In 2021, during the Non-Fungible Token (NFT) boom, any jpeg with a bit of sophisticated PR could seemingly sell for millions of dollars. And those were NFTs with no inherent value. But the bear run, and the exposure of their lack of substance, took a toll in 2023 as the value of the NFT market dwindled. Jack Dorsey, former CEO of Twitter (now X), sold an NFT of his first tweet for 2.9 million dollars; now, the price has plummeted to only $4. Will the NFT market rebound in 2024?
2024 is a significant year for the NFT market as it now stands at a critical juncture. If it can’t bounce back this year, its hopes of a comeback is almost zero. After stratospheric growth in 2021 and its following cool off, stakeholders are hoping for signs of an NFT market rebound in 2024. Several factors suggest that 2024 could be a pivotal year for NFTs, potentially marking a phase of maturation and broader adoption.
Technological Advancements and Integration
One of the factors that may help NFT growth in 2024 is the continuous improvement of its foundational technology: the blockchain. Blockchain technology, the backbone of NFTs, is rapidly evolving. Improvements in scalability, security, and user experience can make NFTs more accessible and practical for a wider audience. Blockchain and crypto platforms are becoming more user-friendly, and transaction costs, particularly on Ethereum with the advent of Eth2 and Layer 2 solutions, are decreasing, making NFTs more appealing for everyday use.
Also, integration with legacy digital ecosystems can help. As NFT platforms integrate more seamlessly with social media, gaming, and online marketplaces, the barrier to entry for consumers decreases. This ease of access could lead to increased adoption among non-traditional crypto users.
Use Case Expansion
One of the pitfalls that builders in the NFT space weren’t wary of is the digital art mania. Industries such as gaming, entertainment have taken the digital art use case to another level. However, if markets like real estate, and even identity verification can further doubledown on the exploration of the use of NFTs to create new value propositions, this may skyrocket its adoption.
Moreover, the “utility NFTs” idea is becoming ubiquitous—an added utility that was spurred by the Bored Ape Yacht Club (BAYC). They offer their holders benefits beyond mere ownership, such as access to events, services, or exclusive content. This is also an untapped dimension for the NFT market; and builders should look into innovating in this submarket. NFT utility can potentially be found in a wide range of sectors:
Regulatory Clarity
Regulations around blockchain, crypto and, consequently, NFTs are still quite vague.
However, as governments and regulatory bodies around the world begin to provide clearer guidelines and frameworks for cryptocurrencies and NFTs, institutional investors and traditional companies may feel more comfortable entering the space. This could lead to increased liquidity, stability, and growth in the NFT market.
Institutional involvement adds credibility to any market. Institutional adoption can bring credibility and a new level of professionalism to the NFT market.
Social Impact
The NFT market is a community powered domain. NFT projects that foster strong, engaged communities tend to perform better and have more resilience in market downturns. If builders in the NFT space can cough up ideas to further improve how communities are being organized for NFT projects, this may improve the market’s outlook.
For example, Apocalyptic Apes, an emerging blue-chip project derived from the Bored Ape Yacht Club, is dedicated to environmental conservation efforts such as ocean cleanups and carbon offset initiatives. In contrast, the more niche project, Typical Tigers, zeroes in on wildlife preservation, specifically channeling its proceeds towards tiger rescue operations as directed by its community members.
Challenges Ahead
Despite all these optimistic arguments, challenges remain. Market volatility, and the need for further education around NFTs, are still a big problem. Only sustainable practices, transparent communication, and educational initiatives can solidify the long-term health of the NFT market.
With the look of things in 2024, the NFT market’s potential rebound isn’t yet certain.
The ability of the NFT ecosystem to navigate its inherent and external challenges, innovate, and adapt to the needs of a broader audience will determine the trajectory of the market this year.
Author: Makinde Adeniyi
#NFTs #Crypto #Blockchain #Web3 #DeFi
