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With a mind-blowing total sales volume of $2.5 billion, NFT is on its way to disrupting the cryptocurrency market. What’s crazier is that $2.5 billion is only for the first half of 2021; how big would it be now that the NFT craze is more widespread. From Jay-z to luxury brands like Louis Vuitton, NFT is reaching many types of people, and what’s better is that it’s a market welcoming to anyone.
Now, if you’ve ever heard of NFT or want to join in the hype, you would think about its current state. Will you still make money off some purchases, or is it too late even to make a quick buck? In this article, we’ll evaluate how NFT has paved over this year and find out whether it’s still early or not.
The Numbers
NFTs or non-fungible tokens are digital assets that are unique to one person. To ensure that everything is secured, all the data is stored in the blockchain, a system, or a ledger that exists virtually. Almost anything that can be reproduced digitally can be an NFT, from photos, audios, and even videos, the market reaches far and wide.
Unlike Bitcoin, a cryptocurrency and a fungible asset, NFTs can’t be traded at equivalency. It is also the reason why a lot of NFTs these days are priced very high. Some are rare and are valued that way.
Now that you know a bit about how NFTs work, let’s get into the numbers. There are records of 200,000 people partaking in the NFT market as of October 2021. For reference, Coinbase is one of the most recognized cryptocurrency wallets, and that platform alone boasts 68 million verified users. You don’t even need concrete math to see the difference between those two figures, so right off the bat, we can safely say that the NFT market is still in its infancy.
CurrencyWorks’ Cameron Chell agrees that NFT is still in its earliest stage and has yet to break through the mainstream. Aside from that, Chell also noted that collecting is innate to us humans and part of our psyche.
Once things are identified as scarce, people would look at them differently, hence why NFT is essential and is on its way to becoming one thing that humans incorporate in their daily lives. However, remember that NFTs don’t guarantee ownership of artwork, for instance. What they’re paying for is the rights to a particular token.
Lack of Tools for Authenticity Check
The physical art collection is a market that we can compare to what NFT is being used to at the moment. Although NFT is flexible regarding what things can be owned, much of what is in the market are digital artworks. However, NFT lacks a lot of ways to authenticate digital pieces. When it comes to physical art pieces, it might be an expensive and lengthy process to verify something, but at least you can rest easy that you have a real Picasso piece inside your house.
NFTs are innately secured because of their blockchain implementation. However, scammers and dishonest people are everywhere, and they might pull off something crazy, like making knock-off NFTs; who knows? What’s essential for the market is to have more ways than one of authenticating an NFT since, indeed, it will explode, and more people will buy assets. Without it, fewer people will be interested in NFTs, which will bring inevitable consequences to the market.
Not Enough Scalability
The lack of scalability is why NFT is being held back to enter the mainstream. Since it is expected that more people will enter the market, it is scary how much things could change and how unpredictable it would be. Currently, NFT marketplaces use the likes of Ethereum, but what is needed for NFT to go forward is a much more specific network, something exclusive to NFT and is more than enough to handle its demands. Not the current demands, but the expected ones that will surely come in the coming years or even decades.
Once this drawback has received a solution, NFT will flourish and attract more people to invest. The problem, however, is a project like this will cost a lot and will take time. Until then, NFT marketplaces would stick to Layer-1 blockchains, which are good but aren’t enough to power and lead NFT to the next level.
Exclusivity and Interchangeability
The Ethereum blockchain is the most common network to host NFT marketplaces, but a lot of them are also up and live. According to Cryptograph’s co-founder Hugo McDonough, having too many hosts is another big problem that will be big for NFT to face anytime soon. We can, however, expect something to happen anytime soon as McDonough announced that he is partaking in developing something that they call the polka-dot network. It might just be the thing that would help unify these hosts or is one that will make NFT universal.
Storage Problems
The process of buying an NFT might be straightforward, but acquiring one would produce more problems than you could have ever expected. For instance, you might have to think about your storage. Is it safe? Is it something that would help me hold on to my NFT for years or even decades? What happens if they go offline? These questions are only some of those you should be asking even before buying an NFT.
Generally, external hyperlinks are the only gateway to ownership, and these lead to cloud services like those from Google and Amazon. These two companies aren’t by any means terrible, but you can’t tell the future or when they will shut down or have your data erased. Anytime, your NFT may vanish out of your sight, and the worst thing about it is that you might not have a chance to get it back. More storage solutions are required to keep things in check and assure NFT asset owners that anything they buy will be in their possession forever, or at least throughout their lifetime.
Not User-Friendly
NFT might be all over, in the news, YouTube, or Twitter. We can see posts or videos about NFTs, mostly education or just outright content that will make you believe that NFT is the next big thing. However, accessing marketplaces and generally being part of the community is a hard thing to do, at least for people without any experience in cryptocurrency and anything related to modern internet communities.
There are a lot of steps that are required for you to start selling or buying. You might even need to read a tutorial before getting on your way to acquiring an NFT, which is a pretty bad thing if the market wants to push for the mainstream. What would solve this is a centralized and organized place where all currencies and present NFT assets are accepted.
Takeaway
Even though we’re saying that NFT is still far from being a thing of our daily lives, there are a lot of signs that are telling us something. For instance, this September, Twitter announced that they would integrate something that would help users verify their NFT profile. We know how much Twitter’s reach is, and this integration will give NFT a boost to make people aware that this market and community exist.
Some more corporations are jumping into the NFT Train, and here are some examples; Disney, Mastercard, Visa, Gamestop, and many more.
With all of these things in mind, we can determine how much potential the NFT market has and how it is on its way to disrupting the financial industry. Although mainstream penetration is still not in sight, at least we can say that NFT is here to stay, and it will continue making a statement for years to come, and who knows, maybe even decades.