A non-fungible token (NFT) is a mean to authenticate a digital asset. It’s a digital certificate with encryption and blockchain-based verification mechanism. Despite the questionable value and hype being at least partially over, the NFT is still around and even going strong. At least in high-class museums of contemporary art. What NFT trends for 2023 are there and how can you benefit from them?
The NFT market in 2023
According to various reports and market research agencies, like Research and Markets, the NFT sector is poised to grow to around $100 billion by 2026. The 2023 is expected to generate a lot of revenue. Since the first and questionable wave of investments is almost over and valuable and mature propositions are pouring in, the investors are expected to turn the blind eye to what was going on in the past, especially in 2021. That’s why the average early growth will vary between 40% to even 50%.
There are three major segments we can talk about, when touching the subject on NFT trends. We can break it by application:
We can break it by end-user:
Finally, we can talk about geographical regions and their specific needs:
- North America
- South America
- Middle East and Africa
None of them is the same, since digitization processes are not equally distributed. A lot of various factors are involved: infrastructure, client base, their habits, spending and investing patterns, etc. That’s why the NFT trends for 2023 will not always be representative for a lot of people.
There are, however, some meta trends, responsible for the shape of this industry in the year ahead.
Major NFT trends for 2023
The hype is over, no question about it. The downturn should force the NFT emitters to adopt more tangible use cases rooted in established technology. They should be based on media and user behaviors, not generate artificially-made hype, betting on something totally detached from reality. Social media activities and e-commerce should be good examples of this “new normal”.
NFT will gather around people, not technology itself. The famous NFT from the Bored Ape Yacht Club Collection does not represent the vital interest of potential audience and client base. It’s just there, like 99,9% of NFTs out there. It’s like inventing a car and figuring out what it’s supposed to be for in the first place. Does not compute. Things like community building, customer loyalty (and rewards in the form of NFT tokens), digital collectibles, digital real estate (in games like Fortnite, for example and in metaverse), legal automation of content. We expect these topics to be on everyone’s mind in the year to come.
Increased role of market education. Less than one-third of the entire U.S. adult population knows what NFT really is. It’s a long way to go. Let’s go back to the car development metaphor. It’s like inventing the car without knowing the purpose behind it and starting with Apple Car Play inside, without explaining it’s like a horse, but faster. Nobody would want to buy something perfectly useless if it doesn’t solve any kind of real-world problem. NFT emitters and the entire world behind it should put an extra effort to educate the market before trying to sell anything.
We strongly believe these trends will shape the entire ecosystem in 2023 and spawn smaller but equally important developments. What are they and how they can impact your application?
Major market shifts
We think that the following trends will be based on three major NFT principles:
- they prove the ownership since only one person can own any given NFT. There can’t be two or more owners of the same item
- since tokens are based on blockchain, they are linked with specific data that can be processed
- passing the ownership is easy and utilizes a smart contract
In 2021, almost all launched NFTs were developed in on or more fields:
- video games
- smart contracts
- decentralized finance
In 2023 and beyond, NFTs will be linked with:
- practical use of decentralized finance
- creating real value in the world of video games
- industrial use of NFTs
- product promotion
- redefinition of NFT in art
Down-to-earth NFT trends in 2023
Let’s start with the last one. The most expensive NFT out there was sold in October 2021 for $532 million. It’s called CryptoPunk #9998. It looks like this:
Seriously? This is what we are worth? With all the sophisticated algorithms out there, smart contracts, implementations, verifications, enormous processing power? A car metaphor yet again: it’s like building the fastest and most safe vehicle we can possibly think of and produce, just to paint it pink and throw it in the middle of Fiat Multipla Fan Festival. You can but it’s probably not the best use of your engineering firepower.
NFTs in the world of art are just there. What we expect instead is the rise of metaverse galleries and auction houses. Places like Voxels, Narra, Async Gallery or Decentraland will provide a little more than just mere early 90s .jrpgs rip-offs. Real digital art deserves real digital representation. Same goes for physical art and digital proof of authenticity. We believe the NFTs will lose the 2021 appeal and move towards more mature representation and usage.
Same goes for FinTech applications. Taking loans with NFT will become more popular. This is a new crediting method where investors leave their NFTs as collateral to receive funds for new projects or situations when they require money. There are multiple platforms (like NFTfi or Arcade) to implement this idea in the decentralized finance (DeFi) sector. These platforms allow employing NFTs as collateral before receiving the credits. Arcade is one of the most popular DeFi platforms for crediting with NFT security interest. After an agreement with all terms, assets are locked in an escrow account managed by a smart contract. Until the loan obligations are repaid, or default occurs, NFTs cannot be returned and locked.
Healthcare will also get a bump. A blockchain-based medical services marketplace where information about patients will be processed and secured seems to be a next-gen NFT market valley.
Real estate could also be redefined. The problem with long-term investments in real estate is ownership rights and the issue of transferring them. Proving something belongs to you can take a lot of time. Compare that to minutes with NFT and we have a winner. Also, blockchain technology paired with tokenization increases the security and safety of information. This can be very useful; especially, when the property in question is sensitive in nature or an owner don’t want to inform the public, something changed hands. Paparazzi never sleep.
NFT in gaming is its infancy but this area will also quickly change. The modern gaming industry is based on items. Skins, add-ons, equipment… all these items can require NFT to prove ownership. When the game account is in question due to a break-in, for example. Passwords can have new owner but digital certificates can’t; at least not that easily. Securing digital assets with NFT tokens can be a new golden standard for the industry.
Digital twin NFTs can help real-world businesses to test products extensively through immersive virtual realms while having a tamper-proof record. These NFTs can be helpful for any industry that involves manufacturing and modifications. Through digital twins, brands can reveal their commitment to transparency and sustainability practices, giving visibility to the supply chain and bringing trust in the certifications of the product. Digital twins are a powerful way for businesses to showcase the long-term value of their products and their authenticity every step of the way.
Product promotion will get wild and fast. Global leaders in collectibles related somehow to the core products are Campbell’s, McDonald’s, Taco Bell, Gucci, Nike and Louis Vuitton. Imagine at least one of them get seriously in bed with value-based NFT. Not for the sake of it but seriously. A good example of wasted opportunity is Pringles. The company have launched a collection called CryptoCrisp with a feature of “virtual flavor”. The starting value was about $2, or 0.0013 ETH. For this money, at the time of the auction, you could buy a physical can of chips. After a while, the price on OpenSea skyrocketed to 4 ETH. Now, imagine that can be linked into something more brand-related. Owning a car sponsored by the company? A certificate or authenticity for company-sponsored retreat?
Which leads us to the final trend – tickets. Sure, we have QR codes for that but if VIP lounge requires more, there’s no business like show business. Or should we say – show them your ticket business. NFT tickets could be implemented to confirm access to high-level events for VIPs or even typical events where the speed of confirmation necessary for processing people is mandatory. We expect this trend to start from the ground in 2023.
Few statistics to finish painting the view
Here are some NFT-related statistics to make you wonder about the market potential:
- more than 70% Americans have no idea about what NFT is
- NFT collectors are three times more likely to be man than women
- It costs around $100 on average to mind and sell NFTs
- Collectibles is the most popular category in NFTs. It’s a leader with over 43% of the market share. Utility has over 38%, art almost 11% and metaverse little more than 4%. The rest is pretty much irrelevant at this point but it can all quickly change
- Asia has the top 5 nations with the highest NFT adoption rates (Philippines, Thailand, Malaysia, China and Vietnam). High adoption rate is also in UAE
- each month, 250,000 users trade NFTs on the OpenSea platform
These not-so-random statistics prove, there’s still a lot of room to grow. Gender inequality in the NFT market has nothing to do with sexism but it can be remedied but offering something extra spicy for ladies interested in new technologies. Higher adoption rates could span out of China and cover America and Europe alike. It’s about education and, yet again, offering the real value.
Non-fungible tokens were not invented in 2021. The first one was actually released as early as 2014. Each week, around $10 to even $20 million in NFTs is traded on the blockchain network. It’s a lot of money and market potential. There’s value in diving into an already established market but young enough to not be oversaturated with solutions. If you want to jump in, you need FinTech experts to join you on the journey.
Consider using Code & Pepper as a service provider. We have Agile teams to enhance your potential. We can also participate as an end-to-end product development vendor. It’s up to you and your vision for the final application. One thing is for sure. You will need a contemporary and future-proof tech stack to do it. Fortunately, we have one.