NFTs came into the world with a bang, transforming the financial ecosystem and charting a course with some fascinating highs and lows. From the revolutionary CryptoPunks to the Bored Ape Yacht Club, the cultural rush behind the most infamous of NFTs has cooled somewhat since its heyday. However, the future of NFTs remains an evolving and exciting opportunity into the year 2024.
NFT - Genesis
Just like anything outside of the confines of the traditional, NFTs started out as something rogue - and, in the beginning, with very little fanfare. When the first NFT ‘Quantum’ was created by Jennifer and Kevin McCoy it was 2014. At the time, both blockchain and crypto were in their early stages. Their solution to prove the provenance of a purely digital piece of artwork unknowingly created an entirely new concept of intellectual property and ownership. These efforts alongside digital entrepreneur Anil Dash created what we know today as non-fungible tokens.
Explosion and stabilization
While blockchain and crypto exploded, NFTs lay dormant for some time. It wasn’t until the COVID pandemic that the entire world found itself needing a digital future, and NFTs accelerated into global markets. By the time famous auction house Christie’s sold Beeple’s Everydays: The First 5000 Days for $69 million and the wider world had sat up to pay attention, NFTs had already officially made its mark to those in the know.However, by 2023, the buzz had begun to wane, and investing and further adoption in NFTs began to slow. The extreme excitement and mainstream hype about NFTs had fallen off the front pages. That doesn’t mean that the future of NFTs is bleak.
Beyond art
The future of NFTs, in fact, lies in its adaptability. NFTs are more than just the pop culture art that made them initially famous, and expand well beyond the art world into virtual goods in gaming, music, publishing, real estate, or in virtual worlds like the metaverse, where NFTs represent owned land and digital wearables. The next time you’re in the metaverse, you can peruse the luxury brands that offer NFTs in the virtual store and come out dripping in Gucci or Yves St Laurent. Tokenizing of real-world assets, such as real estate, could open new investment and ownership opportunities, making these markets more accessible to a broader audience.With NFTs forging a new way to conceive of, buy and sell goods, there are arguably not many industries that NFTs are unlikely to touch in the years to come.
Changing demographics of NFT users
Understanding who uses NFTs and their preferences is crucial for its future. Boomers are proving to be wary of NFTs, leaving it to the millennial and Gen Z generations to take the majority of ownership. In the US, Gen Z and millennials are much more likely to invest in crypto and NFTs compared to older generations - in fact a fifth own cryptocurrency and digital assets. Boomers are keeping their investment firmly in property. If NFTs move into real estate, the younger generations may find a tool to break their way in.Millennials grew up hearing the dial-up tone if they wanted to get on MSN messenger. Gen Z on the other hand are the first generation native to digital technology and the digital economy. Some of the biggest ‘winners’ in the early NFT wave were under the age of eighteen; twelve year olds on their laptops at their parents’ kitchen making hundreds of thousands; fifteen year olds buying and selling for millions; and a string of baffled but delighted parents who must have thought that the whole thing was a hoax. It’s important to keep in mind that although this generation is certainly not exclusively ‘the’ generation of NFTs, the behaviors and preferences of these younger generations will be the ones to shape the industry’s future.
Technological Advancements
Here are just some of the technological advancements facilitating the future generation of NFTs:Scalability and efficiency: Ethereum 2.0 transition from proof-of-work (PoW) to proof-of-stake (PoS) aims to reduce energy consumption. Optimistic Rollups and zero-knowledge Rollups are reducing the costs, speed and efficiency of transactions.Cross-chain interoperability: The ability to transfer NFTs across different blockchains has become more widespread, enhancing their utility. These functionalities and newly created platforms are widening accessibility.Improved standards: The introduction of ERC-1155 allows multiple NFT collections to be launched as one smart contract, instead of having one for fungible tokens, and one for non-fungible.
The drive behind the future of NFTs
Accessibility, diversity and increased security is pushing NFTs into 2024 as a fundamental part of the digital economy. Whilst their initial boom may have faded, NFTs are really only just getting started.
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