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Are NFTs still a craze or has the world lost interest?

·6-min read
Bored-looking shorthair cat lying on bed.
Is the world getting bored with NFTs? We check in. (Image: Getty).

Just a flash in the pan or a viable long-term investment option? This is a question many investors are asking when it comes to NFTs (non-fungible tokens).

Launching to mainstream popularity in early 2021, the NFT craze seemed to have boomed out of nowhere.

People have been captivated by the endless options and opportunities that NFTs have to offer, from cat memes, NBA collectables, an exclusive album release from The Kings of Leon, to an artwork from veteran digital artist Beeple that made headlines at the start of the year when it was purchased for an astonishing USD$69 million (AU$94 million) by crypto billionaire MetaKovan.  

Now a few months on, are NFTs still in vogue or is the world losing interest?

What are NFTs?

Standing for non-fungible tokens, NFTs are a type of digital asset that represents real-world objects such as art, music, in-game items and videos. 

They are bought and sold online, frequently with cryptocurrency and are generally encoded with the same underlying software as many cryptos.

The main difference between NFTs and cryptoassets as we currently know them is that the latter allow fungible trading, which means for example that Bitcoin can be exchanged for other Bitcoin, as they are mutually interchangeable and have the same properties. 

In contrast, NFTs are by definition non-fungible and are deployed as individual chains of ownership to track specific assets.

However, often NFTs are used to claim “ownership” of a digital asset that is otherwise completely copyable, pastable and shareable.

Reality check: what’s currently happening in the NFT space?

While many expected the hype for NFTs to slow down, it seems like the industry is only heating up, especially as big companies continue to dip their toes in.

One of the largest marketplace for NFTs, recorded a USD$3.4 billion transaction volume on Ethereum in August, more than ten times the number in July. 

The marketplace also experienced the highest-ever volume numbers, with over 300 million transactions on a single day and consistent purchasing activity throughout the month.

By category, here are a few key happenings attracting attention in the NFT space:

Digital art

Currently, the widest application of NFTs has been in the art world. Famous artists such as Boss Logic, Urs Fischer, Damien Hirst, John Gerrard and virtual reality artist Rachel Rossin have gotten involved in the NFT space.

 Many of these artists’ NFTs have sold for millions of dollars.

In September, a mystery buyer in the historic auction house Sotheby's purchased a collection of 101 computer-generated NFT apes called “Bored Ape Yacht Club” for a whopping USD$24.4 million. 

Another auction house Christie’s is looking to hold an auction for some of the oldest NFTs ever, taking bids in ETH tokens, which is a first for any leading auction house.

One of the most popular NFT collections, CryptoPunk 7610, in September was bought by global payments platform Visa for roughly USD$150,000, in an effort to “have a seat at the table as the crypto economy evolves”.

Celebrities are also jumping on the NFT wave with NBA MVP Stephen Curry having a Bored Ape NFT as his profile picture on Twitter. 

Shaquille O’Neal also recently updated his profile picture to a “Creature”, from the notable New York Based artist Danny Cole’s project Creature World NFT.

Video games

Ever since their introduction of NFTs have shown time and again that they have the potential of changing the gaming world. Today, the gaming paradigm continues to take shape as game developers are increasingly adopting blockchain technology to give their games an even more immersive experience.

In August, co-founder of popular social networking short-form video hosting service Vine launched a new NFT project called “Supdrive”, which he calls an “on-chain fantasy game console”. The new console will run games as NFTs, which means there will only be so many “editions” or copies available.

One of the most popular NFT games, Axie Infinity, which works off a play to earn model, announced in August that it has a sales volume of USD$845 million, with more than 3.8 million transactions.

Down under, Australian company Immutable, which is popular for its two major titles that integrate NFTs: “Golds Unchained” and “Guild of Guardians”, recently announced that it secured $82 million from a Series B funding round in order to expand the reach of its NFT and gaming technology.

Sport memorabilia and collectables

In the sporting world, NFTs continue to cement their foothold.

In August, licensed sports apparel retailer Fanatics announced it is entering the NFT market with the planned launch of “Candy Digital”, where customers will be able to purchase and trade Major League Baseball licensed NFTs on an open market.

World renowned sports icons also seem to be getting in on the action with Lionel Messi, recently launching his own NFT project with the Australian artist Boss Logic.

In September, French startup Sorare also announced it raised over USD$680 million in a funding round, as it advances talks with the Premier League over an NFT-based fantasy sports gaming and collectibles platform. Spain’s top soccer league La Linga also agreed to an exclusive, long-term partnership with Sorare to launch its own NFT fantasy football card series.

Music

Many musicians are looking for ways to monetise their art through the blockchain and NFTs. While in the past, most of the revenue generated from music went to third-party intermediaries such as distribution platforms and record labels, now NFTs allow for better management of intellectual property rights and improve the distribution of royalties.

In September, NFT marketplace MakersPlace announced its NFT development partnership with Sony Music. The partnership will see upcoming NFT drops with artists, with Shakira the first to be involved with a collection of NFTs. Rage Against The Machine’s Tom Morello is also getting an NFT collection inspired by Dungeons and Dragons, while T-Pain is launching NFTs with a new album.

Through blockchain and DeFi, a new startup platform called “Token||Traxx” has also recently launched to create a whole new income stream to support the traditional and established music community.

Luxury fashion

The relationship between luxury fashion and NFTs was natural, given the scarcity of many high fashion items.

There has been a plethora of recent developments in the space including Gucci’s four-minute long video clip “Aria”, to RTFKT Studio’s partnership with young and rising crypto-artist FEWOCiOUS to develop a series of sneakers accompanied with digital merchandise, and Louis Vuitton’s mobile game “Louis the Game”.

The Singaporean edition of international luxury fashion magazine Vogue featured a QR code in its September issue, that enables access to two digital covers created by fashion designs, both of which are available as NFTs. 

This isn’t Vogue Singapore’s first foray into NFTs, as it also launched a series of mystery boxes earlier in the month, each comprising an NFT artwork designed and conceptualised by the fashion magazine depicting the moment of sunrise in 10 selected cities.

So how innovative will the NFT sector get? Only time will tell, but it’s clear that the space won’t be slowing down in momentum any time soon.

Ray Brown is market analyst at CoinSpot.

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