- NFTs have fallen off a cliff.
During the first couple months of 2022,
the NFT market continued to grow,
even while the crypto market declined,
then crashed,
then crashed again.
Now the NFT market has also fallen.
So how bad is it?
OpenSea, the world's largest NFT marketplace,
reported a 75% drop in sales volume.
The average sales price or a Bored Ape dropped by more than half.
The average cost to buy an NFT
was nearly $1,800, now barely over $400.
Oh, you can't forget about the poor fella who bought Jack Dorsey's first Tweet
for $2.9 million
and then tried to resell it a year later
and the highest bid was $10K.
So does this mean NFTs are dead?
That's what we're going to uncover.
And in doing this research, I realized I have quite the controversial opinion on the future.
But before we get into the future of NFTs,
Everyone's favorite use case,
or maybe the most hated, depending on who you ask,
is as collectibles.
This is the most simple use case as well.
You know, the one where people buy expensive JPEGs and
use them as their profile pictures on Twitter.
The utility for a collectible is
just that, a collectible.
Something you think is cool,
maybe you have an emotional connection to it.
You could try to sell it for more money down the line but,
but there's no guarantee of a positive ROI,
That's the best I could come up with.
😭
Nevertheless, this by far is where most money is going
within the NFT market.
In hindsight, it's easy to see the collectible side of things
was getting a little bit oversaturated.
I mean Coca Cola and Campbell's soup made NFTs last year.
Charmin made them too.
I'm doing poorly today.
When Soup and TP brands are doing a thing that's
supposed to be cool,
it's not a great sign.
But now let's look at another kind of NFT - art.
And you might be asking yourself,
Isn't art collectible?
Yes.
The distinction here is that collectibles in the NFT community
community are usually created by some kind of AI
and are always part of some limited edition collection.
Think Bored Apes or CryptoPunks
Art, on the other hand, is created by a human artist.
That could mean some sort of painting or photo, music,
animation, or even film in the form of an NFT.
And there's some pretty cool stuff happening here.
There's so much more going on in the NFT art world
than just your childhood memories turned into nightmares.
And one is a project that I've
been tracking for the past few months.
The first movie to be released and funded by the sale of NFTs.
Kevin Smith, aka Silent Bob, will be
releasing his next film called "Killroy Was Here"
as an NFT, and it seems to be going pretty well.
Musicians are getting in on the action as well,
- because sooner or later, the labels are going to have to come on in,
and they're going to have to come on home and they're going to have to sit at the table,
and understand that their catalogs and things that
they hold on to are better served in the blockchain
than sitting in the catalog collecting cobwebs.
- Snoop's point here is that NFTs offer
musicians a way around the corporate music industry,
one that's famous for exploding artists.
I mean, remember how Prince literally changed his
name to a symbol in attempt to get
out of a contract with his record label?
And to further this point, the top ten NFT
sales in music last month were all released and
sold without the involvement of a major record label.
Now that is utility.
Now, gaming is the third sector of NFTs.
Over the last year or so, the sector has had
the highest number of active wallets and sales and continues
to do so even in this bear market.
But the highest number of sales does not mean the money.
Collectible sales net ten times more than gaming.
Axie Infinity is the most popular game using NFTs.
The characters, or axies as they call them,
are NFTs that the player must buy or
rent in order to actually play the game.
And there are plenty of other NFT games,
but the overall consensus seems to be that
blockchain games need to just get better in
order to compete with the existing gaming world.
However, the future utility of NFT gaming has
got to be one of the most exciting.
Just think about how much time, effort, and sometimes money
you put into getting that upgrade in a game. It's huge.
But after you're done playing, all those hardearned assets
are just stuck there in that single game.
Think about how cool it would be to be able
to use those assets within other games or maybe rent
to sell or trade them to another player.
There's so much potential upside for gaming NFTs, but
the challenge here is to keep these things games.
We don't want every game to turn into a job and
I think that's what they kind of are right now.
Now, metaverse NFTs are the fourth sector of NFTs and
much like gaming, the sector still has a really long
way to go before we see its true potential.
Like a long, long way.
But wait, you say to yourself while watching
this video in your left hand and your
name also happens to be Matt.
Any Matts out there who are doing
that are freaked out right now.
But you might be saying,
we already talked about gaming.
Isn't metaverse and gaming NFT the exact same thing?
Well, not exactly, no.
Think of it like this, a metaverse NFT is like the deed to land.
Then let's say an office space is
built on top of that land.
This space is home to a thriving business.
The office space itself is more like a gaming NFT,
an NFT built on NFT land.
I know it gets dorky really quickly.
It's like dork built on kind of more dork.
But much like the real world,
land in the metaverse is not cheap.
The average cost of a Sandbox land piece is $2300.
And they've been purchased for far more, as much as
half a million dollars, depending on location.
But despite all the talk about the Metaverse recently,
the sector is actually still quite small.
In fact, metaverse NFTs only make up about
1% of all sales by number of transactions.
So even though there's massive hype, the sector, at least in
terms of NFTs, has stagnated, at least for now.
Now let's take a look at utility NFTs.
These NFTs offer the holder some sort of utility.
Think, does this NFT solve a real problem?
Does it have a defined function?
If so, then you probably have a utility NFT.
Probably the most well known of this type
is the Ethereum name service, or ENS.
ENS provides holders a readable name
for their Ethereum wallet address.
Instead of something like this,
you get something like this.
ENS addresses are still quite popular, especially
after the domain name 000.eth
recently sold for 300 ETH.
But there's more utility NFTs, a company called
StockX that sells rare sneakers, collectibles, and electronics
use these artistic NFTs as a kind of
voucher for the real item within their warehouse.
So you can buy the NFT and then trade
it or sell it on their marketplace or redeem
it at any time for the real item.
There's also promising uses for the medical field.
Right now, there's a company called Aimedis
who's trying to move patients' medical
records onto the blockchain.
This will make them accessible to any
healthcare provider, no matter where the patient is
or which doctor they see.
They also plan to make patients medical data anonymous,
meaning it would allow patients to sell
their anonymous data for research purposes and actually
make some money doing it.
So maybe you have an especially small
body part, like a medical anomaly.
You might be able to profit off of that information.
Passive income.
In the first half of 2022,
utility NFTs have lagged far behind collectibles and
gaming in nearly all metrics.
But I think that this will likely be the highest value
see the recent dip in NFT sales as
proof that the bubble has officially popped.
They'll now just fade out in the horizon
like Beanie Babies or the Tide Pod challenge,
but I don't think that's going to happen.
NFTs remind me a lot of VR headsets.
You put one on and you're like, wow,
this is going to be the future.
But it's not there quite yet.
There are so many awesome potential use cases
for NFTs that are just now being explored.
It's like the tip of the spear right now.
If NFTs and blockchain technology became widely used,
we would see drivers licenses, medical records,
passports, certifications, diplomas, all easily accessible
with just a cell phone.
Is that going to happen overnight?
Obviously not, and it probably won't even
happen in the next couple of years.
But this is exactly what NFTs
are perfect for - verifiable digital ownership.
So breaking down NFTs into different sectors is
a useful way to see how the space
is developing, where the money's going.
But these sectors often intersect one another,
and they certainly aren't set in stone.
And with that in mind, I believe there
will eventually be a flippening of NFTs.
This is my controversial opinion, collectibles will continue
to exist, but will no longer be what
everyone thinks when you say NFT.
Likewise, art as NFTs will just solidify
as a new medium for digital art. It makes sense.
Music NFTs make a lot of sense as well.
In a time where most artists get popular on social media anyways,
then blockchain games and the metaverse,
those will hang around but need a whole lot more work before
people actually want to use them on a daily basis.
It's the utility NFTs where I believe the large
scale adoption of this technology begins and stays.
And don't get me wrong, JPEGs are kind of cool,
but the idea of not having a paper Social Security card
or having Verifiable labels to help combat counterfeit goods,
or having a truly tamper-proof shipping label, that
seems like the real future to me,