5 Reasons Why NFTs Are More Relevant In 2022
By Bobby Suman, Fintech Finance
Non fungible tokens gained meteoric attention in 2021. As more time has passed, the NFT community has developed into a strong force, slowly inserting itself into the dialogue of the mainstream media. Despite this, some individuals feel that NFTs have reached their ceiling and that the trend is waning off. Are they right? Here are 5 reasons why NFTs still represent tremendous opportunity in today’s market.
Reason #1 – The Power Of Celebrity Endorsements (1)
Many celebrities and content creators immediately recognised the value that NFTs could provide. Why? The notions of exclusivity no doubt align with the work of content creators, always looking to find niches to emphasise the value of their work. Though what is more interesting is the amount of money some of these individuals have poured into their NFT portfolios, made available by research from experts at NFT Club:
The most valuable celebrity NFT portfolios belong to Mark Cuban ($502,610,000), Gary Vee ($107,190,000) and Snoop Dogg ($19,280,000)
Snoop Dogg owns the single most valuable NFT ($3,370,000), shown in his ‘CryptoPunk#3831’
The most valuable celebrity collection is VeeFriends ($68,592,820), where a total of 1,023 NFTs are owned by celebrities such as Beeple, Steve Aoki and Gary Vee himself.
Whilst it is important to note that the data collected to draw these conclusions was only from Ethereum NFT wallets between the 23rd to the 30th November 2021, it still shows the huge financial injection into the NFT world that will no doubt encourage continuous investments in the coming year.
Reason #2 – Mastercard, Coinbase & Samsung Are Bringing NFTs To Your Small Screen (3)
Coinbase and Mastercard partnered together last month to enable more people to join the curator economy, extending the purchasing power of NFTS beyond just the technologically savvy/elite.
Through the project, anybody with a Mastercard card will be able to buy NFTs on the Coinbase platform. Prakash Hariramani, Coinbase Senior Product Director for Payments and Commerce, noted that this is ‘an industry first … in the crypto economy for this new and growing class of NFTs’, expanding NFT ownership beyond a niche crowd of celebrities and tech enthusiasts. (3)
Even Samsung is acknowledging this potential, as they announced 3 new TV models for 22 which will feature an ‘intuitive, integrated platform for discovering, purchasing and trading digital artwork.’ The thought of being able to purchase TVs in between watching your favourite shows could very well mark a landmark moment in NFTs becoming mainstream.
Reason #3 – NFTs and Fan Tokenisation In Sport (5 & 6)
In 2021, we had examples of some of the highest profile football teams, such as AC Milan, launch NFT campaigns where NFTs acted as ‘loyalty tools’ and allowed fans to gain exclusive rewards and experiences through the digital platform. But was this enough?
Petrit Berisha, Head of Cryptomedia at COPA90 and multi award winning podcast creator, shared some valuable insights on the evolution of fan tokenisation in sport, and how far the space can go.
‘Personally, I think fan token models right now are broken and do not benefit fans in the ways that I’d have envisioned. Football clubs are making money from fan tokens when in my mind they should be marketing expenditure aimed to try and engage fans globally in a novel way. This will change at some point, and I believe fan tokens have a future in sport, just not in the current models they’re being used.’ This shows how tokens in sport may change from being a profit-making mechanism to focusing more on utility for the end consumer. After all, sport is nothing without the fans. Berisha’s favourite example of this comes from just a few weeks ago when FTX gave all Golden State Warriors fans in the stadium against the Dallas Mavericks an NFT to commemorate the 75th anniversary of the NBA, showing genuine appreciation for those who make the sport worth playing for.
(7) As we approach Beijing 2022, Team GB have also tapped into this market, offering a limited number of fan tokens. These tokens ‘unlock access to the Gold Lion Club community, fun features, and exclusive experiences which will be the envy of all fans. New benefits and experiences will be offered throughout 2022, exclusively available to holders of Gold Lion Tokns, including access to signed merchandise, athlete experiences, and eventually an immersive clubhouse in the Metaverse.’
Reason #4 – Your Favourite Brands Love NFTs (4)
Traditionally, companies that sell luxury items viewed the digital world as a channel that merely emphasises physical experiences. Nowadays though, they are beginning to treat the digital as a marketplace in its own right – in fact, Investment Bank Morgan Stanley estimates that NFTs could make up nearly $50 billion (10%) of the luxury market by 2030. Some examples here show how NFTs complement the strategy for luxury brands:
Dolce & Gabbana made $5.7 million, selling 9 NFTs of a digital high-design video and a rare physical item.
Nike purchased the digital fashion company, RTFKT, who partnered with Fewocious to launch 3 new trainer designs. Over 600 were sold in 7 minutes, each priced from $3,000 to $10,000.
Gucci sold a limited edition digital version of their Gucci Dionysus handbag for just $4.75 in Roblox. Not a lot, right? It resold for $4,000 in the secondary market
In my opinion, these high end brands will continue to tap into the NFT marketplace to enhance the prestige attached to their products.
Reason #5 – Debunking The Scam Accusations (8) – Are we finally acknowledging that NFTs are not just a hoax? And are we dealing properly with genuine instances of fraud?
For the first time ever, HMRC seized NFTs after arresting three people on suspicion of attempting a fraud of £1.4 million involving 250 alleged fake companies. At smaller price points, this is also a commonality. Adam Morris, Co Founder at NFT Club, addressed the matter, and how ‘investors need to always be vigilant, as people are getting pretty smart with the sorts of scams they come up with. And with the UK tax authority reporting the first NFT fraud case in the country, British investors need to be aware of how to look out for scams and how to avoid falling for them.’
KYC and AML regulations are not in action on all NFT marketplaces. This means that anybody can open an account, make a sale and still remain invisible in the process. This has the capacity to be extremely dangerous. For instance, criminal organisations could create their own NFTs and simply purchase it themselves from an identity that obscures its link to itself. However, whilst this may look like a new frontier for money laundering, the offramps for that money is in fact under strict KYC & AML regulations. For instance, I don’t need to expose my name, bank, or job to OpenSea, the leading NFT marketplace, but I will have to for Coinbase or any other off ramps if I want to take significant sums out of them.
It is also completely ignorant to assume this problem is exclusive to NFTs. Look at the world we live in. Albeit an older stat, the global counterfeit trade for all items, from purses to electronics to software, was at $461 billion in 2016. Whilst NFTs are a new sector that fraudulent activity could reside in, let’s not be foolish and act like we have tackled the problem in the mainstream world yet. In my opinion, it’s a weak claim to try and limit the productive capacity of NFTs. (9)
NFTs in 2022 are just as exciting, if not more, than they were in 2021. Berisha’s comment is most appropriate here: ‘we’re in the dial up phase of Web3.0 more broadly, and I think NFTs are the building blocks of this new world.’
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