Non-fungible tokens (NFTs) have been in the news for the past few years. While swaths of the population have tried to get their heads around the existence of NFTs, demand has risen, institutions have been built, and lingo has permeated our collective consciousness.
There is one elephant in the room, though: NFTs are difficult to use and most of them are digital snake oil. But these problems create an opportunity for answers. Both the reach and legality of NFTs are set for change. As funding moves into the space, the market begins to mature, and that change is gaining momentum. We are entering a new era of NFTs – NFT 2.0 – where the technology will be more easily accessible by the mainstream, and the underlying value proposition of NFTs will be more transparent and reliable.
Reflecting on the Rise of NFTs
In its short existence, NFTs have exploded on the crypto landscape, topping $17 billion in trading volume in 2021. That number is expected to grow to $147 billion by 2026. Even more impressive is the fact that this volume is owned by less than 400,000 holders. , which amounts to a total transaction volume of $47,000 per user.
With the meteoric rise of the industry, NFTs themselves have gone through enormous changes since their inception. For example, Cryptopunks, which were mined for free in 2017, reached blue-chip status, peaking last year with Sotheby’s selling $11.8 million. A few years later, Larva Labs, the company responsible for creating the punk, was acquired by Bored Ape Yacht Club’s parent company, Era Labs, for an undisclosed amount.
Development of NFTs
Quickly dismissed as a fad, NFTs have shown a great deal of staying power, garnering the attention of major celebrities and brands and have even been featured in Super Bowl commercials. Companies like Budweiser, McDonald’s and Adidas have dropped their own collections, while Nike has entered the space by acquiring RTFKT Studios.
related: Why are major global brands experimenting with NFTs in the metaverse?
While organizations determine their NFT strategy, the overall space has mirrored the technological innovation of the past several decades, just under a significantly accelerated timeline. While the iPhone took almost 10 years to reach its current version, the NFTs range from 8-bit pixelated images and Pong-like blockchain games to high-fidelity 3D animations and complex play-to-earn game mechanics in massively multiplayer experiences. moved together. couple of years.
While real NFTs evolve, the ecosystem of pick-and-shovel solutions is also growing rapidly. The onslaught of the NFT minting platform and tooling has dramatically lowered the barrier to entry, creating deep saturation in the market. As of March 2022, there were more NFTs than the public websitesProducing a significant amount of noise that has been difficult for many people to cut.
1/ There are now more NFTs on OpenSea than there are websites on the Internet in 2010.
Very soon, NFTs will go beyond websites, perhaps even webpages. This growth has major implications for how we should index NFTs…— alex atallah (@xanderatallah) 9 March 2022
The asset class’s staying power and huge trading volume have shifted the way that creators approach the space. Many have outgrown their Web3 strategy or treated their fans as a source of liquidity, leading to missteps, rug pulling and abandoned projects. Simply put, most companies and manufacturers are not ready to enter Web3, and they need more hand-holding and white-glove services than tools.
Ultimately, NFTs are moving just like email. There was a time in the 1990s when companies needed to hire experts to code email for themselves. Early adopters set up lucrative agencies that were able to serve Fortune 500 companies and execute initial digital strategies. The information gap brought tremendous benefits to these agencies until technological advancement (and education) made it easier for brands to do it themselves.
related: We have not even begun to tap the potential of NFTs
Likewise, we are currently in the era where brands are looking to educate and prepare experts for a Web3 future, and it is only a matter of time before they can fully realign their Web3 strategy. Managed and managed in-house. Onboarding for NFTs, and crypto at large, is a fairly complex process that many people simply cannot handle. However, some companies are finding ways to understand the more difficult aspects of crypto and create avenues for deeper engagement with their fans.
Built for the Mainstream: NFT 2.0
The current iteration of NFTs is not designed for mainstream consumption. The onboarding system is not easy for the consumers; Volatility is harmful to true fans; And it skews the artist-fan relationship. There is a huge discrepancy between the sticker price of NFTs and the value it is able to provide to consumers, and are seeing demand shocks largely due to many collections failing to execute on their road map.
Major NFT buyers are becoming more vulnerable to rag pulls and scams, meaning their new collections are less likely to be liquidated. And although it’s easy to see dwindling volumes and doom, the reality is that NFTs require a massive washout in order for those looking to get rich quickly and more appropriately incentivize the true builders in the space. . As vaporware gets wiped out during a bear cycle, antifragile companies that could weather the storm when they moved from Web 2 to Web 3 would flourish. Agencies and platforms, if at the wrong time, will be wiped out, but those prepared for the email-esque shift will maximize high-margin, high-touch projects while capturing long-tail revenue streams.
This has important implications whether you are building in the space, a potential user or an investor. This place is going to grow rapidly and develop rapidly. Don’t blink or you may miss.
This article was co-authored Mark Peter Davis And sterling campbell,
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, opinions and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Mark Peter Davis is a venture capitalist, serial entrepreneur, author and community organizer. He is the Managing Partner of Interplay, a top performing venture capital firm based in New York City. He is also an active podcaster, author of fundraising rules and founder of both the Columbia Venture Community and the Duke Venture Community.
sterling campbell Is the CEO of Minotaur, a Web3 company serving top tier creators and brands as they develop NFT projects, decentralized autonomous organizations and tokens. He has spent much of his career focused on consumer-focused technology for Blockchain Capital, Lerer Hippeau, Grishin Robotics and William Morris Endeavor, where he has also developed talent. Sterling earned a Bachelor of Science in Music Industry and Business Administration from the University of Southern California and a Master of Business Administration degree from Columbia Business School.