The NFT market looks set to move on from the turmoil of 2022. But the industry still faces significant long-term obstacles to growth this year., Including security, UX and falling interest from brands.
According to a report published earlier this month, the NFT market is back to its highest level since May 2022. This indicates that the market is back on track from the many crypto crashes in the past year. The Terra-Luna crash of May 2022 was the first dramatic moment of that year and marked the end of the crypto bull market. NFT trading volume and sales fell shortly after.
So far, the conversation surrounding the NFT market this year has focused largely on the emergence of new market blurbs. Its rise has not been undeniable, with observers speculating that the market is home to an unusual amount of wash trading.
A new report from CoinGecko shows that February 2023 saw a 126% increase in wash trading from the previous month’s $250 million volume. Wash trading apparently accounts for a combined 23.4% of “unadjusted trading volume” in the industry’s six largest marketplaces. With rewards provided by some marketplaces, users were incentivized to increase their trading volumes. In the month following the launch of the $BLUR airdrop, BLUR saw wash trading triple.
Brands have shifted focus from the NFT market
According to DappRadar, the recent collapse of Silicon Valley Bank contributed to the temporary decline in the NFT market. However, “the recovery was quick, showing the resilience of these top-tier NFTs,” the source said.
According to Alex Salnikov, Co-Founder and Chief Strategy Officer of Rreible, a number of obstacles could make 2023 a difficult year for the industry. “These turbulent times have also not helped the stigma around NFTs which continues to be a hindrance to growth. The general population is still skeptical about NFTs, and as we’ve seen, some mainstream brands are choosing to avoid using the term ‘NFT’ and instead refer to ‘digital collectibles’ to appeal to the masses. Using words like
Some of these brands include Reddit’s “Collective Avatars,” Dapper Labs’ NBA Top Shots, and Candy Digital’s Major League Baseball and Stranger Things partnership.
“During the bull run, we also saw an influx of big brands wanting to experiment with NFTs,” he said. “This year, we’ve seen brands like Meta take hold of Web3 initiatives. I am sure these brands will come back. Now is the time when everyone has to make tough decisions about how to allocate resources, and web3 strategies are a huge undertaking that many companies don’t have the time or resources to take on during this market.
(It’s worth noting that Amazon recently announced plans to enter the NFT space. But that’s largely been a blip, as bigger brands turn to AI and other revenue streams.)
“Moreover, the ongoing wars between centralized markets are affecting the overall NFT market. Traders are trading NFTs like they are tokens, and the market is forgetting what really matters. Artists, creators and their Communities matter most,” Salnikov said.
it comes down to usability
JD Lasica, CEO and co-founder of Amberfi, a Web3 startup that is set to launch a new creator-focused marketplace called Expressions in April, believes it is time for the market to mature. Despite minor setbacks, there are plenty of reasons to be confident. “We live in a region that sets its internal clock to minutes and seconds instead of months,” he said.
“Over the next year, we should see a slow if unsteady upward trajectory in the NFT space for two reasons: Broader use cases for NFTs in fashion, retail, finance, real estate and other large verticals as NFT monkeys move beyond JPEG More and more digital-forward collectors will want to trick out their online lifestyles with cool digital swag — and brands and manufacturers are eager to please.
However, the one elephant in the room is the usability problem. NFTs are notoriously insecure, easy to steal, and hard to retrieve once stolen. Until these features become bugs, it will be difficult to pitch NFTs to a mass market audience. “Many projects are breaking down barriers to widespread adoption,” Lasika continued. “Everyone is looking to the latest hot new collection instead of trying to solve two main problems: safety and utility.”
Key word: “community”
“Even space giants won’t open airdrops or buy NFTs for fear that a bad actor will drain their wallet. We need to build trust in our space. Once it’s restored goes and utility improves, we are out of the running.
Lasika refers to a technique known as “airdrop phishing”. When a wallet owner connects to an airdrop and signs a transaction, it can leave the wallet open to exploits. A survey last year showed that only one in ten NFT holders were scammed. Half of users have lost access to NFTs in the past.
Strath Schrader, Executive Creative Director of Palm NFT Studios, believes that communities are key to the future of the NFT market. “This will continue to drive market growth as these brands begin to engage their core fans in NFT experiences. New users will continue to redefine the way we use this technology.”
“The history of NFTs so far has really been about the marketplace. But the way we engage with brands is much more than a transaction. The NFT platform and features that will drive this next growth cycle are core fans Will focus the communities’ experience: empowering them with access, rewarding their support, and providing a share in what they love.
BeInCrypto endeavors to provide accurate and up-to-date information, but shall not be responsible for any missing facts or incorrect information. You comply and understand that you should use any of this information at your own risk. Cryptocurrencies are highly volatile financial assets, so do your research and make your own financial decisions.