Non-fungible tokens (NFTs) took the world by storm in 2021 with buyers spending millions of dollars on digital collectibles across the art, entertainment, music, and sports industries. As NFTs grew in popularity, the sector attracted the attention of celebrities like Logan Paul, Justin Bieber, and Serena Williams, bringing digital collectibles into the mainstream. We’ve seen a new generation of collectors, investors, and fans move from collecting physical items like baseball cards or Beanie Babies to spending over a million dollars on a boring app.
In January 2022, NFTs were experiencing an all-time high trading volume of US$5.8 billion. But, within a few months there will be a huge decline in the market. Following the collapse of Terra USD and Luna, the collapse of Bitcoin’s price and the industry-shaking recession of FTX, the NFT market became one of the many victims of the “Crypto Winter”, with trading volume falling to US$395 million in August. . , a 30-month low, and traders are preparing for further declines this month. The steep decline has artists, collectors and traders wondering if the industry is doomed forever.
While it’s true that picture-for-profile (PFP) NFTs aren’t growing as fast, the value of NFTs has evolved to extend beyond price, and their use is growing far beyond just a static image in one’s wallet. .
NFTs have the ability to tokenize real-world assets and can provide exclusive physical and digital experiences for holders. We are already seeing this concept of tokenization implemented on a large scale.
Earlier this year, the European Commission released its Strategy for Sustainable and Circular Textiles, a new and innovative solution “to shape the future of Europe’s textile and fashion industry with a digital product passport.” The digital product passport will be used as a tool to share details about a product’s environmental sustainability, including data on a product’s composition and environmental impact. By implementing this measure, the industry will be able to better understand global sustainability goals and increase clarity for consumers while advocating for environmentally conscious choices. This form of digital asset – although it’s not a traditional NFT – is where the future is going.
As the business landscape of digital assets continues to expand from traditional use cases of NFTs to tokenization of real-world assets, mainstream and luxury brands are also taking advantage of this technology. NFTs provide brands with a new way to engage with consumers and provide additional real-world benefits, rewards, and experiences. ASICS, a well-known athletic shoe brand, launched a large-scale brand loyalty program on the Solana blockchain, leveraging NFT technology to excite and activate the company’s core audience. Nike, Doritos, and hundreds of other brands are finding ways to leverage Web3 and NFT technology to attract a new generation of consumers driven not by speculation but by utility.
In the rapidly evolving digital landscape, picture-for-profile NFTs still have a place, but they’re not going to be the product that drives Web3 mainstream adoption. Public financial interest in NFTs has slowed as we knew it, but the willingness and creativity of brands to leverage digital assets is growing. Loyalty programs, exclusive experiences, digital content and rewards, our own digital identities and data ownership will define the next generation of NFTs and may actually be the killer use case that engages the next billion people on Web3.