In case you are only now learning about NFTs, they are a unique digital asset, recorded on the blockchain which certifies ownership and authenticity.
Most common NFTs are digital art pieces although this is not exclusive.
This is our big, in depth guide about why to invest in NFTs in 2024, so it is not short. If you are not interested in the entirety of the overview, skip to the specific area of interest.
Specifically, here is everything we will cover:
- Overview of NFTs in 2024
- Brief Overview Of History
- Challenges and Opportunities in the NFT Space
- Community and Social Impact
- Technological Innovations and Trends
- NFT Adoption and Accessibility
- Market Trends and Speculation
- NFTs and Gaming
- NFTs and Creativity
- NFTs and Real-world Applications
- Investment and Financial Considerations
Overview of NFTs in 2024
- NFTs continue to have an important role in the crypto space.
- New projects, new use cases, and AI innovations continuously emerging.
- NFTs are introducing new and diverse people into the idea of digital ownership.
- NFTs are positioned to become a significant factor for adoption of web3 in 2024.
- Every new wave of NFTs will look a bit different than the one before.
- The increased value, accessibility and utility is what will likely mostly encourage widespread adoption.
- In the past NFTs were dismissed as just a trend, but regardless of all the rough patches on the road, they are still here.
Brief Overview Of Recent NFT History
To gain a better glimpse at whether the rumor of NFT resurgence in 2024 is true, let's take a brief overview of their recent history.
- The first peak of NFTs was in 2021, which was impacted by many things, including the unique blockchain technology, the crypto bull run, the pandemic, and of course FOMO. At the time, the market shifted from a small group of traders to larger auction houses offering more NFT sales as well as celebrities entering the space which made it more interesting to the mainstream.
- The market has then gone through a correction in 2022, the trading volumes plummeted, and the NFT prices along with them, which was triggered by the downturn of the crypto market as a whole at the time, due to regulatory concerns, macroeconomic factors, environmental factors, market overvaluation and negative sentiment.
- In 2023 the NFT space showed the first signs of revival, especially in the last quarter, since the crypto market entered the bullish phase, again showing us the dependence of NFTs on the market as a whole. Bitcoin Ordinals and the growth of Solana are also some of the main contributors to growing interest in NFTs, as they offered unique features and security perks.
- Then moving to 2024, we can see the more mainstream adoption, more mature and diverse projects, and overall improvements in the performance of the crypto market.
Challenges and Opportunities in the NFT Space
The NFT space is struggling with some common crypto (and money) issues like wash trading and scams.
We cannot view this world with pink glasses if we want to succeed - the crypto industry is a victim of more and more frequent scams, and hacks, as well as exchange collapses.
A lot of these are the result of direct criminal intent, poor risk management and decision making and negligence.
These types of situations don't only compromise a specific project, team or person responsible for the scam or collapse, but stains and delegitimizes the industry as a whole.
Other problems of NFTs and crypto in general, is that they are built on hype and trend, are often shady, lacking genuine substance and transparency.
The main thing we can do to overcome these is really taking the “do your own research” thing seriously, and taking great care in where we invest in and what links we click.
This is also where we can determine and work on the flaws of the industry.
We are slowly rebuilding their credibility as a pioneer of digital innovation, by offering ownership and authenticity in the virtual space.
The skepticism has slowed down for a bit. We started turning the market to the better, with a reduction in questionable projects and scandals and controversies.
In the last bull run of the crypto realm, we saw more interest and experimentation from large financial institutions, rapid growth in altcoins, huge explosion of memecoins, impactful DeFi (decentralized finance) innovations, clearer regulations and guidelines, Bitcoin reaching an all-time high.
Among these things, we have also seen a great hype surrounding NFTs, witnessing them still staying strong despite all the hate and controversy they have gone through in the past.
Community and Social Impact
Connecting with artists and like minded folks is one of the best things about NFTs and in my personal opinion, one of the best reasons to get into the space in 2024.
Yes there are many scammers, but also you will encounter tons of great people, and feel more connected online.
Then, who knows, you might team up with people online, support each other, and together, think of new solutions, innovations and projects.
Furthermore, we can see something that has always made - and will keep driving the nFT marketplace is community - companies can use nFTs to turn customers into a community, and NFT-based projects can create communities based on joint interests.
In both cases, this means consumers are incentivized to help the brand or project grow, as they directly benefit as a result - both from being a part of a community and through seeing the value of their NFT grow.
Really, the main reason why we are seeing the resurgence of NFTs is the people who stuck to it and didn’t give up on improving the space.
We often speak in passive language, only mentioning the innovations that led to revival, but don’t give as much credit to the people behind these innovations, as they deserve.
The reality is that what drives the NFT market is the community, the people who use it as a tool to express their ideas and creativity.
Technological Innovations and Trends
Further use cases for NFTs are constantly being developed, and their connection with the real world, such as NFTs being used as a proof of authenticity for luxury items, or musicians using NFTs for royalties.
There are also great attempts to make NFTs more liquid, meaning you don't have to necessarily have a buyer to earn, but can fractionalize NFTs and trade them like tokens, like the Erc 404 project and the LiberPlex Hybrid DeFi.
The NFT market has already changed a lot since 2023 and we can expect the change to continue happening as we go forward.
We can expect the emergence of new trends, especially in the Metaverse NFT market, which offers diverse digital assets like virtual houses, fashion, avatars, and of course, art.
In this way, we can again see how NFTs go hand in hand with other technological innovations, in this case, the growing popularity of virtual worlds.
Our lifestyles alone influence it, as more and more people are earning their bread online, and as a result, more and more people are interested in owning rare and unique digital assets.
Metaverse NFT market gives artists, developers, and gamers new opportunities to earn from their projects, and offers investors a way to diversify their portfolios.
We can also see the rise of NFT aggregators, platforms that allow buyers to trade NFTs from different marketplaces in a single place, simplifying the experience and making it more approachable to newcomers and more streamlined for veterans.
NFT aggregators also allow traders to buy larger amounts of NFTs at the lowest price, without visiting multiple markets.
So, it is not a surprise the market share of these aggregators has grown from 1% in 2021 to 5% today.
After Gem was purchased by OpenSea and Uniswap acquired Genie, we expect an even larger interest in aggregators.
They are set to play an important role in shaping the NFT market in the long run.
NFT Adoption and Accessibility
Real-life implementation might be our best opportunity to introduce newcomers into the world of NFTs - they may go through a “normal” consumer experience, and then begin to explore the space as a result.
Something we are seeing and can expect to continue happening with the NFTs is making them more approachable through User Interfaces which essentially “hide” the complicated blockchain technology, and offer something people are more used to and can easily adopt and understand.
That means not understanding the market and all its terms no longer stops users from participating in the ecosystem.
A good example is the partially or fully custodial wallet system, meaning a person does not have to open a self-custodial wallet to own an NFT (although they can open a self-custody wallet to transfer their asset if they choose.)
To summarize, something that may be the driving force for thinking about the further development and success of NFTs in 2024 and beyond seems to be accessibility, even more than utility.
Market Trends and Speculation
NFTs are impacted greatly by the entirety of the crypto market, they are partially dependent on it.
That means, that as the crypto economy improves and becomes stronger and more stable, we can also expect to witness greater popularity, strength, and stability of NFTs.
Nevertheless, at this point, the revival of NFTs isn't ONLY reliant on the state of the crypto industry as a whole.
We see the momentum growing, and more and more people being interested primarily in the NFTs.
New macro and micro trends could lift NFTs back into the mainstream, and they are becoming more mature:
- On the macro level, we can see the NFTs are becoming more affordable - there are more larger low-cost collections, and less expensive, small quantity “member’s clubs”, making the space more accessible to the mainstream.
- Another macro trend we see happening is an ever-increasing focus on value creation, rather than speculation alone - doing the research at this point actually makes sense. Although NFTs are always a game of chance and have a gambling aspect, there are some predictors of whether a project will be successful.
- Another major thing is that big brands like Starbucks and Nike are increasingly experimenting with the idea of digital collectibles. Through these brands, we can also expect a wider audience to enter the world of NFTs.
- On the micro level, we can see a strong link between AI developments and NFTs, especially when it comes to creative AI tools. These tools drive more experimentation, making NFTs a perfect space for innovation.
NFTs and Gaming
We’ve seen a surge in NFT gaming projects.
Pudgy Penguins are perhaps one of the most prominent examples of the revival of NFTs, being one of the largest and most successful integrations of NFTs with gameplay, and physical products.
Pudgy Penguins created not only a game but an entire immersive world, accompanied by great content, succeeding in targeting a diverse audience.
Regardless of your thoughts on Pudgy Penguins, each successful project in this space helps the NFT market grow, and we hope to see more and more good projects in the NFT gaming space.
It is quite revolutionary that you can now have full ownership of your in-game assets, as it leads to a more wholesome and fun way of trading and monetization.
It’s like we’re back in school, trading cards, only now our items have a value that can drive our own projects and dreams. That of course, leads to a new level of engagement and immersion.
Although that has had a great impact on the market, we need to focus on supporting projects with substance, rather than only on the perceived utility of it.
In fact, many play2earn gaming projects, were so forced and numerous at one point as an answer to greater utility demands, so they suffered losses because the games were bad.
They were driven by hype, were unsustainable, unplayable, and were just a more creative way of gambling, often simply disappearing.
Not to say that you shouldn't explore play2earn projects, however, you should follow your hunch, and see whether you are finding a substance in it.
NFTs and Creativity
The most beautiful thing about NFTs is that the whole thing is driven by art.
NFT artists are pushing the boundaries of creative expression and ownership, changing how we interact with digital art, and allowing a wider scope of people to express themselves.
They are one of the ways we can solve the problem of a starving artist, people no longer have to give up on their dreams or accept a limited income if they are not one of the top 1%.
NFTs offer artists a chance to have substantial financial gains from their art - which is fair.
They encourage artists to embrace digital art even more, while traditional artists can also benefit from NFTs.
We are constantly revealing new forms of expression, just one scroll through the NFT keyword on X for example, will show you how far and wide we can go with digital art.
Generative art has also changed the game, again offering a wider set of people a way to express their ideas.
NFTs give artists more control of their work and how it is being distributed, for example, they can choose to retain ownership and receive royalties for each subsequent sale of their work.
This more decentralized and democratized ownership is empowering both the artists and collectors.
In fact, through NFTs, many more people have gained interest in collecting art than ever before - it is no longer a niche market reserved only for those with significant disposable income.
Now some find an issue with perceived ownership, the idea that you can simply right-click and save an image.
We can talk about this in the context of simply supporting artists - yes you can right-click and save an image, in the same sense you can print your own print, but many of us love to support artists.
We just wanted to mention this, as all of the above elements brought a huge, maybe too large focus on utility, making people “invent” false utilities.
Truth is, if you recognize art as good and beautiful, and you have spare money, NFTs are simply another way to support creators and make this world more colorful.
The same thing we mentioned above “following the hunch” - is true for art NFTs.
Can you feel the heart of it, can you feel there is some concept behind it?
If you do, likely you are not the only one, and you might be on the path to becoming a part of something great.
At the same time, if you opt for something you really like and care for, you will still get some level of satisfaction even if you don't see the project moon.
NFTs and Real-world Applications
Another exciting thing about NFTs which we are exploring more are real-world applications.
Many NFT enthusiasts are exploring how we can use NFTs to represent real-world assets.
We can see both mass-market brands like Starbucks, Reddit and Nike entering the NFT space - and native brands like Pudgy Penguins and Kitaro studios entering the “real world” through physical products.
We also saw many others experimenting with using NFTs for real-life situations, such as Ticketmaster and Token Proof using NFTs for event tickets and memberships.
Although no one can predict the future, it makes sense that we will want to represent real-world assets in digital format.
In fact, the more we are exploring this topic, traditional finance in the modern era of virtual existence has less and less sense.
Imagine you can invest in real estate, intellectual property, or art pieces through digital tokens which are tradable on blockchain-based platforms.
Investment and Financial Considerations
NFTs are challenging the traditional investment landscape.
The simple fact that anyone can build their NFT project gives them a huge variety, and we are constantly discovering new ways to approach finance.
For example, NFTs can be used as collateral, offering a unique way to secure loans.
That means we no longer need to rely on physical assets as our collateral - we can now use digital assets, which makes sense as we spend more and more time online.
It is incredible we can and will be able to leverage art collections or other virtual assets as collateral for loans.
This is another way to unlock liquidity in NFTs, the lack of which was its principal problem.
Hopefully, that will enable us to utilize our art skills or passion for gaming to receive financing to fuel our projects or dreams.
The best thing about the tokenization of assets is the democratization of access to investing, people with a wider scope of interests and skills can enter the investment space.
Furthermore, that increases transparency and liquidity of financial markets.
Through NFTs, ownership can be fractionalized, and NFTs can work the same as shares, one can have a part of a high-value asset without substantial financial commitments.
Furthermore, NFTs are programmable, offering new and better ways to automate complex financial transactions.
A smart contract can execute an action automatically, minimizing the need for third parties and making the process more streamlined.
Conclusion
As we are entering the era of Web3 and are obviously not going back, NFTs look promising.
They expand our ideas of creativity and financial opportunities and are a lovely playground to experiment with innovations and different ways of expression.
That is a beautiful thing, as now a variety of people who love spending their days and earning online have a new way to work together on projects, to expand their skills and circle.
(And potentially open themselves up to an opportunity to significantly improve their financial life through something they love doing. )
Not to mention expanding the social circle and feeling that they are belonging and contributing to something larger than themselves, which is in my personal opinion, the real value of nFTs which will never go through a crash.
I don’t know if you noticed, but I hardly mentioned getting rich ideas, because that is not what has kept the real ones going for so long, and it is never certain - it is always a bet.
Nevertheless, if you’re inspired by some other motives to enter the space, there are many opportunities for earning as well.
This article is not financial advice. Always DYOR in anything you do. We love NFTs so we are biased.
Thanks,
Have a good one,
Fukiyu
Archibald.
