The NFT Market has just started to properly form.
While many people in the retail market are scared about the future of Crytpo and DeFi tech, we see a different trend in institutionalized mainstream finance.
An Increase of almost $114 billion
Over the next five years, the market for NFTs, the unique tokens attesting ownership and authenticity of an asset written on the blockchain, will grow by almost USD 114 billion.
This is one of the latest estimates made by the Global Non-Fungible Token Market report, which estimates a compound growth rate of more than 35 per cent.
2022 was an up-and-down year for the community. The positive trend of 2021, a period in which volumes increased by 21,000% in twelve months, continued until the following June with large amounts of capital coming in.
Then the overall transaction value dropped, causing the minimum price of all collections to fall. Worldwide, the best-selling products were the Bored Ape Yacht Club, a collection of 10,000 digital monkeys generated by a random combination of 170 elements, launched by the company Yuga Labs.
For a while, owning a Bored Ape signified having a substantial asset stashed away in the bank, like owning a couple of solid gold bars or a limited edition Rolex.
A bored apes ownership means belonging to a highly exclusive club that includes, among others, former basketball player Shaquille O’Neal, rappers Eminem and Snoop Dogg, footballer Neymar Jr, pop star Justin Bieber and actress Gwyneth Paltrow.
But as we know, this “golden era” was short-lived, and, dare we say, bound to fail with as much clamour as it began.
We don’t think that this take is particularly controversial nor particularly cruel towards the many people that have seen their wealth evaporate in the wake of a new market after the initial push failed to materialize concrete solutions for the many retail investors that were behind the trend.
NFTs were used to quickly speculate without care for long-term solutions, usability, utility and use cases, and we now see the potential of a rise in the market seeking to mature in a more stable and healthy way.
We believe that the drop in trading is attributable to the exit of short-term speculators. “The era of non-fungible tokens where profit reigned supreme seems to be over, and gradually a new page in the history of this technological reality is ready to be written,” says Amelia Tomasicchio, director of the information site The Cryptonomist.
Attention remains high and big companies continue to inaugurate projects. The phenomenon is stabilising thanks to the presence of solid and committed communities, characterised by sound business behaviour.
The Rise of the New Futurists
At the moment the main field of application, in fact, remains that of creative expression. Even a reputable auction house like Christie’s is hammering out digital compositions alongside paintings by internationally renowned painters. ‘Nft are the means and not the end,’ Andrea Bonaceto, an internationally renowned Italian artist, points out.
Some draw on media such as canvas and paper, others use state-of-the-art tools. More and more traditional galleries are approaching the world of crypto art, and they have been since people like Beeple showcased the potential of the media.
Technologies such as artificial intelligence, robotics and blockchain will play an increasingly predominant role not only in art but also in the management of society itself’.
According to a new report, the NFT market in Europe is expected to grow by 46.8 per cent year-on-year until a more stable situation will be found by 2028.
The “Europe NFT Market Intelligence and Future Growth Dynamics Databook” showcases the info in a more detailed way, bringing up multiple data points that are working together to make a solid case for NFTs’ future endeavours.
According to the report, the NFT market in Europe is set to grow 46.8% year-on-year starting from 2022, with many fluctuations predicted to happen periodically as the market stabilizes. Specifically, a CAGR of 33.4 per cent growth of the NFT sector has been predicted for the period 2022–2028.
These results stem from the recognition that the European market is establishing for NFTs, like creating a set of rules that protects property rights in the digital world. Thanks to this peculiarity, NFTs are suitable for every sector with multiple use cases coming to mind, starting from sports and art to real estate and entertainment, with many others in between.
Not only that, every country on the old continent such as the UK, Italy, Germany and France recognises their importance. And indeed, European NFT start-ups continue to innovate and develop more and more differentiated products, raising funds to accelerate their growth.
Europe and the NFT market by country
The report also notes the various progress each country has made to support the NFT market, such as the UK, which seems to have government support for this particular sector development.
And indeed, UK NFT start-ups are raising funds to further accelerate the growth of their marketplaces. In this sense, as the NFT market is expected to experience strong growth in the next three to four years, venture capital firms are increasing their participation in UK NFT start-ups to gain a significant market share.
Not only that but an NFT platform has also been launched in the country that allows social media users to link their profiles to the Blockchain and create NFTs. Millions of social media users are also looking for ways to monetise their online content, and with Non-Fungible Tokens, this is already a possibility for anyone willing to being their own DeFi journey.
Moving to Germany, then, NFTs are mainly used for digital trading cards (collectables) or crypto-art. The situation here is much simpler with Non-Fungible Tokens being considered as part of the Web3 evolution, and together with other blockchain and metaverse products they are properly targeted by government policies that are smart, precise and ahead of time
In France, on the other hand, NFTs are often used to promote brand awareness or to raise funds for charitable organisations. Not only that, but the crypto-art segment also sees France as a protagonist, with its auction houses also trying to involve multiple NFT artworks.
The report adds descriptions of the NFT market situation also for Italy, Austria, Belgium, Denmark, Spain, Finland, Poland, Russia and Switzerland, painting a picture of shared growth differentiated by the many different approaches that the governments are taking in each respective country.
Dubai and Fidelity
We can’t really talk only about the situation in Europe, since when it comes to NFT, Bitcoin and metaverse integrations then Dubai and the United Arab Emirates in general also join the club, differentiating themselves by their more strategic approach to crypto.
With the aim of attracting more global investors, Dubai launched the Dubai Metaverse Strategy, reaching almost 25,000 new business licences in 2022 alone.
In the specific branch of NFTs, Abu Dhabi would mark the non-fungible token as intellectual property rather than specific investments or financial instruments, allowing multilateral trading facilities (MTFs) and Virtual Asset Custodians (VACs) to operate in multiple NFT markets.
Besides Europe and the UAE, financial giants such as Fidelity also seem to be interested in the crypto scene.
Again, in the specific NFT branch, Fidelity seems interested in launching its own online marketplace for buyers and sellers of digital media, namely our beloved Non-Fungible Tokens.
Going back to the Europe situation, we can also see that multiple Italian companies are starting to see opportunities in the metaverse.
This was revealed by the report ‘Web 3.0: Metaverse and NFT’, produced by EY, in collaboration with the Luiss Guido Carli Research Centre in Strategic Change, according to which 30% of Italian and foreign companies have already invested or intend to invest in the adoption of the main emerging technologies, including the metaverse, and 25% more intend to do so during 2023.
The research was carried out by interviewing more than one hundred CEOs and top managers of some of the most important Italian and foreign companies, to investigate the impact of Web 3.0, with a particular focus on the metaverse and Nft.
Only 28% of the interviewees want to invest more than 15% of their budget in experimenting with new solutions in the metaverse, with a good 20% stating that they nonetheless plan to invest more than 200,000 Euros during 2023 to start new projects and adopt new solutions in the metaverse.
The How’s and Why’s.
Interest in new Web 3.0-related technologies is strongly correlated with the potential growth of the industry.
Indeed, more than 40 per cent of the surveyed companies believe that the average growth rate of revenues in the metaverse over the next ten years will be more than 40 per cent. Many managers also believe that Web 3.0 has the potential to shape and change the future business models of companies through the creation and sale of digital and collectable assets, digital homes and buildings, and virtual experiences.
The main application areas that companies intend to invest in are mainly Customer Experience integrations, which consist of providing multi-sensory experiences through the creation of fully immersive virtual places, Training 4.0 as learning and skills development in the Metaverse, and Metaverse marketing.
According to 48% of the sample, although it is still an expanding market, the NFT media already offers multiple opportunities for revenue growth.
In particular, three main areas of application were identified: copyright, collecting and marketing.
In contrast, 38% of respondents do not consider Nfts as a technology to be explored and invested in, as they have too volatile a market and therefore they offer little added value to their already established businesses.
Only 14% of the surveyed managers point out that their lack of knowledge about NFTS makes them an unattractive option for their objectives, showcasing how widespread the technology already is in the entrepreneurial ecosphere.
The main criticisms that the interviewed managers and CEOs make of new technologies are the presence of high investment costs coupled with the uncertainty of the related revenues and the lack of clarity about the real potential and opportunities associated with them; the need to invest in the development of new skills; and the absence of adequate regulation.
Following the wake of the multiple issues that have plagued the crypto market en large in 2022 and now in 2023, 64% of respondents also believe that governments should further regulate this market as current regulations are not fully adequate to respond to the different scenarios enabled by Web 3.0.
Only 17 per cent of respondents, in fact, believe that governments are moving adequately to regulate the metaverse, while 63 per cent think that the current regulation of the market is either not sufficient or wrongly targeted.
The managers interviewed believe it is necessary to regulate aspects related to cybersecurity (especially personal data management), education and training, economic transactions and related taxation and social and ethical behaviour.
It is also crucial to activate a system of harmonisation between the various jurisdictions of individual countries. From this point of view, it is crucial to conceive an idea of compliance not only at a national level — as was the case for web tax — but at a supranational level, also in light of the considerable efforts and recent experiences that states are making in the field of global minimum tax.
The Conclusions
Once again, we are very happy to see how many colleagues are taking this particular ecosphere seriously and how much they are respecting the public, showcasing how important it is for multiple institutions to band together to create a set of rules and regulations that aren’t a smokescreen for the governments, but are actually a safety net for both project creators and clients.
Synapse had already started its journey in this direction, with the difference being that we are a DeFi institution, and NFTs are one of our focuses, but not the single one. We have seen the value of NFTs, and we don’t want this technology to be associated with the mismanaged mess that we have seen during the previous bubble, and we want our public to be aware of the potential that non-fungible tokens have.
But we also want all of our users to be properly protected and aware of the risks that this market brings with it, and this is why we strive to give you all the info possible for each different situation. This is all for today, and remember, think for yourselves, properly do your research, don’t invest with your emotion and properly check everything you need to check before moving your hard-earned money.
About Synapse Network
Synapse Network is developing a cross-chain investment and start-up acceleration ecosystem based on blockchain technology to give everybody an equal chance to contribute to great upcoming projects and to do so early on. We are bridging the gap between the traditional & crypto market. The idea of the Synapse Network technology goes beyond the standard offer of launchpads available on the market, becoming a true technological brand providing tech solutions.
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