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OPINION: NFT market set to double in 2022

Young woman using smartphone with stylised NFT symbols.
Despite recent reports of a drop in NFT activity, there is still an unprecedented amount of investment in the space. (Source: Getty)

It’s been near impossible to avoid the term NFT lately. There’s no rock big enough or cave deep enough to have hidden away from the rise and falls of non-fungible tokens.

You’re just as likely to talk at the water cooler about the latest episode of Yellowstone as you are an incoming NFT drop.

For Balthazar - a leading NFT gaming platform - our interest has been in the play-to-earn utility offered by NFTs.

We’re focused on how we can help gamers play and earn, NFT holders return a yield by lending their assets to our scholars, and game developers use our platform to launch their new games.

But NFT games are far from the only use case in this exploding market.

From music to art, and fashion to sport, what we’re seeing with NFTs at present is just the start.

From here, the power of unique, transferable digital identifiers will become integral to government, politics, events, betting, infrastructure, industry and more.

Despite recent reports of a drop in NFT activity, there is still an unprecedented amount of investment, innovation and active users in the space.

Being immersed in the NFT gaming space since Balthazar launched in September 2021, I believe it can only go up from here. We are at the very beginning of this market.

But how fast will it grow?

Last year, the biggest NFT marketplace, OpenSea, recorded more than US$13 billion in trade volume. And by May 17 this year, the total trade volume for 2022 had already surpassed this, at US$14.2 billion. So what will it be by the end of 2022? How about the end of 2025?

Global fintech Finder put together an expert team of specialists charged with answering these questions.

As the CEO and co-founder of Balthazar, I was invited to be a part of the panel.

NFT market to boom

The panel believed the NFT market was going to the moon in 2022. As a group, the panel expected the NFT market to grow to US$146 billion in market cap by the end of 2025.

I wasn’t as bullish, yet I still anticipate great things. I expect the NFT market to reach US$50 billion in market cap by the end of 2025.

However, the volume being traded will be a key metric to watch. While the panellists on average believed transaction volume would hit US$26.5 billion by the end of 2022, I expect it to hit US$36 billion.

Interestingly, analysing the top 10 NFT marketplaces (by number of users), we found more than US$20 billion in transaction volume in 2021, and 2022 has already hit more than US$26 billion. It’s well on its way to double this year compared to last year.

As to what will drive this overall growth, NFT adoption in the US is expected to be a major driver. NFT adoption there sat at 2.8 per cent at the start of 2022.

Male gamer sitting at home and playing NFT games online for money.
Some NFT games are generating up to $300 million a month in revenue. (Source: Getty)

The expectation of the panel is that adoption will rise to 6 per cent in 2022, and I agree.

We’re seeing the industry starting to mature, with more confidence behind investors.

In the play-to-earn space, we're seeing a distribution of wealth to developing countries, and NFT games like Axie Infinity are generating $200 million-$300 million a month in revenue.

There's a great underlying need for crypto and NFTs to provide developing countries access to global economies.

NFTs vs Cryptocurrency

While intimately linked, the use cases for cryptocurrency and NFTs are disparate. This led to some debate among the panellists as to which of these categories would be the most important going forward.

Overall, 50 per cent of the report’s fintech specialists believed NFTs were ultimately enhancing the credibility of the cryptocurrency sector.

That was hardly a convincing result, especially as 23 per cent of experts believed they were undermining the credibility and 3 per cent were unsure. The latter could have swung negativity and neutrality into a majority position.

With this in mind, 45 per cent of fintech experts still see cryptocurrency as the best-performing investment in 2022.

I don’t agree, due to the consistent and extreme growth in game NFTs - from drop to resale - as proof. A quarter (26 per cent) agreed NFTs were the best investment bet of 2022.

Notably, only 10 per cent suggested traditional stocks were the best investment of 2022, and only 3 per cent pointed to property.

How times have changed.

John Stefanidis is the CEO and co-founder of NFT gaming platform Balthazar.

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