How NFTs affect the economy
Some critics described the NFT market as a bubble that would soon halt. However, no signs show the NFT ecosystem will slow down anytime soon. One of the reasons behind the rapid explosion of NFTs is their ability to take different forms, representing digital and physical assets such as artworks, real estate, and video gaming resources. If you want to learn more about the history of NFTs, NFT Profit is here to help you make good decisions and develop your knowledge along the way.
Experts believe we will see the creation of many platforms to showcase NFTs and manage their transactions more efficiently. Perhaps, that is why they are increasingly gaining more traction among venture capital investors. However, NFTs also create robust economic opportunities for artists, content creators, collectors, and publishers globally. The following article discusses how NFTs impact the economy.
Monetization of Digital and Physical Assets
It was virtually impossible to collect digital art before the introduction of NFTs. The same applies to other digital objects and physical assets, including sports collectibles, plots of land, and even clothing. NFTs have enabled artists, creators, developers, and collectors to tokenize and monetize their works easily.
NFTs are created on a permanent digital blockchain ledger, with unique characteristics to distinguish one from another. That ensures an accurate and irrefutable record of every item’s origin, authenticity, and owner, allowing creators to benefit from their works. NFTs are also limited in supply, inducing scarcity in a market that counterfeits have plagued for decades.
NFTs also allow combining two items into a single entity, called a breed. That can help artists and creators to maximize their incomes from the sales of their works. Besides, NFTs generate value addition since the original creators can still receive a fraction of the proceeds each time the items change ownership.
Apart from independent creators and artists, companies can also use NFTs to create new products and services with unique properties for global consumers. NFTs can also help companies tokenize their existing high-value product offerings to attract higher prices. The tokenization of real-world assets improves the efficiency of buying, selling, and trading them on platforms. It also reduces the probability of risks such as fraud.
NFTs have enabled many artists and collectors to score huge profits from the sales of their works. NFT sellers can engage with buyers directly, without intermediaries, thanks to blockchain technology. That enables creators to reduce costs, enjoying the full benefits from their works.
A Rapidly Growing Market
NFT technology is rapidly growing into a lucrative market, attracting creators, content developers, collectors, and investors worldwide. NFT sales generated an estimated $13.7 million in the first half of 2020 but that number shot up to about $2.5 billion over the same period in 2021. NFT sales on some marketplaces had reached hundreds of millions as of 2021. Those statistics show the rapid growth of the NFT market.
While most NFT marketplaces have mainly focused on digital artworks, art accounts for just about a quarter of the total NFT sales. The market also comprises NFT fashion products such as the recently sold digital jacket by RTFKT for $125,000. Twitter founder Jack Dorsey sold his first tweet as an NFT for a whopping $2.9 million in 2021.
An NFT version of the New York Times column also recently sold for $560,000. Those are reminders of NFT’s unlimited economic opportunities. A recent report by PwC established that blockchain technology could add $1.76 trillion to the global economy, and NFTs will account for a larger share of that capital.
NFTs and their marketplaces are fast democratizing the production and exchange of digital assets. Non-fungible tokens have enabled independent developers, artists, entrepreneurs, and companies to seamlessly access vast and burgeoning global markets for various digital assets, driving inclusive economic growth.
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