The Cryptocurrency Market is Crashing, So What About the NFT Market?

Digital asset is a concept we are more and more familiar with every day. The traditional digital assets of organizations include videos, photos, and PDFs. However, in this ever-changing world, the more recently popular forms of digital assets include cryptocurrency and NFTs. 

Are you familiar with NFTs? 

NFTs stand for non-fungible tokens, it is a unique, one-of-a-kind, digital piece. They are bought and sold online using a cryptocurrency such as Bitcoin or Ethereum. NFTs are generally encoded and use blockchain technology the same as many crypto coins. The first known NFT was minted in 2014, six years after Bitcoin, the first cryptocurrency ever came to market. NFTs can be traded in the market for another NFT similar to how crypto works where they can buy and sell crypto coins. 

Compared to cryptocurrency, NFTs are a newer type of digital asset. According to Pew research, the vast majority of US Adults have heard about cryptocurrencies and 16% say they have performed an activity involving cryptocurrency. Meanwhile, there are approximately 360,000 NFT owners holding around $2.7 million worth of value. However, 80% of the market value belongs to 9% of the total group. 

NFT can represent real-world objects and not just art but also music and video games. In 2021, the NFTs market with 41 billion is very close to the total value of the entire global fine art market. 

What’s the NFT market like? 

As we are in the bear market of cryptocurrency, recently, NFT reached its all-time low as well in 2021. Following in the footsteps of cryptocurrencies, blockchain technology has spawned a new obsession – the NFTs. It was the “it thing” in 2021, where news, media outlets, and many people were talking about it. The trend of it was also increasing as the most expensive NFT was sold for 91.8 million dollars. 

Bitcoin, the world’s largest cryptocurrency, fell to $19,340 on July 5, 2022, a two-year low. All cryptocurrencies have been declining. A similar pattern may be seen in the NFT spaces. This is reasonable because for now, to purchase an NFT, digital assets owners still have to purchase it using cryptocurrency and when crypto coins go down NFTs prices also go down. 

There has been debate around the survival of cryptocurrency and the question has been raised that if the cryptocurrency market crashes, will it also lead to a crash in the NFTs market. NFTs may be falling, but many gamers are betting on this new technology. For instance, eBay acquired an NFT marketplace called Known Origin in June 2021. The value of the deal was not disclosed but experts assumed that it is not going to be little. Also in 2021, eBay began accepting NFT sales on their platform. With the acquisition of KnownOrigin, eBay gains ownership of a proper digital marketplace.

The future of NFT: Moving beyond collectibility — NFTs for business

Although the NFT market is falling along with the crypto market, there are still a lot of celebrities who spend millions on NFTs just to be “collectible”. However, in the future, NFTs might move beyond their collectibility and into utility with business benefits. 

As we continue to explore this new digital asset, we should remember and understand the technology behind it. NFTs provide the practical applications of having a highly safe and comprehensive approach to online business transactions using blockchain technology. NFTs’ benefit stems from their use of blockchain technology, which is a decentralized digital record that is nearly impossible to modify or hack. This technique has nearly endless possibilities beyond basic pixelated graphics, aside from demonstrating ownership of a unique digital object.

Imagine a world where the deed to your car exists as an NFT. Instead of having to change the information owners every time the car is sold, the deed would log all changes automatically keeping a record of the old one. It is also much more secure because people can’t steal your NFT and forge the ownership because they wouldn’t be able to. Not just for cars, the future of NFTs can be used for all types of properties and ownerships. 

Some experts are still skeptical about the future of NFT and feel that any bubble, including crypto, will ultimately burst. Similarly to bitcoin, we can forecast NFT market patterns, however, the accuracy of these forecasts is debatable. It is always possible that something unexpected may happen in the crypto market, sending values soaring into the stratosphere – or plummeting to the depths.

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