23rd Feb 2022
2021 pushed NFTs (non-fungible tokens) on the map. Celebrities are jostling to buy and mint them; several new players entered the scene; and the foundations of NFT infrastructure have been established, setting the stage for more growth in 2022 and reducing fears that NFTs are an ephemeral bubble.
2021 was a beacon year for NFTs
2021 opened with a bang for NFTs, which skyrocketed from around $10 million worth of total sales at the end of 2020 to over $8 billion in sales value by September 20211. Cointelegraph predicts that NFT sales could end 2021 on a record $17.7 billion2. Sales slowed after February and average NFT prices dropped 70%, seen by market analysts as a positive sign in a market that was at risk of overheating3.
73% of US NFT traders made their first purchase this year and NFT sales volumes grew consistently, from under $95 million in 2020 to $1.2 billion in Q1 2021, $1.3 billion in Q2, and $10.7 billion in Q3 2021, representing 38,060% YOY growth4.
James Bowden of the University of Strathclyde and Edward Thomas Jones of Bangor University seem justified in their claim that “With NFTs, we are probably emerging from the “peak of inflated expectations” on a journey towards the same “plateau of productivity” that Amazon reached a long time ago.5“
2021 saw the NFT market flooded with new players
2021 saw the arrival of numerous new players. Many crossed over from the related worlds of blockchain and cryptocurrency, but key actors came from traditional art and auction markets, and others from unpredictable directions like consumer packaged goods (Coca-Cola, Taco Bell); fashion (Dolce & Gabbana6, Burberry7), and finance (Visa8).
Analysts are paying attention to blended reality applications which mix online NFT ownership with offline experiences, such as Real Madrid Football Club’s NFT smart ticket, offering digital currency which can be redeemed for exclusive digital items9.
NFTs rose hand in hand with the metaverse
It’s impossible to talk about NFTs in 2021 without also mentioning the metaverse, a collection of interoperable shared online worlds that allow users to move from platform to platform with the same avatar, wealth, and digital possessions. Real Madrid’s new NFT ticket is part of it, as is Twitter’s experiment allowing users to use an NFT as their profile picture10, and the likes of Ariana Grande, The Weeknd, and ABBA holding metaverse concerts11.
Virtual real estate — which uses NFTs to authenticate ownership of parcels of digital “land” in the metaverse — took off this year, with land prices on the three top virtual real estate platforms more than tripling since 201912.
Decentraland, Cryptovoxels and somnium space are all virtual worlds, where you can purchase digital land, build homes and buildings, play hyper-realistic video games, start businesses, or even construct concerts or live events.
“Getting in on virtual real estate now will be akin to buying land in Manhattan in the late 1700s,” observes QuHarrison Terry, growth marketer at Mark Cuban Companies. “Very few can envision what this will look like a decade or century from now, but the high growth potential is there.13“
NFTs are transforming gaming
NFTs allow gamers to move gaming items off platform to sell elsewhere, enabling them to take more control in the gaming world, which is rapidly becoming part of the core of the metaverse. We’re also seeing new play to earn games like Axie Infinity, where players earn NFTs by collecting, breeding, and trading digital creatures. Axie players earned up to around $4-500/month in 202114. By September, Axie saw sales reach $2.05 billion15, registered over 1 million daily active users16, and achieved a daily trading volume of around $650 million17.
Other NFT play to earn games popular in 2021 include:
- Gods Unchained
- Guild of Guardians
NFTs revitalized the art market
Out of all the sectors affected by NFTs, the one that’s seen the greatest impact is the art market. The total monthly value of NFT art sales rose from around $63 million in April to peak at $774.1 million in September. Although values fell each month since then, December’s current total of over $147 million still represents massive growth18. JP Morgan Chase estimates that digital art NFTs generate $2 billion in sales each month, 5x as much as at the start of the year19.
NFT’s have been credited with reviving the contemporary art market20. Contemporary art auctions rose 117% to $2.7 billion in 2020-2021, and Sotheby’s and Christie’s found NFT art so valuable that they created their own infrastructure for blockchain payments21.
The world’s greatest art shows, galleries, and auction houses welcomed NFT art this year, including the Art Basel art fair. “The fact that NFTs were exhibited at a major art fair like Art Basel is a huge milestone towards its acceptance as an art medium on par with painting and sculpture,” said crypto-artist Olive Allen22.
Big art sales in 2021 include original digital art like “EVERYDAYS: The First 5000 Days” by digital artist Beeple23, but also NFTs minted from famous artworks in collections like Russia’s State Hermitage Museum24 and the British Museum in London25.
Celebrities added glamor to the sector
Famous artists and musicians have been at the forefront of the NFT trend both as collectors and creators. Many are eager to use NFTs to secure royalties from secondary sales, which they’ve previously missed out on. Celebrities who’ve jumped onto the NFT bandwagon include:
NFL quarterback Tom Brady went one better and established his own sports-focused NFT platform called Autograph, which has been a big success selling NFTs of athletes like Usain Bolt, Simone Biles, Naomi Osaka, and Tiger Woods32.
The NFT ecosystem is under construction
The NFT ecosystem isn’t yet complete, but 2021 laid down a lot of the groundwork. Activate Consulting defined what’s needed for NFTs to go mainstream: authenticity solutions, secure NFT storage, friendly regulations, low-energy minting, interoperable cross platform trading, and participation at scale from companies holding plenty of IP33.
Many of those boxes can already be checked. As mentioned above, significant IP heavyweights have already joined the game. 2021 saw Binance and Crypto.com join OpenSea, Zora, and Nifty Gateway with NFT marketplaces; the launch of Metaplex for building an NFT storefront; and of Burnt Finance tools for auctioning NFTs34.
A number of critical elements, like better regulations and more reliable storage options, are still in the works, but confidence is high that these too will be realized in the near future.
NFTs are making an impact that goes beyond financials
While most people are interested in choosing what they consider to be the best NFT related company stocks to buy and potentially making a profit, there are thought leaders contemplating what NFTs could mean for society as a whole.
Analyst Andrew Steinwold predicts that”it’s non-fungible tokens (NFTs) that will radically alter human society and culture.35” He and a number of others envisage equitable communities built on decentralized platforms, which use NFTs as governance tokens to give users an equal voice in community development36.
NFTs could drive a new version of the old patronage system, forging closer relationships between creators and fans. “Now, creators can not only engage but transact with their fans directly: the community can voice their opinions and have a better chance of being heard, the perks can be designed to reward members who add the most value, and the community can benefit through token ownership and redeemable real world rewards,” comments Nichanan Kesonpat, blockchain entrepreneur37.
While these ideas might not come to fruition in 2022, these conversations could produce new trends that we can’t currently predict.
The lookout for 2022 is positive
Over 80% of consumers believe that a brand’s digital presence is as important as its physical presence, helping drive demand for branded NFT assets, plus consumers are increasingly interacting with brands in a digital-only environments38. The average price of an NFT is now $161, testimony to the breadth of the NFT fanbase39, and 94% of previous NFT customers say they are somewhat or very interested in buying an NFT in the next 12 months, as do 42% of those who haven’t yet bought one40.
Against this backdrop, analysts are positive about NFT related company stocks in 2022. Activate Consulting expects NFTs to become mainstream next year, saying “Every technology and media company will need an NFT strategy.41” JP Morgan Chase is likewise positive, saying “the NFT universe is surely set to continue to grow strongly over the coming years.42“
Paul Veradittakit, partner at Pantera Capital, expects to see NFTs rise in price, sales volume, and breadth of use case and interoperability. “NFT projects in 2022 will show substantially more diversity in use cases and will reconfigure how we interact with and think about ownership of digital media more broadly,” he said43.
While the NFT market is still young, 2021 seems to have advanced it to the point that it’s hard to claim that this is a bubble in danger of popping. People who haven’t yet bought an NFT itself or chosen from the NFT related stocks list are increasingly considering the best ways to invest in NFTs. One option is to buy an NFT related ETF, like Defiance’s NFTZ, which spreads your investment allocation across a number of NFT related stocks to help mitigate the risk that comes with investing in just one or two.
2 “Should You Invest in NFTs or Cannabis Stocks in 2022?” December 26, 2021 https://www.nasdaq.com/articles/should-you-invest-in-nfts-or-cannabis-stocks-in-2022
3 “NFT Price Crash Stirs Debate on Whether Stimulus-Led Fad Is Over” April 3, 2021 https://www.bloomberg.com/news/articles/2021-04-03/nft-price-crash-stirs-debate-on-whether-stimulus-led-fad-is-over
4 “Activate Expects NFTs to Go Mainstream by 2022” November 9, 2021 https://cryptonews.com/news/activate-expects-nfts-to-go-mainstream-by-2022.htm
5“NFTs are much bigger than an art fad – here’s how they could change the world” April 26, 2021 https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563
7 “BURBERRY DROPS NFT COLLECTION IN MYTHICAL GAMES’ BLANKOS BLOCK PARTY” August 4, 2021 https://www.burberryplc.com/en/news/brand/2021/Blankos.html
8 Tweet by Cuy Sheffield, August 23, 2021 https://twitter.com/cuysheffield/status/1429746495952089090
10 Tweet by Mada Afa, September 29, 2021 https://twitter.com/af_mada/status/1443243702156206089?
11 “Touring The Musical Metaverse: Virtual Concerts are Here to Stay” September 7, 2021 https://www.virtualhumans.org/article/touring-the-musical-metaverse-virtual-concerts-are-here-to-stay
“The Metaverse Concerts: Where Online Games and Music Performances Meet” November 2021 https://coinmarketcap.com/alexandria/article/the-metaverse-concerts-where-online-games-and-music-performances-meet
12 “Virtual Land Prices are Booming, and Now There’s a Fund for That” March 19, 2021 https://www.bloomberg.com/news/articles/2021-03-19/virtual-land-prices-are-booming-and-now-there-s-a-fund-for-that
13 “NFT Trend: Virtual Real Estate” https://www.nftqt.com/nft-trend-virtual-real-estate/
14 “Here’s how Axie Infinity players are earning nearly $500/month in crypto rewards” August 19, 2021 https://www.fxstreet.com/cryptocurrencies/news/heres-how-axie-infinity-players-are-earning-nearly-500-month-in-crypto-rewards-202108190844
15 “Sky Mavis hits $2B in sales for its NFT game Axie Infinity” September 16, 2021 https://venturebeat.com/2021/09/16/sky-mavis-hits-2b-in-sales-for-its-nft-game-axie-infinity/
16 “Here’s how Axie Infinity players are earning nearly $500/month in crypto rewards” August 19, 2021 https://www.fxstreet.com/cryptocurrencies/news/heres-how-axie-infinity-players-are-earning-nearly-500-month-in-crypto-rewards-202108190844
17 “Gaming is Taking Over the NFT Market” September 10, 2021 https://finance.yahoo.com/news/gaming-taking-over-nft-market-164500693.html
18 “Total value of sales involving a non-fungible token (NFT) in the art sector worldwide over the previous 30 days from April 12 to December 15, 2021” taken from https://www.statista.com/statistics/1235263/nft-art-monthly-sales-value/
19 “Should You Invest in NFTs or Cannabis Stocks in 2022?” December 26, 2021 https://www.nasdaq.com/articles/should-you-invest-in-nfts-or-cannabis-stocks-in-2022
20 Report “LES NFT BOUSCULENT LE MARCHÉ DE L’ART CONTEMPORAIN” October 4, 2021 https://www.bfmtv.com/economie/patrimoine/les-nft-bousculent-le-marche-de-l-art-contemporain_AD-202110040125.html cited by “NFTs are bringing back contemporary art sales” October 4, 2021 https://mashable.com/article/nft-contemporary-art-sales and links here
21 Tweet, September 7, 2021 https://twitter.com/ChristiesInc/status/1435346651217108996?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1435346651217108996%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fblockonomi.com%2Fchristies-to-accept-eth-bids%2F
“Sotheby’s Metaverse: The art auction house opens its own NFT marketplace” October 15, 2021 https://nftevening.com/sothebys-metaverse-the-art-auction-house-opens-its-own-nft-marketplace/ “
22 “Art Collectors Swoon Over NFTs at Elite Basel Gathering” September 25, 2021 https://www.coindesk.com/business/2021/09/25/art-collectors-swoon-over-nfts-at-elite-basel-gathering/
23 “Beeple NFT Artwork Sells for $69.3 Million in Christie’s Auction” March 11, 2021 https://decrypt.co/60971/beeples-nft-artwork-sells-for-60-3-million-in-christies-auction
24 “NFT mania is sign of a land grab for the online ‘metaverse’” September 9, 2021 https://amp.ft.com/content/1ae22d81-4c23-4475-8661-354f1b8dbc7c
25 “How London is becoming the centre for digital art and NFT auctions” October 12, 2021 https://uk.finance.yahoo.com/news/how-london-is-becoming-the-centre-for-digital-art-and-nft-auctions-050022578.html
26 “Genies will sell one-of-a-kind digital goods for Shawn Mendes” February 25, 2021 https://venturebeat.com/2021/02/25/genies-will-sell-one-of-a-kind-digital-goods-for-shawn-mendes/
27 “These Celebrity NFT Newbies Are Influencing Others To Tap Into The Digital Space” October 28, 2021 https://afrotech.com/celebrity-nft-newbies-influence?item=3
28 “Miramax sues Quentin Tarantino over Pulp Fiction NFTs” November 17, 2021 https://www.theverge.com/2021/11/17/22787216/miramax-pulp-fiction-quentin-tarantino-nft-lawsuit
29 “Mila Kunis’ Animated ‘Stoner Cats’ Series Released as NFTs” August 6, 2021 https://www.awn.com/news/mila-kunis-animated-stoner-cats-series-released-nfts
30 “Martha Launched a Halloween-Inspired Collection of NFTs That You Can Bid on Right Now” October 19, 2021 https://www.marthastewart.com/8170277/martha-stewart-nft-halloween-launch
31 “Lionel Messi kicks off NFT ambitions with ‘Messiverse’ art collection” August 23, 2021 https://www.marketing-interactive.com/lionel-messi-kicks-off-nft-ambitions-with-messiverse-art-collection
32 “Tom Brady Launching NFT Platform with Apple, DraftKings, Spotify Exec Advisors” April 7, 2021 https://decrypt.co/64223/tom-brady-is-launching-an-nft-platform
34 “NFTs: Past, Present, and Future”, July 26, 2021, https://medium.com/burnt-finance/nfts-past-present-and-future-27b03c5232ea
35 “Crypto Will Change Value, NFTs Will Change Society” July 19, 2020 https://andrewsteinwold.substack.com/p/crypto-will-change-value-nfts-will
36 “The Past, the Present and the Future of NFTs” July 13, 2021 https://medium.com/alchemistcoin/the-past-the-present-and-the-future-of-nfts-20d54bd97b06
37 “Creators, Communities, and the Gray Space in the Middle” October 10, 2020 https://www.nichanank.com/blog/2020/10/9/gray-space-in-the-middle
38 “Activate Expects NFTs to Go Mainstream by 2022” November 9, 2021 https://cryptonews.com/news/activate-expects-nfts-to-go-mainstream-by-2022.htm
39 “‘Second Coming’ of NFTs and What Is Driving New Wave” September 7, 2021 https://www.coinspeaker.com/second-coming-nfts-new-wave/
41 “Activate Expects NFTs to Go Mainstream by 2022” November 9, 2021 https://cryptonews.com/news/activate-expects-nfts-to-go-mainstream-by-2022.htm
42 “Should You Invest in NFTs or Cannabis Stocks in 2022?” December 26, 2021 https://www.nasdaq.com/articles/should-you-invest-in-nfts-or-cannabis-stocks-in-2022
43 “Pantera’s Paul Veradittakit’s 2022 Predictions” December 23, 2021 https://www.coindesk.com/layer2/2021/12/23/panteras-paul-veradittakits-2022-predictions/