Will it be the Start of the End of NFT in 2022?
Understanding the Use Case of NFT
NFT originally created by Kevin McCoy in 2014. Many of us think NFT is a digital creation like JPEG, Music, etc. But actually, it is not only that. But NFT is a technology that helps any digital assets to have a commercial value.
Think of it like this. For example, if you make a painting, it will have a commercial value because it is unique and it only has one copy. There’s a risk that your art is imitated by someone else. But if it does, the fake one can be spotted. What if, you’re a digital artist? When you produce your art on the internet, it can be easily copy-pasted and claimed by anyone else. Yes, you can register your art as an IP but it will be costly and it can take years to have the certificate. It’s not easy for digital artist to commercialize their creation.
Using NFT, the digital artist can store their work in a blockchain that cannot be copied, changed, or destroyed. Your name as the owner can be minted on the blockchain as well! It’s not only digital art but any digital assets it can be converted into NFT!
The metaverse is the ecosystem where the economy of NFT circulates. Every asset in the metaverse is in the NFT form and can be traded!
The Journey of NFT
The first NFT minted was in 2014 by Kevin McCoy. The first NFT is a colorful animation pattern of a Quantum. He called it “Indelible Provenzano ownership of Digital images of this kind” meaning the source of these digital assets that can’t be destroyed.
Experiment to Test the Dynamics of Rarity and Demand
In June 2017 Larvalabs created Cryptopunks, making a breakthrough in the NFT landscape. Cryptopunk is a collection of 10,000 images with distinct and unique elements that are generated using a code. Initially, those images are distributed for free to experiment with the thesis of dynamics in rarity vs demand. Initially, the first NFT that is sold for around $2200, yes it was initially distributed for free, 4 years after in 2021 when NFT boomed, the same NFT sold for around $7.5M. CRAZY
2021 the Peak of NFT Sales
From the success of Cryptopunks now we can see countless 10,000 NFT images project in the NFT space or we called it Generative NFT. In 2021 we can see projects like Bored Ape Yacht Club and so on that sold for a very high price. Not just only having ownership of JPEG, what is sold on having JPEG’s NFT is having access to HNW members like celebrities and business owners. NFT sales in 2021 accounted for $25B!
Downfall of NFT
The sentiment toward NFT is decreasing since 2021. The picture below illustrates the trend of Google search, increasing in the mid of 2021, peaking in Q4 of 2021, and plummeting in 2022. Average sales on Opensea peaked at the beginning of 2022 and accounted for around $6800, now it plummeted to only around $1900! Also, the daily average NFT sold also plummeted from 2600 NFT sold per day to only 9000 NFT sold per day!
As the NFT boomed in 2021, many now think that they can make tons of dollars by minting NFT. The supply right now is way more than the demand! Many s*itty projects out there in the marketplace saturate the market
Cycle of NFT
According to Gartner's hype cycle for emerging technologies, NFT in 2021 already reached the “Peak of Inflated Expectations”. Gartner predicted in 2021 that NFT will soon go through the phase of “Through of Disillusionment”. Well, I think Gartner might be right here.
At this phase, we will finally find which NFT projects will survive and the ones that survive will pass through this stage and be in the “Slope of Enlightenment” where they will find their identity and its fair price. The one that will make it is the one that has real utility and use case.
Although NFT as technology is predicted to pass the “Through of Disillusionment” according to Gartner in 5–10 years NFT will reach the “Plateau of Productivity” where we will adopt the technology massively and live with the technology side by side.
Always DYOR when investing in NFT! A good project will come to a fruition!
Contents distributed by Learn.Block6.tech
👉 Telegram — Fresh ideas
👉 Twitter — Latest articles
