The growing stature of NFTs in the crypto sphere
Non-Fungible Tokens (NFTs) are all the rage these days. In the middle of the prolonged crypto winter, this statement in itself is a testament to the influence NFTs have over the crypto sphere.
While crypto prices are in a freefall, a Bored Ape NFT has just been sold for almost $1 million. Saudi Arabia’s win over Argentina in the World Cup has also raised the value of the team’s NFT collection.
Could NFTs be the crypto’s unwitting savior? Do they have enough sway to help pull the market out of the slump, or are they nothing more than novelty items?
Fact or fad?
“Absolutely, the sale of this recently bored ape is a clear indication of the value preservation of this asset class,” believes Alex McCurry, CEO of Solidity.io that has helped launch the ApeCoin DAO NFT marketplace.
In a conversation with Economy Middle East, he argued that with eroding crypto prices, one would expect illiquid NFT values to implode. Instead, the market has seen some of the largest NFT sales in recent months.
“With the recent launch of the ApeCoin NFT marketplace, we have only seen an uptick in interest and NFT sales, which I believe will lead to price and value appreciation across the entire industry,” asserts McCurry.
Trey Smith, CEO of Web3 gaming engine, Mech agrees. “NFTs probably comes closest to being market outliers of the crypto market,” Smith told Economy Middle East. He reasons that NFTs are mostly used for either art or gaming. And during a bear market, most people are not going to be using liquidity pools, borrowing, lending platforms, or doing heavy investing. But they will still create art and play games.
“In a sense, if any part of crypto has any chance of decoupling from the rest of the market, it’s NFTs and gaming,” asserts Smith. That said, he believes NFTs are still seen as a novelty and are far from being considered mainstream or a safe investment, even by many crypto enthusiasts.
Richard Gardner, CEO of Modulus concurs. In his view, there’s a distinct market for most NFTs, including those in the art and sports segments, which is made up almost exclusively of ultra-high net worth individuals (UHNWI).
For the mainstream market, NFTs are nothing but novelties, while for a handful, they’re long-term investments, not unlike speculative bets on Beanie Babies or Hummel figurines, explained Gardner.
“Beyond those collector-Esque NFTs, there are real industry applications for non-fungible tokens, to be sure,” asserted Gardner. “However, there isn’t a great deal of correlation to the greater crypto market, other than it does indicate that crypto isn’t dead.”
However it’d be shortsighted to view NFTs merely as novelty items since they are a lot more nuanced than simple digital collectibles, believes Scott Brown, Founder, and CEO of NFT platform and marketplace VRYNT.
Brown told Economy Middle East that his platform, VRYNT, helps build an ecosystem around NFTs by repurposing them as both a credential and reprogrammable store of benefit to create an evergreen connection between consumers and brands.
“Once this takes hold, and non-crypto savvy influencers and their fan bases begin to adopt these new mechanisms, these new digital credentials will also begin to diverge from the whims of the crypto winters simply due to the shift in their audience,” said Brown.
This resonated with Lars Seier Christensen, chairman of Concordium and founder of Saxo Bank. “I think NFTs have a great future, particularly as they move towards more utility and premium content,” Christensen told Economy Middle East.
According to Christensen in the long run, good NFT projects should be defined by their value-add to buyers and collectors and to help brands structure their fan offerings better, since at the end of the day it is about creating real, lasting value for the NFT collectors and fans.
In fact, he thinks that in the long run NFTs won’t even be correlated to cryptos in the same way as they are today. “The turnover in NFTs is rather small compared to crypto, so it will rather be the other way around – a better crypto sentiment might improve NFT sentiment, not vice versa,” said Christensen.
Daniele Servadei, CEO and co-founder of Sellix agrees. “I do think that, with time, more and more proper uses for NFTs will appear,” Servadei told Economy Middle East. “If used and marketed in the correct way, NFTs will surely benefit crypto. They won’t, however, be its savior.”