- Non-fungible token market grew exponentially in 2020, and we believe it may experience a greater boost in 2021.
- Many blockchain projects currently leverage the unique features of NFTs, and the future is really promising.
In 2020, the non-fungible token market grew by almost 300%, tripling its size in 2019. More than $250 million exchanged hands in transactions involving NFTs. A study by NonFungible.com showed that the Non-Fungible Token (NFTs) market is growing at an alarming rate. According to NonFungible.com, NFTs have what it takes to be a leading digital asset class for the virtual economy. The applications and financial cases of non-fungible tokens make them indispensable in the crypto industry.
What are Non-Fungible Tokens (NFTs)?
What does ‘non-fungible’ mean? Fungibility is the characteristic of an asset or good, which shows it can be readily interchanged for an asset of the same kind. On the other hand, a non-fungible asset cannot be interchanged; examples include artwork, cars, houses, etc.
Before discussing the non-fungible token market growth further, let us have a clear understanding of NFTs. Non-fungible tokens are blockchain-linked digital assets that are unique and cannot be interchanged. We can also define non-fungible tokens as crypto tokens used to represent assets. These tokens represent something unique; thus, they are not mutually interchangeable. You can compare non-fungible tokens to represent artworks, collectible sports cards, virtual real estate, and much more. Aside from their unique features, NFTs cannot be copied or broken into smaller fractional units.
Non-fungible token market growth
The non-fungible token market is experiencing a significant boom as big names join the growing industry. Some crypto enthusiasts believe that the non-fungible token is the future of collectibles. NFTs have the capacity to expand the digital resource economy, thus giving users the means to prove their ownership of goods. NonFungible.com used proprietary technology to track activities in the non-fungible token market.
The firm revealed that all NFT transactions’ total value increased from $62 million in 2019 to $250 million in 2020. Also, the total number of active wallets transacting NFTs grew from about 112,000 in 2019 to 222,000 in 2020. This is a staggering 97% growth in one year. In like manner, the number of sellers grew by 66%, while buyers increased by 24% within the same period. In 2020, the number of active wallet users increased exponentially, making enthusiasts believe there will be higher growth in 2021. Notable investors like Mark Cuban and Chamath Palihapitiya are all bullish on the growth of the NFT market.
However, some crypto experts are less convinced, citing concerns about the inability of NFTs to command high trade volumes. For instance, the weekly volume of the non-fungible token market currently stands at $8.2 million. In comparison, the weekly trade volume on Bitcoin futures in January alone was worth more than $500 billion. Although these concerns are true, we have to remember that the NFT market is still in its infancy.
Today, crypto assets are well established, and the NFT market logically represents the next phase of blockchain. If people can invest their money in blockchain in the form of crypto assets, they can also do the same with other goods.
Uses of NFTs in the Non-Fungible Token market
We can utilize non-fungible tokens in a number of ways, such as:
- The creation of digital or crypto collectibles.
- Managing the ownership of digital items.
- A proof of the authenticity of digital art and allowing artists to retain their copyright.
Arguably the most popular application of NFTs is CryptoKitties. It is an Ethereum-based game that allows users to buy and sell adorable digital cats. The project was launched on the 18th of November, 2017, and it garnered over 150,000 users and $15 million in transactions within two weeks.
What does the future hold for the Non-Fungible Token market?
The application of NFTs has grown beyond gaming. We already have businesses and projects like Ethernity, Cryptograph, KnownOrigin, etc., exploring ways to utilize and apply NFTs. Although NFTs have their challenges, their application in proving ownership for both digital and real-world assets is indispensable.
With the numerous applications of NFTs, the non-fungible token market certainly has a bright future.