While the concept of NFTs has been around since 2014, they were mostly under the radar until last year, when they suddenly commanded headlines around the world. Just as DeFi brought capital into the crypto market, NFTs are bringing people in — with puzzling artwork, profitable games, and even some practical use cases.
What is an NFT?
NFTs, or non-fungible tokens, are unique, non-divisible tokens that can represent ownership of a digital asset in a decentralized manner. Their inherent counterfeit-proof nature, and the transparency of the transaction process, make them a landmark Internet innovation.
What happened in 2021?
Last year was a wild ride for NFTs as they first gained attention from crypto enthusiasts and then institutional investors. Let’s take a look NFT data from 2021 to see which projects performed best.
According to Footprint analysis, the cumulative trading volume of NFTs was $21.5 billion by the end of 2021, compared to $120 million before 2021, a 200x jump in cumulative trading volume. The number of merchants also doubled from less than 1.3 million to 65.4 million by 2021, a 50x increase.
In Q1 and Q2, NFTs began to grow with adoption by sports leagues, artists and celebrities
In February, Dapper Labs’ NBA Top Shot video highlights were sold as NFTs, generating $226 million, more than the entire NFT market over the previous year. This made crypto investors from other categories take notice.
On March 11, Beeple sold its digital work, First 5000 daysfor $69 million in a Christie’s auction, the 3rd largest single auction for a living artist.
On March 23, Twitter’s CEO Jack Dorsey’s first tweet sold for more than $2.9 million as an NFT as of 2006, further driving the boom.
Other avatar projects, such as Larva Labs’ 2D CryptoPunks and 3D Meebits, have gained recognition in the media and among the general public.
In Q3, GameFi began to dominate the NFT space
Axie Infinity, the original breakthrough play-to-earn blockchain gamereached a transaction volume of $1.8 billion in August, a 1,500% increase compared to January 2021, with 2.8 million traders.
Perhaps more incredibly, the price of the game’s token, AXS, bucked all known crypto trends and broke away from the price movements of BTC.
The trading volume of Art Blocks, a generated art project, also reached a peak of $587 million in August, and the number of traders exceeded 20,000. It has since become the largest NFT art project in terms of sales.
To outsiders, Loot seems like the strangest example of a breakout NFT project. Unlike most others, which sell signed images, Loot NFTs consist of 8 lines of text that spell out randomly generated pieces of fantasy adventuring equipment—warhammers, dragonskin belts, amulets, etc. There is no game playable yet where owners can apply this to .
Bored Ape Yacht Club (BAYC) has become especially popular with celebrities. In August, NBA star Stephen Curry paid $180,000 for a Bored Ape. Other owners include Jimmy Fallon, Logan Paul and Shaquille O’Neal.
In Q4, Metaverse Real Estate became precious
On October 28, Facebook announced that it would be changing its name to Meta and going all out in the metaverse.
This challenged the public’s imagination, causing people to speculate about the future value of digital property. By the end of 2021, more and more investment companies have started buying land in virtual worlds such as The Sandbox and Decentralized. On November 23, a piece of digital land was sold for $2.43 million in Decentraland.
NFT 2021 Summary: Lots of bulls with little staying momentum
Collins Dictionary named NFT the 2021 Word of the Year.
It is true that price explosions in various NFT subcategories have drawn considerable attention to this emerging digital technology. However, none of them managed to maintain momentum for more than a few months, after which investors found a new promising niche, and trading volume fell in the previous one.
How will NFTs evolve in 2022?
More industries and brands
In the second half of 2021, many brands began to participate in the NFT market, including Nike, Adidas, Budweiser and Disney. It is likely that more brands and companies will join.
Creators will focus on solving real problems
NFTs are still a very young area of the crypto industry. As trading volume, asset liquidity, and the number of new users expand—along with Web 3.0 infrastructure—creators will work to solve real-world problems like copyright claims and digital asset validation.
NFTs will complement real assets
Some innovative companies have already started using blockchain technology to issue tangible assets in the chain for a host of reasons. Music NFTs, for example, are beginning to change how artists profit from their work.
Benefits for CryptoSlate Reader
Date and author: January 14, 2022, [email protected]
Data Source: Footprint Analytics – 2021 NFT Annual Report Dashboard
This article is part of our Year in Review series.
What is Footprint Analytics?
Footprint Analytics is an all-in-one analytics platform to visualize blockchain data and discover insights. It cleans and integrates chain data so users of any experience level can quickly start exploring tokens, projects, and protocols. With over a thousand dashboard templates plus a drag-and-drop interface, anyone can build their own custom charts in minutes. Uncover blockchain data and invest smarter with Footprint.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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