2021 is just beginning and there is already vastly greater price and network activity taking place on blockchain networks. Among the wide variety of cryptocurrency assets, one specific asset class has been capturing the lion’s share of recent attention. The “Non-Fungible Tokens (NFT)” ecosystem has been exploding in terms of trading volume and price rises.
NFTs have experienced a boom in adoption. Digital art, real estate, and limited edition items have all been launched in NFT format as a tool for unlocking value and establishing verification. In this VYSYN Ventures release, we will be identifying some of the developments in the NFT ecosystem that are bringing this technology into the limelight.
Record breaking NFT sales as the asset hits mainstream
In December 2020, “Beeple” sold 20 of his digital artworks for $3.5 million. At the time, this represented the all-time record sale for artworks auctioned on the Nifty Gateway, a marketplace for limited-edition digital items.
Beeple has become the first artist to auction a purely digital, NFT-backed artwork at a major auction house. The auction runs between Feb. 25 - March 11 at Christie’s. On the first day, bids have already crossed $2 million, with 14 more days to go. For the first time, the auction house, Christie’s, will accept the cryptocurrency ‘Ether’ as payment.
Setting the tone for this event is another record-breaking sale which has almost doubled the December 2020 sale referenced above. A Beeple artwork, “CROSSWORD”, which was originally sold in November 2020, was resold on February 24th, 2020 for $6.6 million. CROSSWORD is themed on the U.S. 2020 presidential election.
According to reports, NFT transactions tripled in 2020, raising the total value of the market to over $250 million. The past year was lucrative for speculators in the NFT market, with reports revealing that many traders made six-digit profits in 2020. NFT art sales have attracted significant interest lately. Apart from Beeple, some other top brands are adopting the emerging innovation including Turner Sports, Louis Vuitton, Nike, Formula 1, and Breitling. The entry of these well-established brands is driving NFT into the mainstream.
A Class Of Assets That Is Serving The Virtual Economy
The increased adoption of NFT coincides with the global revolution caused by the Covid-19 pandemic. This is likely linked to netizens staying indoors and discovering opportunities in the virtual world.
According to L’Atelier, as of May 2020, the economic output of the virtual economy was $66.2 billion. This is equivalent to the GDP of Bulgaria. Gaming platforms like Fortnite, Minecraft, and virtual worlds like Decentralized constitute a market size of about $100 billion.
The virtual community is growing at a very fast rate across the globe. So far, over 2.5 billion people in the world are participating in one virtual ecosystem or another. The transition of traditionally offline solutions into the online space has been on the rise. It is estimated that the global gaming market, a market with strong use cases for NFTs, will grow to more than $180 billion in 2021.
Several significant NFT sales linked to the global gaming market have already happened in 2021. Axie estate sold for 888 ETH, HashMask sold for 420 ETH, and CryptoPunk sold for 605 ETH, as detailed in the following Twitter Thread by Delphi Digital analyst Piers Kicks.
NFTs are shaping up to be the asset class of 2021
Data from Google reveals that more people in the US are searching for information on NFTs than ever before. In February 2021, the search volume for “NFT” surpassed the number of searches for “DeFi”. Future search volume for “NFT” is anticipated to double while “DeFi” is on a downward trend.
(Source: Google Trends)
Events like the ongoing auction at Christie’s are a trailblazer for NFTs as an asset class. The event is a monumental trust signal and will spur more NFT participation from enterprises that would have previously left the asset class unconsidered. NFTs could emerge as a revolutionary tool for unlocking trapped value in various industries. Growth in the global gaming industry is another tailwind driving increased adoption among the asset class. With huge interest from globally recognized entities and rapidly growing prices, NFTs are shaping up to be the asset class of 2021.