This year, the worldwide market for non-fungible tokens reached $22 billion (£16.5 billion), because to the popularity of collections like the Bored Ape Yacht Club and Matrix avatars, which turned digital images into huge investment assets.
Veteran investors have voiced similar concerns about NFTs as they have about cryptocurrencies, claiming that they are symptomatic of an unsustainable digital gold rush. Even if a piece of virtual art by Damien Hirst or a jacket to wear in the metaverse can be easily reproduced, NFTs confer ownership of a unique digital property on someone. A blockchain is a digital, decentralised ledger that records ownership.
According to data from DappRadar, a company that records sales, NFT trading reached $22 billion in 2021, up from just $100 million in 2020, and the floor market worth of the top 100 NFTs ever issued was $16.7 billion.
The First 5000 Days, a digital collage by Beeple, the pseudonym used by American digital artist Mike Winkelmann, was auctioned for $69.3 million in March, making it one of the most valuable works of art ever sold by a living artist. Human One, another Beeple NFT, sold for $29 million.
The Bored Ape Yacht Club, a collection of 10,000 NFTs depicted as cartoon primates that are used as profile photographs on their owners’ social media accounts and raised $26.2 million, was another multimillion-dollar NFT. Jimmy Fallon, the talk show host, and Post Malone, the rapper, are both BAYC owners.
Mainstream enterprises entering the fray, according to DappRadar, is a crucial cause in the surge in NFT trading.
Coca-Cola raised over $575,000 by selling products including a bespoke jacket to be worn in the Decentraland metaverse, while Matrix star Keanu Reeves couldn’t keep a straight face when told that his Matrix film series now had NFTs linked to it by an interviewer.
“Hollywood, sports celebrities and big brands like Coca-Cola, Gucci, Nike, and Adidas, made their dent in the space, providing NFTs with a new level of exclusivity. The power of attraction of these famous names profoundly impacted NFTs and the blockchain industry overall,” said DappRadar.
NFT marketing has targeted football enthusiasts, including NFTs endorsed by former England players John Terry and Wayne Rooney, and experts have warned that they are hazardous investments that are unregulated in the UK. According to George Monaghan, an analyst at research firm GlobalData, it would take years for NFTs to function like a traditional market.
“The NFT activity in 2021 was frantic. In the next years, this will decrease, and NFTs will revert to something more closer to today’s modern art market, where there is a more solid consensus on valuation. That said, any crypto market, let alone NFTs, will take years to resemble anything that conventional markets would consider stable. “I wouldn’t invest your rainy-day cash in meme NFTs just yet,” he said.