Sales of non-fungible tokens jumped to more than $17 billion in 2021, according to a new report from data firm NFT Nonfungible.com. The study, developed with research firm L’Atelier, owned by BNP Paribas, said NFT trading reached $17.6 billion last year, reflecting a 21,000% increase from the total of $82. million in 2020.
NFTs are tradable assets that track who owns a particular digital item — say, a work of art or video game avatar — on the blockchain. They broke into the mainstream in a big way last year.
A token representing a collage by digital artist Beeple sold for a record $69 million at a Christie’s auction, while popular collections like the Bored Ape Yacht Club attracted celebrity buyers from Jimmy Fallon to Snoop Dogg. “We saw exponential growth last year,” said Gauthier Zuppinger, co-founder of Nonfungible.comto the American website CNBC.
Nonfungible.com’s figure for total NFT transactions in 2021 is lower than some other estimates. An earlier projection by blockchain analysis firm Chainalysis put the value at over $40 billion.
Zuppinger says this is due to the company’s own methodology for measuring legitimate NFT trading volumes. Nonfungible.com data excludes transactions involving bots and wash trading, a practice where investors simultaneously buy and sell an asset to artificially inflate market activity.
While proponents believe NFTs are a valuable way to prove ownership of digital content, critics say the market has attracted predatory behavior. Participants are often encouraged to speculate on prices, and there is evidence of their increasing use for money laundering and other illicit activities.
Switch to ‘metaverse’
More than 2.5 million cryptocurrency wallets were owned by people who held or traded NFTs in 2021, according to Nonfungible.com research, up from just 89,000 a year earlier. The number of buyers rose from 75,000 to 2.3 million.
People have also gotten better at making money from NFTs, according to the report, with investors generating a total of $5.4 billion in profits from NFT sales last year. More than 470 wallets have managed to earn profits in excess of $1 million, Nonfungible.com said.
The most popular category of NFTs were collectibles, which accounted for $8.4 billion in sales. NFTs from games like Axie Infinity represented the second largest category, racking up $5.2 billion in sales. There was also a shift in focus later in the year to the so-called metaverse, with sales of digital land and other projects in the space reaching $514 million.
The hype surrounding the metaverse – proposed shared spaces in which users can interact with virtual objects and with each other – has gained traction following Facebook’s rebranding to Meta and a purchase of RTFKT by Nike, which makes virtual shoes.
What’s next for NFTs?
Going forward, Zuppinger does not expect the overall value of NFT transactions to grow as dramatically this year. Volumes have averaged $687 million a week so far in 2022, he said, slightly above the average of $620 million a week in the fourth quarter of 2021.
“What’s interesting is that we’re seeing fewer people, fewer buyers, fewer sales,” said Zuppinger.
“The global community may have declined because of speculation and the loss of interest in collectibles. But the global market is still very high and the value of some of these assets has continued to increase.”
Zuppinger predicts that more large companies and financial institutions will enter the market as more speculative assets begin to disappear. Several major brands, including Visa and Nike, joined the NFT movement in 2021.
This article is a translation of the writing by Ryan Browne for the website CNBC.
The post NFT trading increased by 21,000% in 2021 appeared first on DNEWS.
