The Resurgence of NFTs: A Glimpse into the Potential Growth of NFT in 2024
A Recap of The Surge of NFTs in 2023
Major Brands Started to Embrace NFTs
In 2023, major brands such as Nike, Reddit, and Starbucks embraced the NFT phenomenon, releasing mass-market digital collectibles. These digital collectibles were not mere profile pictures but encompassed utilities and value beyond the realm of speculative investments.
Moreover, industry giants like Ticketmaster, alongside newcomers such as tokenproof and YellowHeart, began experimenting with NFTs in novel ways. Event tickets, memberships, and various forms of fan engagement became ways for exploring the potential of NFTs. This diversification of NFT applications indicated a broader shift from exclusive, high-value assets to products produced in larger quantities and sold at more affordable prices.
Inscriptions Reignited the Interest in NFT
In 2023, NFTs have recently made a striking comeback, attracting the attention of enthusiasts and investors alike. The catalyst behind this resurgence is mainly due to the introduction of inscription in Bitcoin Ordinals, a development that has transcended the confines of Bitcoin and spilled over into other networks such as Dogecoin, Avalanche, Arbitrum, and Solana. This influx of interest has not only led to major congestion and outages on these chains but has also breathed new life into the NFT market, creating a fresh wave of excitement and anticipation for what lies ahead.
The VanEck Crypto Monthly Recap for December 2023 offers a snapshot of the dynamic NFT market. Notably, the NFT volume experienced a staggering 81% surge, driven by the rising BRC-20 trading on Bitcoin and an impressive 328% increase in NFT volume on Solana. Solana, in particular, witnessed a monumental shift in investor sentiment, with its NFT volume surpassing that of Ethereum for the first time.
Ethereum, while experiencing a modest 1% increase in NFT volume, maintained its stronghold with Blur as the leading NFT exchange, facilitating 74% of NFT volume on the chain. However, the dynamics within the Ethereum NFT space indicate a nuanced landscape, with Blur's governance token, $BLUR, underperforming the market. Despite this, deposits to Blur's upcoming layer 2 network, Blast, are on the rise, and the Blast contract has achieved a Total Value Locked (TVL) exceeding $1 billion.
Source: VanEck
The impact of inscription on blockchain cannot be understated. The networks, once heralded for their scalability and efficiency, are now grappling with unprecedented congestion. The surge in demand for NFTs, fueled by inscription, has pushed these networks to their limits, leading to outages and disruptions in service.
The congestion, however, is not merely a technical hiccup; it is a testament to the soaring popularity of NFTs. As the networks struggle to accommodate the influx of users seeking to engage with NFTs, it becomes evident that the appeal of these digital assets has reached new heights. The unexpected consequence of inscription-induced congestion has inadvertently become a barometer for the rising prominence of NFTs in the broader digital landscape.
Predictions of NFT Renaissance in 2024
Bitcoin Ordinals and Mainstream Adoption
The meteoric rise of Bitcoin-based NFTs in 2023 is expected to continue its momentum into the coming year. Jason Lau, Chief Innovation Officer at crypto exchange OKX, emphasizes that educators are becoming more educated and discerning about the placement of NFTs on the Bitcoin network. The appeal of Bitcoin Ordinals, storing NFT art and data directly on-chain, lies in its ability to provide participants with the benefits of scarcity, security, and immutability inherent in the Bitcoin blockchain. This approach contrasts with the skepticism surrounding NFT projects that were perceived as quick cash grabs, as Bitcoin-based NFTs gather momentum and contribute to resurrecting interest in the metaverse.
Oh Thongsrinoon, Chief Marketing Officer of Altava Group, echoes this sentiment, stating that while NFTs faced challenges in 2023, Bitcoin-based NFTs gained traction. This resurgence is seen as a positive development for the crypto space and is expected to further enhance interest in the metaverse, signaling a potential shift in how digital assets are perceived and valued.
The Intersection of Digital and Physical
One noteworthy trend set to unfold in 2024 is the deepening connection between digital and physical assets. According to John Crain, co-founder and CEO of SuperRare Labs, the NFT space will play a pivotal role as "digital twins and certificates of authenticity." Collectors, who have shown a penchant for physical editions of NFT art, are expected to drive this significant rise in bridging the gap between the two worlds. This development not only enhances the tangible value of NFTs but also positions them as unique and authentic representations in the physical realm.
The trend of tokenizing real-world assets (RWAs) has been a major discussion within the crypto space, and this conversation is predicted to continue into 2024. Oh Thongsrinoon foresees NFTs transcending speculation and gaining real-world value through RWA tokenization. This strategy, already applied to NFT collections, offers utilities such as branded merchandise, intellectual property ownership, exclusive access, and product consultations. In 2024, NFTs may extend their influence to industries like precious metals and real estate, providing a tangible bridge between the digital and physical spheres.
Vineet Budki, CEO of Web3 venture firm Cypher Capital, echoes this sentiment, foreseeing NFTs maturing into valuable tools with real-world applications. Fractional ownership of assets, dynamic digital experiences, and hybrid physical-digital blends are expected to define the landscape in 2024, moving beyond the initial hype surrounding NFTs.
The Growth of NFT Gaming
Another exciting area expected to drive NFT growth in 2024 is the gaming industry. While some gamers have been cautious about Web3 games and NFTs, video game companies are increasingly integrating them into their offerings. Jason Lau anticipates a new wave of Web3-enabled games that will expose a wider range of gamers to NFTs. Notable games like Square Enix's Symbiogenesis and Mythical Games' NFL Rivals have already embraced NFTs, paving the way for more immersive and engaging gaming experiences. This shift signifies a departure from the initial phase of NFT games, which primarily showcased the tokens as novelties rather than integral components of compelling gameplay.
Industry experts, including John Crain, believe that 2024 will mark a turning point for NFT games. Web3 game studios are now focusing on building high-quality games that leverage NFTs and tokens to enhance the overall gaming experience.
Challenges on the Horizon
Despite the optimism surrounding the resurgence of NFTs, several challenges loom on the horizon for 2024. One significant hurdle identified by industry professionals is changing the public narrative surrounding NFTs. It is necessary that NFT projects work diligently in altering the perception that the technology is solely associated with scams. By building engaging products and delivering real value, the public perception is anticipated to shift positively.
It is also worth acknowledging the cyclical nature of the crypto industry, highlighting that individuals who entered the NFT space in the previous cycle remain skeptical about the progress made beyond the initial promises. However, signs of recovery were noted towards the end of 2023, suggesting that the industry is making strides in dispelling earlier doubts.
Regulatory uncertainties represent another challenge that NFTs are likely to face in 2024. The SEC’s intervention in the NFT space in 2023, filing an unregistered securities claim against an NFT collection, underscores the need for clearer legal frameworks. Experts and users both express concerns over the regulatory gray areas surrounding NFTs, emphasizing the importance of establishing a clear legal landscape as the space continues to grow.
Looking to the Future
Despite the challenges, industry leaders maintain bullish sentiments about the future of NFTs. John Crain envisions NFTs becoming standard infrastructure for the internet, providing a simple and effective mechanism for proving the provenance of digital content. This shift is deemed crucial, especially in a world where AI capabilities are increasing exponentially, and the ability to discern what is real becomes paramount.
The role of RWA tokenization and NFTs in representing human values in both the digital and physical space cannot be understated either. NFTs are a blank canvas that can adapt and capture an endless range of possibilities, their potential to shape the evolving landscape of digital ownership and creativity.
Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.
