Non-Fungible Tokens, better known by the acronym NFTs, have become some of the most controversial pieces of technology to come out of the blockchain ecosystem since its origins. What was once seen as the shining beacon of blockchain, bringing in millions of dollars to the industry and spiking public appeal, is now looked on with scorn, with most people seeing them as a complete scam.
NFTs have had quite an interesting 18 months, with both public opinion and total value swinging on a pendulum from high to low. At its most valuable, the NFT market exceeded billions of USD, with the most expensive NFT selling for nearly $70 million. Yet, a little over a year later and that market is almost non-existent, with much fewer transactions per month and less public interest than ever before.
But what went wrong with NFTs, and what caused their whole market to evaporate overnight? Many believe that the culprit lies in the lack of functionality that NFTs provide. While being digital art, they are inaccessible and don’t offer any benefit apart from personal ownership. Even that, in some cases, isn’t a certainty.
In this article, we’ll dive into the world of NFTs, demonstrating how their market crashed down and the central factors that led to its demise. From there, we’ll also explore exactly how this market can regenerate, making reference to leading Web 3 companies in the space like Peer.
Let’s dive right in.
What Went Wrong With NFTs?
The NFT market exploded back in 2021, following the rise of cryptocurrencies and gaining momentum as media outlets and celebrities started to talk about them. As more and more people started to buy NFTs, their value began to increase. From there, investors would continue to buy at inflated prices, creating a huge bubble around the digital assets.
While some people thought that this bubble would continue to increase forever, others saw that there was no real utility behind NFTs. The main argument behind NFTs, or better yet, their main purpose, was wholly aesthetic. By buying an NFT, you owned it and could display it. However, that didn’t stop others from pointing out that there wasn’t much power in owning a digital image as it could easily be copied or duplicated.
When you buy an NFT, you buy the digital certificate, with your name being listed as the owner on the blockchain. While that cannot be duplicated, the digital image that you’ve bought easily can, effectively taking away any point in buying one. This fact led many to PrintScreen NFTs and republished them, instantly poking a hole in the main reason for buying an NFT in the first place. And, as the market started to turn, the other reason – as a financial investment – also began to evaporate.
Without a core reason to own an NFT and with the market beginning to spiral, people began to rapidly sell-off. NFTs that were once worth thousands or even hundreds of thousands of dollars fell to nearly zero. Just like that, without any utility or functionality, the industry crumbled.
How To Restart the NFT Market
In order to bring more attention to the NFT market, it has to push beyond its initial appearance. While the first surge of public attention was enough to raise the average cost of these digital assets, it was unsustainable in the long term. Without a real function in this market, once the excitement died down, the only thing keeping the prices stable also faded away. With that in mind, there has to be an integral function that will generate renewed interest in NFTs.
Peer is one Web 3 company that’s focusing on bringing this utility to the world of digital assets. Peer is a vertically integrated blockchain stack, offering a diverse multi-layer system through which NFTs, metaverses, and blockchain technologies can be hosted. Peer is launching the world’s first Web 3 NFT, which focuses on creating a usable environment around the digital asset.
Instead of just being an asset in your portfolio, Peer brings functionality to NFTs by affording them real-world utility. At its core, Peer is building a social application, creating a space where those interested in Web 3 can share experiences and connect. By placing real-world NFTs at locations across the world, Peer can bring people together, creating a Web 3 social app that drives utility for NFTs.
By connecting the real world and the digital world, Peer creates a new function for NFTs. With this, they will have more than just aesthetic or investment purposes, helping to sustain the industry. Once the world of NFTs focuses on this multi-functionality of digital technology, the wider blockchain community will flock once more to this exciting digital medium.
Peer is a wonderful example of making this happen, with their ecosystem rolling out over the next 12 months.
In order to restart the NFT market, the industry needs to place emphasis on the real-world functionality of these systems. Instead of relying on public hype and excitement, there needs to be a further reason to own and use NFTs. Without this functionality, it will be impossible for the public to regain their interest in these digital assets and for the industry to reach its previous heights.
By following examples like that set out by Peer, we can see that Web 3 does already have the needed infrastructure to make NFTs functional. By creating ecosystems that we can interact and engage with around NFTs, they become much more than just stagnant digital assets. If industry leaders like Peer are able to leverage their functionality and breathe a whole new life into NFT utility, we could see an explosion in this market over the next few months.
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Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.