What is causing the adoption and value of NFTs to grow so quickly?
One of the primary reasons that NFTs are exploding right now is the technology that enables NFTs.
If you own an NFT from a valuable artist, everybody in the world can look at the blockchain and see that you own it. They may also see who made the artwork in the first place. This ensures legitimacy and helps to avoid scams.
Smart contracts are also used to power NFTs. This is essentially a code that is intended to perform certain actions when certain criteria are satisfied.
The following are some of the main reasons for NFT adoption:
1. The number of NFTs available is limited.
Most popular NFTs today, such as CryptoPunks, Bored Ape Yacht Club, and Cool Cats, are available as collections. Instead of individual works of art, a complete collection of 1,000 to 10,000 individual NFTs is released.
The majority of NFT collections intend to release 10,000 individual works of art. However, when a collection grows in popularity, the price of a limited item rises.
Because there can never be more than 10,000 CryptoPunks, and millions of NFT investors want one, the collection grows in value, producing more demand.
2. Social signalling with a profile picture
What are the applications of these NFT collections?
They are most typically used as profile images. Millions of users on Twitter and other social media platforms, such as Instagram, use one of their NFTs as their profile photo.
You are, however, signaling to the rest of the world that you own a specific NFT by doing so.
Some people do it as a form of social communication. If they have a valuable NFT, such as a CryptoPunk or a Bored Ape, posting it as a profile image is a kind of bragging.
On social media, Justin Bieber, Snoop Dogg, Post Malone, Eminem, and Steve Aoki have all flexed their NFTs. Professional athletes such as Neymar Jr., Steph Curry, Serena Williams, and countless others have also gotten in on the action.
3. Major corporations are venturing into the crypto and NFT space.
Individuals are not the only ones investing in NFTs. Some of the world’s most recognisable businesses recognise that NFTs are helping to influence the future of culture. And they want to be a part of it.
Disney has stated that they intend to release NFTs in the future. Adidas has already released their first NFT collection. Nike recently bought an NFT brand.
Visa paid $150,000 for one of the first CryptoPunks. And so on.
With each significant name that enters the NFT industry, faith in the technology underpinning NFTs grows. And the number of collectors and investors continues to grow.
The main drivers of the NFT economy
The increasing use of non-fungible tokens in supply chains and logistics, which is predicted to boost revenue growth in the global non-fungible token market.
NFTs help to prevent counterfeiting, track the flow of products across the supply chain, and assure product authenticity. This can be used to improve supply chains for high-end fashion companies.
For industries such as automotives, NFTs could also provide information about each material and component in a single product. This may also help with cost-cutting. NFTs may also be useful to businesses concerned with tracking the use of reusable and sustainable materials.
The main restraints on the NFT economy
Concerns about fraud and scams, as well as a lack of standardisation, are important obstacles impeding market revenue growth.
Using NFTs and blockchain in the real world could be an effective way to authenticate ownership histories and check titles.
This type of application, however, creates security problems. Despite the fact that blockchain increases the security of NFTs, hacking remains a possibility. Unpredictability in calculating NFT prices is a major issue in the NFT market.
The price of each NFT can be determined by the originality, distinctiveness, rarity, and a number of other characteristics of the buyer and seller. NFT prices fluctuate greatly because there are no established criteria for any specific type of NFT.
Yes, NFTs are popular today. However, most individuals around the world have yet to purchase an NFT. Most people still have no idea what they are.
While it may appear that everyone has jumped on the NFT train, the general public has yet to embrace this new social and technological phenomenon.
The increasing use of NFTs in gaming is one of the major factors expected to continue to drive global market revenue growth.
Many cryptocurrency specialists predict that adoption will accelerate in the next few years. So, while it may appear that NFTs are on top of the world right now, they are only getting started.