Will 2023 be the end for NFTs?
Crypto and NFTs are dead. Over. Tough luck. Sorry.
The above statement was part of a jolly message I received towards the end of 2022 from a good friend of mine.
I value honesty in friends, but I’m not sure his definitive and downcast summation of the crypto landscape was entirely true or accurate. Certainly, 2022 was a bad year for cryptocurrencies, cemented by the collapse of crypto-exchange platform FTX, and as for NFTs, they went from the highs of record-breaking sale prices to the loss of billions in failed collections (including that of Logan Paul).
However, I refuse to fly the flag at half-mast just yet.
Volatility is inevitable with tech operating in a largely unregulated, decentralized space; my fourteen-plus years spent as a media and technology lawyer (and the last five years, spent advising cryptocurrencies and NFT projects) has taught me that downs must accompany ups.
So, what gives me hope that 2023 can be a positive year for crypto and NFTs? Here are some thoughts:
- Brands – most major brands have now invested in Web 3.0 and the tokenization of their products, with positive results. NFTs have proven to be an excellent way to build a community and engagement with customers, they have moved from (what has been perceived as being) a ‘get rich quick scheme’ of selling AI art, to more a complex and rewarding ownership experience. NFTs now largely represent membership cards, entitling their owners to exclusive benefits and rewards with their favourite brands.
- Gaming – although I’ve commented recently in the press about the inherent incompatibility of NFTs and gaming (so far), a solution will be found I am sure, as gaming technology continues to take huge leaps forward.
- Art – artists are understanding more about how they can exploit their work by issuing NFTs for greater financial security; projects are becoming more sophisticated.
- Finance – cryptocurrencies have had to answer concerns in the popular press about their environmental impact and their ‘Ponzi scheme’ reputation (not helped by FTX) and in 2023, I believe we will continue to see more informed and sophisticated consumers driving change in this space.
Compromises, in my view, will have to be made in the way that NFTs, and crypto generally, is packaged, marketed, and sold; a subtle move from the volatility of the fully decentralized, to a more controlled and regulated space in order to gain new customers.
The economic climate in which the World starts the year is very different from the crypto-soaked, free-wheeling, heady days of 2020 and 2021: consumers in late 2022 and (I predict) 2023 are still willing to spend, but they are more careful and considerate where and how they spend; to be attractive, NFTs must offer real-world tangible benefits, with evidence of longevity and security of investment.
In conclusion, unlike my friend, I am not so cynical about the future of crypto in 2023, but I am aware that January 2023 is a very different environment to that of the last few years; those who succeed this year will need to show rational thought, be mindful of the past, demonstrate creative technical innovation and above all, display sharp commercial acumen.
On that note, may I wish you a Happy New (Crypto) Year!