What Led to the Decline In Interest?
Back in the early days of their popularity, NFTs were mostly treated as crypto collectibles and were quite prominent in the digital art market. However, as the bubble continued to grow, the sector created the means for its own downfall.
One of the major issues was market saturation, as the number of collections skyrocketed, creating an overabundance. Along the way, many of the projects were put together in haste to make use of the hype, leading to decreased quality which was already in oversupply.
This also attracted scammers, so the number of scams skyrocketed as well. It also didn’t help that the sector reached its peak right at the start of the year-long crypto winter. This made many investors cash out and distance themselves from all things crypto when the prices started going down.
However, even outside of the crypto space, the global economy was in trouble, facing inflation and uncertainty, which led to reduced discretionary spending, a decline in speculation, and a severe reduction of hype about NFT platforms, no matter how innovative NFTs seemed.
Of course, regulatory uncertainty only contributed to the situation, and so did the regulators’ crackdown on crypto firms, especially in the US.
Is the NFT Market Dead or Evolving?
Current NFT Market Trends (2024)
Once the crypto sector started recovering in 2024, this expanded somewhat to the NFT sector as well, leading to a number of NFT trends 2024. The tokenization of physical assets started becoming popular, as tokenized assets are easier to manage than physical ones.
The NFT ecosystem once again saw interest in integration with metaverse, with virtual real estate gaining traction once more. And, of course, enhanced NFT utility started seeing demand again, leading to an increase in NFT minting of those tokens that were more than just a digital form of art.
NFT holders want to get something practical out of their coins, not just to own digital collectibles. So, NFT use cases became the first thing that buyers were looking for. This also led to the rise of hybrid NFTs, which had tangible real-world value but also represented digital assets at the same time.
Shifting Perceptions of NFTs
Just like with cryptocurrencies, the NFT sector eventually started attracting businesses and brands as well, which is another notable part of 2024. Especially since utility NFTs started becoming big.
Specifically, industries and brands started using NFT innovation for real-world use cases, such as ticketing and selling NFTs that represent membership for their buyers. They are not just adopting NFTs — they are adapting them to the real world, which could bring back NFT value and reintroduce them to the digital token economy in a more solid way.
Key Sectors Keeping NFTs Alive
NFTs In Gaming and Metaverse Applications
Of all the sub-sectors of the crypto and blockchain industries, NFTs connected the most with gaming and metaverse. Back when NFTs first blew up, there was a rise of major blockchain games that adopted NFT technology. Projects like Axie Infinity, Gods Unchained, The Sandbox, Star Atlas, and many others still use NFTs to this day.
In most of these games, NFTs represent in-game items, skins, playable characters, weapons, and more. Many believe that it was these projects that ensured that the NFT sector could answer “no” to the question is the NFT market dead.
But, apart from the games, NFTs were also used in the metaverse sector. Projects like Decentraland, which offers virtual real estate, sell their plots of land in the form of NFTs. By buying an NFT token that is connected to virtual real estate, you become its owner and can prove that ownership for as long as you have your token.
Digital Art and Beyond
And, if you were wondering is the NFT art finance dead, the answer is also a solid no. To artists, NFTs are a perfect way to create their art and assign ownership, especially when it comes to digital art. Given how easy it is to copy/paste and download digital art, having NFTs connected to the original has become a crucial part of many artists’ creative processes.
Major art platforms like OpenSea have dominated the sector over the past few years, even though OpenSea itself is now considered a failed platform.
There were some controversies in the art sector concerning NFTs, such as their environmental impact, art theft and plagiarisms, the lack of copyright clarity, and the ongoing discussion of the actual value of digital art in the first place. While some might say that art is art, digital art is different from physical art in many ways, and many have felt that this was not addressed adequately.
Are NFTs a Worthy Investment in 2024?
Challenges Investors Face
Unfortunately, NFT issues do not end with the artists, scammers, and the market itself. There are also challenges that the investors face, with one of the biggest ones being the declining return on investment (ROI).
The NFT market saw a meteoric rise in 2021 and 2022, but since then, investors have experienced diminishing returns. This particularly hit those who bought it during the NFT market’s peak, only to see a decline in prices, demand, and overall interest. For a time, the NFT sector was at the brink of becoming a dead trend, so it is no surprise that people are asking is NFT dead. In fact, such questions have been common for years.
But, as we have seen, the NFTs have seen their own evolution during the hard times, and certain sectors allowed it to survive. Now, with the crypto market seeing a sharp recovery, the NFT sector could see a recovery of its own.
Opportunities in the Current Market
The broader NFT market has suffered from fluctuations, but there have been several niche applications that emerged and are even seeing strong growth potential.
We already discussed that NFTs in crypto gaming and the metaverse still have strong use cases, and as long as these sectors remain strong, so will the NFTs. The sector has also seen a growing usage of NFTs in intellectual property and licensing, and as mentioned, real-world asset tokenization is still strong for its many benefits.
Utility NFTs have blown up in ticketing, event access, and as proof of membership, which could also be an interesting area to explore. They are transforming the way events, concerts, and ticketing work, and while the transformation is slow, it certainly enables the sector to combat NFT skeptics who are asking “Are NFTs dead?”
Expert Opinions and Market Predictions
Finally, it is worth considering the experts’ opinions on the state of NFTs, as well. After all, many of them not only have a deep insight into blockchain trends but can even shape the opinions of the masses by sharing their own.
For example, Yield Guild Games’ co-founder, Gabby Dizon, said that NFTs have the potential to redefine how players interact with virtual worlds. This comes from the fact that NFTs offer true ownership, unlike traditional in-game purchases which can be revoked at any time if the game company decides to do so. But, once you own an NFT, the asset it is tied to is yours forrever.
Digital artist and NFT creator Mike Winkelmann, also known as Beeple, also said that the digital art space is evolving beyond just the creation of NFTs. However, Beeple said that NFTs give artists the tools to monetize their work in new ways, whether through royalties, collaborations, or by owning the full rights to their creations.
And, an NFT investor and managing director at Magnum Real Estate Group, Megan Kaspar, noted that tokenizing real-world assets like real estate or luxury goods through NFTs could open doors to global liquidity and fractional ownership.
As for the experts’ predictions, they differ from person to person, which is hardly surprising. In the art sector, many expect NFTs to rise in the near future due to the growing demand for interactive and dynamic NFTs. Real-world asset tokenization is also growing rapidly, with experts expecting real estate and luxury goods tokenization to skyrocket, attracting institutional investors soon.
As for gaming, some gaming studios already tried to incorporate NFTs into their games, which was not received well by their players. However, this could change with the sector’s maturing, which is what the experts expect as well, predicting that gaming NFTs will become more ubiquitous later down the line.
