Future of NFTs
NFTs, or non-fungible tokens, have been around since 2014, but it wasn’t until 2021 that this novel technology broke through into the mainstream.
NFTs represent digital ownership of a wide range of irreplicable intangible items, and have drawn the attention of celebrities and big companies ranging from American Express to Gucci. Total NFT sales hit $25 billion in 2021, compared to $94.9 million the year before, according to data collected by DappRadar, an app store for decentralized applications.
But there continues to be debate about whether NFTs are here to stay or simply a fad. NFT sales in June fell under $1 billion for the first time in 12 months, according to DappRadar data.
Experts remain split on it, with some screaming “bubble,” while others claim it’s the technology behind NFTs — the smart contracts on blockchain technology — that offer real value. Meanwhile, creators and artists are claiming this is the next form of monetization.
“I do think that right now they’re very trendy, especially the last four months,” says Humphrey Yang, personal finance expert behind HumphreyTalks.“In 10 or 20 years, I think they’ll still be around. How much we use them — that I don’t know. People will still always find some value in communities, but the broader applications of NFTs will be more interesting.”
Recent data shows the market may be finally cooling off. Almost a million accounts were actively buying or selling NFTs at the start of the year, but that number has since declined to about 491,000, a recent report by Chainalysis found. Some experts expect the NFT market to continue to suffer because of the declining price of cryptocurrencies, along with other macroeconomic conditions like inflation, rising interest rates, and Russia’s war in Ukraine.
“NFTs saw explosive growth in 2021, but this growth hasn’t been consistent and has leveled off so far in 2022,” Chainalysis wrote in the report.
The Future of Cryptocurrency
We can speculate on what value cryptocurrency may have for investors in the coming months and years (and many will), but the reality is it’s still a new and speculative investment, without much history on which to base predictions. No matter what a given expert thinks or says, no one really knows. That’s why it’s important to only invest what you’re prepared to lose, and stick to more conventional investments for long-term wealth building.
“If you were to wake one morning to find that crypto has been banned by the developed nations and it became worthless, would you be OK?” Frederick Stanield, a CFP with Lifewater Wealth Management in Atlanta, Georgia, told NextAdvisor.
Keep your investments small, and never put crypto investments above any other financial goals like saving for retirement and paying off high interest debt.
