as well as provide native support for multiple blockchains.
What are the emerging concepts in the NFT adoption?
Crypto for covid relief: Emerging economies such as India and African countries are launching relief projects to auction digital artwork in the form of NFTs to raise money for COVID-19 relief and vaccine development.
Fractionalized NFTs: F-NFTs enable smaller investors to pool resources to purchase fractional interests of a digital asset. For example, a collection of fifty CryptoPunks can be fractionalized into millions of tokens.
Re-fungibility: The concept of refungibility attaches the NFT to a new ERC-1633 standard, which helps the content owner to enable shared ownership to multiple buyers for the single NFT.
Digi-vaccine certificates: The San Marino General Council has approved an incentive for a green vaccination pass that uses VeChain technology and NFTs.
Digital IP: NFTs would enable the design of patent marketplaces where their members can buy, license, finance, sell, refer and commercialize patents. IBM and IPwe are already designing such a patent marketplace.
Country-wise trend of VC investment activity, NFTs (2021)
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Which are the leading startups in the NFT market?
Launch, Zora, and Verisart are a few leading startups in art & music while Dapper, Myhtical, and Skymavis are leading start-ups in the gaming sector. There are startups that dominate the NFT development in sports, real estate, entertainment, fashion, and other sectors too.
Market report scope
| Market Size (Year – H1 2021) | $2.5 billion |
| Outlook Period | The first half of 2021 |
| Emerging concepts | Crypto for covid relief, Fractionalized NFTs, Refungibility, Digi-vaccine certificate, Digital IP |
| Companies Covered | 0xcert, 3D Robe, 4Artechnologies, Aavegotchi, Activision Blizzard, Adidas, Aimedis, Air Baltic Corp, Algorand, Alphawallet, Americorp Investments, Andreessen Horowitz, Anheuser-Busch Inbev, Animoca |
Scope
- Technology Decoding: presents the technology overview, key features, market drivers, major applications, and a market map with potential use cases and popular players (startups as well as enterprises).
- Media & Trend Analysis: highlights the technology presentation from the media perspective – major news, and lauds from the social media promoting the technology. The section also mentions the technology from company annual and other filings.
- Investment Radar: outlines the venture capital funding trends with some of the popular deals, the most funded startups, and notable investors and accelerators pumping millions into the technology growth.
- Innovation Explorer: introduces game-changing company innovations with a spotlight on startups. Select corporate-startup partnerships inclined at future product developments are also mentioned.
- IP Landscaping provides a broad-level analysis of the trends in patent filings and grants, priority countries, and key patent filers in the technology.
- The Road Ahead: summarizes the drivers and challenges, use cases that can become successful with business leaders, potential applications in new horizons, and the outlook of the technology.
Key Highlights
NFT overview and its key applications across industries, use cases, and major stakeholders in each industry, the noise created in the media, VC investment trends, real-world innovation use cases and examples related to the implementation of NFT, trends in patent filings and grants, and the future potential of NFTs.
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Key Players
Table of Contents
Frequently Asked Questions
The market size of NFTs was $2.5 billion in H2 2021.
Key emerging concepts in NFTs adoption are crypto for covid relief, fractionalized NFTs, refungibility, digi-vaccine certificate, and digital IP.
0xcert, 3D Robe, 4Artechnologies, Aavegotchi, Activision Blizzard, Adidas, Aimedis are few of the leading companies in NFT.
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