NFT Coins Boom as This Risky Crypto Sector Faces 5 Key Hurdles in 2023

Non Fungible Tokens (NFTs) are back after a terrible year, with Enjin coin up over 70% this month and NFT marketplaces Rarible (RARI) and Flow
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Both blockchains known by NFT developers have surpassed Bitcoin. Last year he has a long way to go to recover from a wreckage of over 80%.

NFT’s January cheer is not a sign of a turnaround.

The idea is that NFTs are collectible art. He paid $100,000 for owning Tom Brady’s 10-second soundbite that got lost in his laptop or stuck in his drive, a pen in his office desk drawer at home. rice field. Private investors, on the other hand, bought in the hope that gamers would spend crazy money buying fake swords and cute characters for their Axie Infinity playtime.

“You can make money by buying and selling NFTs, but they should not be treated as investment tools,” said Sagi Maman, CEO of Tel Aviv-based blockchain game development platform Xternity. “NFTs do not have the same characteristics as traditional investments such as stocks and real estate that can appreciate in value over time.”

Not only that, NFTs do not have the same characteristics as major blockchain players like Bitcoin and Ethereum.
ethereum
These are high volatility and high risk cryptocurrency transactions no matter what you think about the future of technology and this segment of the Web3 universe. (What is Web3? Read this on Forbes.)

“For me, you are buying NFTs because they are aesthetically appealing, they are rarity and they bring a certain status,” says Maman. “This is not the way to make long-term financial gains.”

Maximum NFT failure

According to data compiled by Canada’s Casinos EnLigne, NFT sales volume fell 83% year-on-year from January 2022 to January 2023.

The NFT space hit a record monthly revenue of $2.8 billion in January 2022, but that number has since fallen to just $492 million in January 2023, according to Canada’s The online gamer news and information portal said on January 16th.

All NFT coins related to games, art and collectibles were affected.

The fact that the Canadian casino industry is tracking this shows that NFT purchases are certain. (I won $1,000 on 0 and $2,000 on double zero! Get the ball rolling!)

Some in the crypto industry say NFT issuers must unite. Among the headwinds, who emailed his Q&A to some attendees, listed the following negatives and positives for NFT buyers:

• Limited use cases: Most NFTs are still used in digital art and collectibles, but they could be deployed in a wide range of industries. Expanding NFT use cases and demonstrating their potential to a wider audience remains critical to achieving mainstream appeal. (Consider that his NFTs where celebrities grab cash have no utility, are just a playground for cryptocurrency scammers, and are damaging the industry as a whole.)

• fake list: NFT marketplace Magic Eden said earlier this month that an unresolved issue in its marketplace could cause fake NFTs to be listed and sold as part of real collections.

• Exorbitant transaction costs: High transaction fees associated with NFTs, especially Ethereum, are a barrier to adoption, especially for smaller transactions. More NFTs are emerging on layer 2 blockchains, but without visibility.

• Lack of interoperability: NFTs are distributed and siled across multiple blockchains, making them difficult to exchange and utilize easily across different blockchain platforms. Cross-platform interoperability is required for NFTs to become more widely adopted.

• Regulatory uncertainty: The lack of clear regulation surrounding NFTs creates uncertainty and risk for buyers and sellers. For example, if an NFT is really an investment in a GameFi-related token, why not treat it as an investment?

Shaban Shaame, CEO of Wakweli, an infrastructure standard protocol in Geneva, said: that they own the rights to the assets;

NFT marketplaces and platforms have begun implementing measures such as whitelisting and manual curation to prevent fraud. More recently, automated systems for detecting plagiarism (“copymints”) have been introduced to help restore trust in the ecosystem. “Still, much more needs to be done to improve the overall credibility and reliability of NFTs,” he said.

NFT: Beyond Boring Monkeys

The first coin offering was the only crypto story ever blown up and gone. New coins are hitting the market all the time, but the hype is gone. NFTs will rise like a rocket in 2021 and then collapsed in 2022. Whenever it happens in the crypto sector, whether it’s decentralized finance or the new blockchain craze, investors pause and question the viability of the sector.

NFTs will not disappear in 2023.

Market participants say there is still room for greater adoption of NFTs, and the consensus is that big brands will lead the way.

For example, Starbucks
SBUX
‘ Web3’s rewards platform is making headlines. Participants will purchase his NFTs for a low price that will give them access to a variety of “coffee experiences,” the company said. As new users overcome the cryptocurrency wallet learning curve, the concept of NFTs becomes more compelling.

Anyone raking in the dough (and losing it) is an investor. Arguably, it was of more interest to investors and developers than to consumers.

Coral Gables-based venture capital firm Bored Ape Yacht Club (BAYC) is one of the leading investors in the space. They issued coins last year. It is down 9.6% so far this year. This is arguably the most famous digital art NFT project.

Owned by NBA great Shaquille O’Neal. So did singer Post Malone. He and his DJ Khaled once used Bored Ape as a headshot on their social media pages, but that’s no longer the case.

“Boring Monkey NFT ownership is digital flex. It shows you are in a circle and you have money,” says Yaroslav Shakula, CEO of YARD Hub in Barcelona. “There are some more real perks. What appears to be is actually the key to many real benefits.

The 6-figure payouts of some Bored Ape NFTs and the common loss coins associated with them are another NFT headache for traditional investors. The rich are leading the way in paying hundreds of thousands of dollars for funky-looking apes, whether they’re printed on canvas to hang in their cribs or not. Or, again, home lost his drive pen in his office desk drawer. But it does come with access to the online BAYC, so maybe there are some perks of membership.

“To date, the main type of tokenized asset is comics. Bored Ape is a tokenized comic. Tokens also have utilities such as being able to participate in exclusive parties. It is as powerful as the value of the asset backing the token,” says Asif Kamal, founder of Artfi in Dubai. “To say NFTs are dead misses the big picture that some of the world’s assets are chained together in tokenized form. The success of the Ethereum name service NFT is a good example.”

Ethereum’s investable name service makes it easy to find NFT collections. Domain name services are designed to resolve domain names to IP addresses like Forbes.com, and ENS does the same with long cryptocurrency addresses. For example, an Ethereum blockchain address, a jumble of letters and numbers that only an AI bot can remember, could turn into The Bored Ape Yachties in Los Angeles.

Alexei Kulevets, CEO of Walken, a GameFi startup based in Lisbon, said: “The good thing for NFTs is that once the hype ends, the true value of the company and its tokens will be revealed. There are a lot of silly things, but there are a lot of examples like this,” he said Kulevets. increase.

Over the past year, NFT art sales have been declining. According to Casino EnLigne data, the number of digital art NFTs sold fell from 36,000 in January 2022 to 18,000 in January 2023.

Sales volume is also on the decline. According to the data, NFT art saw the biggest drop in sales, down 87% year-on-year.

In the last year, we’ve done a lot of word of mouth to the entire crypto world. On Thursday, JP Morgan CEO Jamie Dimon went so far as to call Bitcoin a “promoted scam.”

* The author invests in Enjin Coin and Bitcoin.