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Non-fungible tokens [NFTs] emerged in 2021, transforming a work of art or other artefact into a separate digital object with exclusive possession. This has taken the art world by surprise, and considering that the crypto-market, and especially Bitcoin, is on a tear, a lot of attention has been focused on the crypto market as well.
A recent sale of Beeple’s artwork, as well as Twitter CEO – Jack Dorsey auctioning his first-ever tweet as an NFT, has contributed to the excitement and has made it very popular.
It was also stated that, after dabbling in Bitcoin and Ethereum, many institutional investors were now contemplating NFTs as the next type of investing from which their portfolios could profit. According to a recent LongHash article,
“In addition to the aforementioned art investments and Coatue Management’s $250M funding of NFT developer Dapper Labs, other institutions are taking notice of the NFT ecosystem. In February, NFT art trading platforms Rarible and Async Art also received millions of dollars in funding, with well-known investors participating.”
Interestingly, in a recent interview on the Unchained podcast, Devin Finzer, co-founder and CEO of NFT marketplace OpenSea elaborated on the growth of NFTs and why they moved into the spotlight in the past few months along with what to expect from this industry. While most mainstream users and investors may have come across the term NFT in the past 6 months, Finzer pointed out how the past few years have played a crucial part in building the needed infrastructure for NFTs to be based on. He pointed out,
“But really the last three years, there’s just been a lot of activity and a lot of building in the NFT space. So it started with CryptoKitties. It started with projects like CryptoPunks as well. But from there, there was so much early developer interest, that all of the tooling around NFTs got a lot better.”
However, with the increase of popularity, many have been suspicious of NFTs in general, calling it yet another bubble that exists from time to time. Finzer emphasised that labelling the increase in interest as a “bubble” is difficult to measure, unlike in the crypto industry, where those accusations are based on a rising price. He mentioned,
“I think it’s hard to quantify the NFT bubble. With cryptocurrency bubbles, you can point to the price of ether and you can say like, ‘the price of ether is too high’ or something like that. With NFTs, it’s not just about like the price.”
Although it is unclear how long the demand for NFTs will last, market statistics given by DappRadar highlighted the significant growth of some of the most famous NFT market sites, such as NBA TopShot, which saw staggering growth in just the last 30-days, with its user count the from 65.4K to about 140K. Although NFTs have grown in popularity, Finzer states that they remain a difficult world for users to learn and run in. He said,
“I think if you look deep into the NFT space, you realize that there’s all of this excitement, there’s all of this volume, and all of these transactions happening on a very hard-to-use user experience — for the most part. Some applications have made this easier, but they do cut corners in terms of giving people sort of the full NFT experience. “