The market value of NFTs took a significant hit after reaching its peak in late 2021/early 2022, leading many to believe that the NFT market has collapsed. However, John Crain, the CEO of SuperRare, disagrees with this notion. Despite the decline in value, Crain believes that NFTs are not dead, but rather going through a transformation in the business model. The collapse of the NFT market was inevitable after a speculative bubble burst, sending the market value plummeting. Art-related NFTs were hit the hardest, with drops of over 90% in trading volume. Crain believes that the negativity surrounding NFTs should be viewed in a broader context.
While the NFT market experienced a significant decline in value, Crain points out that NFTs are not dead but undergoing a change in their business model. He emphasizes that NFTs are not assets in themselves but serve as a way to record on the blockchain who holds the rights to an asset. The main use of NFTs should be to certify ownership and authenticity, with their main characteristics related to the functionalities of blockchains such as secure transfer and interoperability. The real asset is what the NFT represents, not the NFT itself. This shift in mindset could open up new opportunities for NFTs in different sectors.
The next step for NFTs could be the tokenization of real-world assets, known as Real World Asset (RWA). By linking NFTs to real assets, a secure and verifiable connection can be established between a token and a physical asset. To ensure the authenticity of the connection, a certifying body may need to be involved, which cannot be decentralized. Once the challenges of linking NFTs to real-world assets are addressed, the RWA market could see substantial growth. While the market for RWA tokens has yet to take off, resolving the issue of property rights association could pave the way for its success.
The collapse of the NFT market in 2021 can be attributed to pure speculation. The speculative bubble led individuals to buy NFTs with the sole intention of reselling them at a higher price, causing the market value to soar to unsustainable levels. However, similar to past speculative bubbles, the NFT market may have the potential to bounce back and thrive if it evolves in line with investor demands. Despite the disappearance of many NFTs, the market could emerge even stronger following a period of adjustment and adaptation.
In conclusion, while the collapse of the NFT market may have raised concerns about the future of NFTs, the CEO of SuperRare remains optimistic about their potential. By recognizing the underlying value of NFTs in certifying ownership and authenticity, the market could see a shift towards tokenizing real-world assets. The transformation of the NFT market presents an opportunity for growth and innovation, paving the way for a more sustainable and robust market in the future. As the market continues to evolve, it is essential to focus on the intrinsic value of NFTs and their potential to revolutionize various industries.
