The non-fungible token market had a great month in August, exceeding previous sales records. Several digital art collections, such as Bored Ape Yacht Club and Pudgy Penguins, pushed sales of NFTs to $3 billion on OpenSea alone, with more than 300 million transactions in a single day.
Despite its tremendous development, Lennix Lai, director of financial markets at crypto firm OKEx, told that the space is still in at a “very early stage.” Rather than existing solely on a digital level, Lai advises that NFTs should seamlessly integrate with real environments.
“I think you need NFTs if you want to develop anything impactful for the real world if you want to bring crypto mainstream,” Lai told. “I believe government adoption would be the final state.” Lai envisions a world in which people’s data, such as social security numbers and COVID-19 Immunization cards, is securely kept on the blockchain as unique and immutable data. However, Lai stated that the business requires “a lot more creativity.” “The future is not that fascinating if NFTs are solely limited to collectibles,” Lai added.
For the time being, NFTs – digital representations of artwork, sports cards, and other valuables linked to a blockchain – must overcome several obstacles before becoming more widely accepted. Another issue is storage. According to Vanessa Grellet, head of portfolio growth at CoinFund, a digital asset venture fund, certain investors who purchased NFTs on certain platforms in the past had difficulty when those sites dissolved.
“I believe [NFTs] will become popular in the next five years,” she told Business Insider. And, like Lai, she envisions NFTs having applications beyond art and collectibles. “I’d like to see additional assets enter the NFT sector,” Grellet added, citing financial instruments like stocks, real estate, and tokenized assets as examples of areas where the technology might be utilized to innovate.
Nonetheless, she noted, there is resistance to expanding the usage of NFTs, just as there is with other disruptive technologies. “There’s a natural lag until individuals see a bottom-line potential,” she said, adding that the space also needs regulatory certainty.
This year, NFTs have become increasingly popular. When individuals purchase NFTs, they are purchasing the rights to a one-of-a-kind token on the blockchain, rather than the artworks themselves. NFTs, on the other hand, are interesting to collectors and artists since the information on a blockchain is nearly difficult to modify.
According to JPMorgan, the rise has spread to altcoins that enable smart contracts, such as Solana, Binance Coin, and Cardano.
Visa’s $150,000 CryptoPunk purchase and NBA player Steph Curry’s $180,000 acquisition of an NFT from the Bored Ape Yacht Club collection are two recent high-profile NFT purchases.
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