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The ongoing “crypto winter,” which has seen the values of cryptocurrencies nosedive from 2021 highs, has hurt consumer perception of NFTs.
Exclusive research from consumer insights firm GetWizer, VIP+’s partner on “The Demographic Divide,” a special report exploring shifting attitudes in media and tech, found that non-fungible tokens are now being seen differently by the public from just six months ago, before the cryptocurrency crash.
Most NFT marketplaces used cryptocurrency as their payment mechanism, which exposed them to market downturns, evaporating the value of many collections. This has had a big impact on how those aware of NFTs see their risk levels.
In January 2022, GetWizer found 28% of those who were aware of NFTs considered them to be a bad investment. This has increased by 16 percentage points to 44%, while the percentage thinking NFTs to be a good investment has fallen by 9 percentage points, from 37% to 28%.
Over a quarter of those aware of NFTs still consider them a good investment. Perhaps unsurprisingly, this is driven by those who own NFTs, with two-thirds positive toward their prospects and just 1 in 20 considering them to be an unwise investment.
It’s markedly different among non-NFT owners, with over half negative about NFTs providing long-term value and just 15% seeing them as sound investment opportunities.
Awareness of NFTs has rapidly increased over the last 12 months. When VIP+ first fielded this study, close to two-thirds of U.S. residents 15 or older hadn’t been aware of NFTs. That has diminished to 43% now. Ownership has fallen slightly, however, in the last six months (from 15% to 13%) but is still greater than a year ago (10%).
Ownership is strongest among 15-29s. One in four reported owning an NFT, and they are the only age group not to have seen a decline since the crypto winter began.
As VIP+ has previously noted, NFT values have tumbled given most are pegged to cryptocurrency. This has had a severe impact on the total value of monthly NFT sales as measured by Cryptoslam, with July’s tally of $647.2 million the lowest monthly total since June 2021. Sales in April, just three months prior ($3.7 billion), were 5.7x greater.
Still, it is important to note that the total number of transactions per month tells a vastly different story. Sales may be down steeply, but trades are not. July saw 5.6 million NFT trades occur across measured blockchains, slightly up (0.46% or 25,800) versus June, with April’s number of transactions just 1.1x greater than July, a far lower difference than sales.
The market volatility has impacted how the public sees the overall stability of NFTs. While a majority (59%) still think they will exist in five years, this figure has tumbled from 71% just six months before, in January.
This has also hurt the consideration that cryptocurrencies should be used to pay for NFTs. While this was not a majority consensus in January, when 42% agreed, it has fallen further to a minority opinion among consumers, now with a third thinking it’s important for cryptocurrency to be the only payment source for NFTs.
The perception of NFTs as a technology that will change art and entertainment has also slipped, with fewer than half of those aware of NFTs now considering them as having the ability to do this.
This sentiment has not shifted much among NFT owners, who remain bullish. But it is the opinion of those aware but not yet owning — the potential growth market for NFTs — that is most important to consider. With so many entertainment companies ramping up their NFT plans, finding ways to ease the concerns of the growth portion of the market is essential.
This could be achieved by a number of different strategies. Demonstrating the utility that NFTs can offer and shifting popular perception from possible to scam to useful technology is one. Exploring free drops, whether by inserting QR codes in programming as Discovery did with “Shark Week” or by rewarding viewers for watching at any time is another.
NFTs are at a pivotal moment in consumer consciousness. There’s a lot that the technology can offer, but the popping of the NFT value bubble has seen many think of them as nothing more than a means to squander capital. It’s the perfect time for entertainment firms to introduce NFTs providing utility—instead of speculative investment options—and change public perception for good.
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