5 predictions about the NFT industry from the pros

Predictions about the NFT industry have been rampant over the past year. The market for non-fungible tokens has exploded since the rise of the crypto-collectibles market in 2021. Since then, market capitalization and trading volume have increased at staggering rates.

In 2021 alone, $23 billion worth of NFT market was traded and market capitalization reached an all-time high at $82 billion, establishing market trends that are expected to continue the market surge through the rest of 2023.

Critics of this market have stated that NFTs may be on a hype curve, with heavy market speculation driving trading volumes higher than actual adoption rates justify. Others have criticized the market for being more for speculative purposes rather than practical or valuable uses.

Market speculation around stability is a valid concern.

Although non-fungible tokens have technically been around since 2014, the technology only gained flight in 2021. With such a rapid advancement in only a year, it’s understandable why there are looming concerns if the market is a bubble ready to burst at any moment or just a fad for gaming or entertainment that will disappear into obscurity. However, advocates for NFTs have said that many applications of this technology exist outside of gaming, which pose an opportunity for diversification and added stability. 

5 predictions to watch next year for NFTs

There seems to be a real theme amongst advocates and critics. For starters, in order to find some stability, escape obscurity and the dreaded hype-curve, the NFT market either needs to narrow its focus or diversify. Society understanding and acceptance of this blockchain technology also needs to significantly increase. 

Here are the top 5 predictions from insiders about the NFT industry, its future use cases, and potential:

1. Ethereum will remain the king – for now 

It’s probably going to end up being a market that will be dominated by blockchain giants like Ethereum and EOS, who will offer their platform for other projects to build upon while collecting fees. The market will then be split between decentralized marketplaces built on top of these two blockchains. With the market already starting to become more crowded, I see this market becoming very competitive which is why it’ll likely require some unique value proposition or strong team/advisors to make it past the competition.

– Andrew Retzler – CEO @ DappRadar

2. Digital scarcity will drive interactive experiences

NFTs are not just about trading digital goods–it’s about creating digital scarcity, which is an entirely new concept that will open up interactive experiences that are currently not possible. One example is leveraging NFTs to reward users for learning to code/coding by allowing them to unlock access to online courses & educational resources using their blockchain wallet, which can be linked externally with other marketplaces like Udemy.

– Shaan Ray, Futurist & emerging technologies researcher

3. Buying and selling will still be more profitable than play-to-earn gaming 

The market is likely going to be dominated by marketplaces where people can buy and sell NFTs. It’s these marketplaces where the majority of trading volume is happening today (we’re seeing over 10x more volume on marketplaces than through individual trades), but 95%+ of this market volume is speculative at best–and festering with potential scams, low-quality projects, etc. The marketplaces are most likely going to be the choke point of adoption (similar to how marketplaces like Coinbase drive mainstream adoption for cryptocurrencies).

– Rahul Sonnad, CEO @ Qlear Protocol

4. Entertainers will find new revenue streams selling digital assets.

The market will not only gain traction and a renewed focus on gaming, but also open up marketplaces for artists, musicians, or anyone else looking to sell their digital assets. The market will become more mature and new companies that operate along this market are expected to pop up with creative use cases for NFTs, so it’s hard to predict what kind of impact this new industry will have within the next 2 years. One thing is sure though–there will be no stopping it.

– Boris Povod, Head of market development @ Open Collectors Network

5. Evolution of token standards will shape the emergence of new market segments. 

As more marketplaces emerge, the market will become increasingly saturated with a broader variety of NFTs and token standards – including the green market. As a result, it is going to be harder for projects catering to gamers or other specific market segments to differentiate themselves from their competitors without some speciality. 

– Yossi Hasson, Co-Founder & CEO @ Rare Bits

Which NFT marketplaces will reign supreme?

The year over year trading volume for NFTS represented a 646x increase $21.7 million to $24 billion. OpenSea and Axie have established a recent dominance in NFT marketplaces and are responsible for the majority of the trading volume. 

Of the $23 billion in NFT sales registered in 2021 alone, OpenSea was responsible for 60% – just over $14 billion. Axie Infinity earned a significant amount of revenue from the NFT market, too. Their market value was driven by being one of the first blockchain games that successfully monetized their users and they exceeded a market cap of $3 billion. As the largest play-to-earn token by market value, the company had some flex-worthy moments in 2021. In July, 2021 – at the peak of their second major surge of the year – Axie actually earned more fees than Bitcoin or Ether in a seven day period alone. Yep – you read that right: more fees in a 7 day period than BTC or ETH.

It’s still unknown what will happen to the marketplaces where people buy and sell NFTs in the next few years, but it’ll probably depend on market competition and the solvency of the protocols that power them. 

OpenSea boasts a robust, yet easy to use platform with a low barrier to entry for new users. High fees to offset Ethereum gas prices, concerns about the application being entirely being centralized (as opposed to decentralized), and the lack of a token to distribute governance to the community all persist for the NFT marketplace leader. Concerns like these fuel the gold-rush like euphoria for potential creators who are nimble enough to try to solve for user concerns to create bigger, better, faster, cheaper marketplace.

The future outlook for NFTs is bright… for now

There’s room for potential creator, admirer, and investor as NFTs are still very much in the early phases of development and still have to find where they fit in. Whatever level of engagement you plan to have (or annoy), for now, it seems as though the growth potential is promising. Market value and societal acceptance of blockchain technologies is still in its infancy and rising steadily.

One thing is certain though, market competition won’t prevent blockchain giants like Ethereum from dominating this market because they have such a stronghold on dApps – and it’s unlikely OpenSea or Axie Infinity will fall into obscurity any time soon, though competition will arise and market share will evolve. 

As marketplaces become increasingly saturated with a variety of NFTs and token standards (and less focus on gaming), companies specializing in specific market segments will struggle against their competitors unless they can differentiate themselves.

What are your market predictions for NFTs in the next 3-5 years? And what level of involvement do you plan to have?