Will the market revive in 2024?

Despite the prolonged downturn and the negative backdrop, such as OpenSea cutting half of its staff just last week, the market is projected to nearly double from $1.6 billion in 2023 to $3.2 billion by 2027. NFT- volume in October was at its highest since the end of August and 38% higher than the lowest week in September, based on Nansen’s data.

The primary appeal lies in the inherent properties of the tokens – providing proof of ownership and ensuring provenance, which is crucial in sectors such as art, gaming and customer engagement. NFTs are still seen as a gateway to fostering a more transparent and accountable digital ecosystem.

Speaking about the obstacles to market growth in 2024, Matt Medved, the co-founder and CEO of media company nft now, told me in an interview, “Many of those outside of this niche community associate NFTs with cookie-cutter PFP projects and nonsensical price points Similar to crypto’s early days, some even write off the entire sector as a “scam.” Education is critical to helping the mainstream market understand the power and potential of digital ownership, emerging use cases, and the paradigm shift we’re dealing with. web3 to see, to understand.”

John Wu, president of development firm AVA Labs, highlighted the transformative potential of NFTs in an interview with me: “NFTs provide a way for artists to establish ownership of their digital creations, create new revenue streams and build communities around artists’ involve work”.

Here are five other trends experts foresee for the NFT trajectory in 2024.

Integration with real world assets (RWAs)

The integration of NFTs with RWAs reveals possibilities to transform physical (illiquid) assets into highly liquid on-chain tokens and facilitate instant cross-border investments. The transition from purely digital assets to a mix of digital and real assets can broaden the scope and appeal of NFTs, bridging the gap between the traditional financial realm and the nascent blockchain space.

“RWAs make for an incredible NFT use case that turns illiquid RWAs into highly liquid on-chain tokens, enabling instant cross-border investment in all kinds of infrastructure and other projects,” Max Thake of the blockchain platform peaq told me in an interview said.

In real estate, the tokenization process aligns with millennials’ preference for more flexible investment and ownership models, which is changing market dynamics. Meanwhile, in the realm of art and collectibles, tokenization provides a mechanism for fractional ownership, allowing a broader spectrum of investors to participate in the ownership of high-value art pieces. This not only increases market liquidity but also ensures price transparency.

Need for regulatory clarity

Experts are calling for a more user-friendly infrastructure and regulatory clarity for NFTs. A clear regulatory framework is seen as essential for the protection of consumers and investors, to ensure a level of stability necessary for the NFT space to mature and grow.

This sentiment underscores the integral role of a clear regulatory framework in cultivating a stable and reliable NFT ecosystem, which in turn can propel the industry to a more sustainable growth trajectory.

Although it is unlikely that we will see any regulatory moves regarding NFTs in 2024. “In order to encourage a fairer regulatory approach to NFTs, the industry must first focus efforts on educating policymakers about the value and nuances of NFTs, separate from those of cryptocurrencies. and regulations are warranted, creating a level playing field that accounts for the individuality of different Web3 technologies is a complex task — and one that shouldn’t be rushed,” Rusty Matveev of blockchain app Calaxy told me in an interview.

Market growth leading to value-based NFTs

The initial cosmic growth of NFTs, often driven by speculation, is turning into a more value-driven market. In 2024, projects must introspect about the real value and utility they bring to the table. This shift results in more sustainable and valuable NFT projects that withstand market fluctuations.

“NFTs have one use case that affects fashion, rare gems and pharmaceuticals: counterfeit prevention. Whether we’re talking about high-value clothing and handbags or malaria medication in Africa, counterfeiting is a big problem. In the rare gem market, NFTs can be used to verify whether a stone is ethically sourced from a mine that did not rely on child labor,” Modulus CEO Richard Gardner told me in an interview.

In another example, authors and educators transitioned their works to NFT formats, giving rise to NFT Publishing Marketplaces such as Bookwire, which provided a platform for such digital formats.

This thought process is instrumental in steering the NFT market in a more value-oriented and sustainable direction, where projects thrive on the utility they provide rather than the speculative hype.

“What happens next is a calmer, more reasonable and sensible search for use cases where NFTs can add real value … we will see more and more NFTs that are valuable based on their utility, not mere speculation,” Thake said added.

Environmental issues

The carbon footprint associated with the calculations required to validate transactions and create new tokens on the blockchain. An average NFT is projected to emit 211 kg of carbon dioxide (CO2) over its lifetime as a result of the processes involved in its creation and procurement.

Ilya Rybchin, a partner at business consulting firm Elixirr, highlights an ethical conundrum facing environmentally conscious consumers. In our interview, he mentioned that “many of the same consumers who are interested in NFTs are also environmentally conscious. For them, investing in an asset that causes a tremendous environmental impact creates an ethical dilemma.” Companies must therefore consider the environmental impact.

Brand and artist collaborations

Collaborations between well-established brands, artists and the digital art communities are seen as a significant step towards advancing NFT adoption and creative expression.

The recent launch of Web3 artist residency by Adidas highlighted the convergence of art and fashion to a wider audience of creators and investors. Collaborations help foster a more inclusive NFT ecosystem, leading to more mainstream acceptance of NFTs.

“Initiatives like the Adidas Digital Art Studio Residency have the potential to be a significant catalyst for the NFT market’s resurgence. Engaging artists and creators in such programs will help drive NFT adoption and creative expression,” Rusty Matveev told me in an interview.

Matt Medved believes that innovation and culture drive the market’s growth. As he noted in an email to me, “NFTs have helped bring blockchain technology mainstream by engaging the creative industries and ushering in a new generation of creators and builders in web3. As we do more of our daily lives digitally, the ownership layer will be important across every category Fortune 500 brands like Starbucks and Lufthansa are launching loyalty programs left and right.

While experts agree that the future of NFTs will not look like the bull run of 2021, some are talking about the potential revival of the market in 2024. This positive outlook stems from utility and value-driven projects, creative collaborations and demand for real-world applications .