Non-fungible tokens (NFTs) have demonstrated their potential in 2021 when the whole world was talking about these novel wonders of digital ownership and art. A year later, however, NFTs seem to have lost their momentum and fell from their high, but is that really the case? In this article, we’ll explore what’s going on with NFTs in 2022, what their market looks like today, and what’s ahead for these one-off crypto assets.
First, let’s touch on the NFT uptrend of 2021, which made these bespoke tokens world-famous in the first place. The reasons behind the boom are disputed, but some aspects seem to have everyone in agreement. One of the latter is the novelty that NFTs introduce to digital ownership. Anyone is able to prove exclusive ownership of an NFT in a publicly verifiable way which, combined with the immutable security blockchain technology brings to the table, unlock numerous potential use cases.
The above trait allowed NFTs to become the go-to instruments of digital art collecting, Play-to-Earn (P2E) gaming, and the sort, making them valuable in the meantime. Still, with all that considered, NFTs seemed to have lost their momentum recently causing prices to drop massively.
When a phenomenon is new, it has a certain attraction that appeals to curious minds. NFTs definitely ticked that box, as they were used in ways fungible tokens could never have been utilized. However, just like with anything that’s new, such beginning shock-like appeal fades over time as people start developing a certain tolerance that cancels the all important novelty factor. The above is arguably what happened with NFTs, and what ultimately caused their momentum to disappear.
With all that said, where do NFTs stand in 2022? In terms of numbers, things aren’t looking very good for the asset class: the overall NFT market cap was down around 90% from its all-time high, with most small-cap collections losing their value almost entirely. More significant groups, such as the Bored Ape Yacht Club, CryptoPunks, Azuki, or Doodles, have managed to retain most of their appeal, but it’s questionable whether they can sustain their valuation in the long run.
However, this does not mean that NFTs are outright dead. Every new asset class has to go through a normalization phase that plays a huge role in determining the long-term place and sustainable valuation of its elements. This is likely what the NFT marketplace is experiencing right now, as sales seem to stagnate and most items are either trading sideways or decreasing in value. Such times can also serve as a sort of consolidation that actually secures a solid foundation for NFTs in the long run.
Whatever happens to NFTs in the future, these novel, one-off digital assets have already demonstrated that they carry immense price and utility potential. Thanks to their unique characteristics, there is almost no doubt that NFTs will never fully disappear, but seeing how their momentum is stagnating in 2022 it’s hard to imagine them reclaiming their former spotlight any time soon.
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