In traded NFTs, sales topped the $billion mark in just a few months, followed by $billion per quarter and only then to be surpassed by $billion per month, according to data collected by nonfungible.com. Already sales have totalled about $11.8 billion in 2022.
However, in saying this, the market is more speculative and volatile than ever before. This kind of growth usually sees market instability, unrealistic expectations and even disappointments. Where business is concerned, NFTs can represent existing physical objects, whether it’s real estate or sneakers, or entirely new creations such as artworks, collectibles, sports memorabilia and other rare objects. Indeed it’s often sports, like the arts, where you find some of the newest trends being embraced — and monetised.
Collectibles: hot property?
One of the most significant trends in NFTs right now is the popularity of collectible NFTs. In sales, NFT collectibles outstrip by a huge margin sales of games, art, metaverse and utility NFTs. It’s probably why the Australian cricket board and players union just recently inked a multi-year licensing deal to issue NFTs to make the most of the demand for digital collectibles.
While NFTs can sell for crazy amounts of money, that doesn’t mean it’s a sure bet as an investment. An NFT of the first tweet issued by Twitter found Jack Dorsey initially sold for $2.9 million in March 2021, but when the owner, crypto entrepreneur Sina Estavi, tried to resell it recently, he was offered a measly $6,800. In short, the NFT market may be in a bubble, but it’s never clear this is the case until it’s too late, when the bubble bursts.
Research before deep diving
Just because Coca Cola and Gucci have created NFTs doesn’t mean every business should rush to create their own digital tokens. While FOMO might push a business to try to avoid missing out, these huge, global brands can afford to take a punt on an unknown investment like a branded NFT. If it works, it can add to the brand equity in this new, virtual space and if it doesn’t, it was just an experiment.
The secret to the execution
There is a lot more to the potential of NFTs than just some niche digital collectibles if executed well. Although it requires a well-developed strategy and an ongoing investment in time and money to make NFTs a genuine part of a multi-faceted digital consumer experience, the opportunities are significant.
Extending product lines into the digital realm, whether it’s t-shirts, soft drinks or property, presents some exciting possibilities. Brands like Nike are already thinking along these lines, according to its CryptoKick patent that links a pair of Nike sneakers with a virtual twin. This sort of innovation gives buyers a stronger sense of ownership of the brand in both the physical and virtual realm and allows the brand to market to consumers and understand more about their preferences into the digital space.
Possibilities are promising
The rise in popularity of NFTs shows that the digital realm opens up many exciting possibilities.
Yet the market is highly changeable and while collectibles may be popular right now, there’s no guarantee this will continue or that the cost of digital creations in the form of NFTs will hold their value.
To be prepared, businesses can look at ways to create NFTs with an exclusive value that will be attractive to customers, whether that’s limited edition artworks, collectibles or unique attributes or exclusive offers. The key is to see the potential of new markets and where to convert your business’s existing product or service into a viable, valuable digital offering.