NFTs went from strength to strength in 2021, becoming a cultural phenomenon as collections like “Bored Ape Yacht Club” saw celebrities such as Stephen Curry and Jimmy Fallon purchasing unique jpegs of disinterested-looking simians in boatwear.
This brought in big-name brands to NFTs, with the NFL, UFC and WWE joining the NBA as major sports leagues with NFT licenses.
It should be noted that monthly NFT sales peaked in August 2021, with $4.5 billion collected that month. The amount has fallen each month since but has remained above $2 billion, something unimaginable in early 2021, when monthly sales averaged $279 million between January and June.
But the success of NFTs also raises two very different problems for the digital format.
With sales booming across platforms, more companies have created their own blockchains. For instance, Panini, a trading card and memorabilia manufacturer with NFT licenses for UFC, NBA and NFL (and soon WWE), created its own Panini blockchain for NFT sales and doesn’t auction on other platforms.
It is impossible to move an NFT bought on a proprietary blockchain to a private wallet. While that’s a savvy business move ensuring that the minter takes a share of any future sale of NFT trading cards — the smart contract being put into full corporate effect — this means that NFT collectors will have multiple wallets in the future with no way to collate their collection into one place.
It’s an obvious hindrance for those looking to flex their pieces either in the real world or the metaverse and one that looks to have no solution, as corporations will look to keep as much control of their digital realms as possible.
In other words, the mass commercialization of NFTs has begun.
This brings with it another problem for the NFT community. When NFTs first launched, the only way to purchase one was via cryptocurrency, usually Ethereum.
VIP+’s partnership with leading consumer insights firm GetWizer for our “Demographic Divide” special report found that this reliance on cryptocurrency was a potential barrier for the majority of consumers of all ages. Crypto tends to be considered too complex for average consumers to get their heads around, and thus a service that bases itself transactionally purely on that is limiting its market reach.
NFT originalists and purists would argue that is correct and should always be the case. But with the likes of Live Nation Entertainment, Ticketmaster and record labels making plans for NFTs and Fox creating Blockchain Creative Labs, moving away from cryptocurrency as the transactional basis will continue.
It should be noted that this is already happening. Dapper Labs and Panini are two NFT transactors that only require debit or credit card information to purchase. In fact, it’s impossible to buy a Panini-licensed NFT with crypto.
This could rupture the NFT community, but it is to be expected. Every digital innovation, from the relative wildness of Web 1.0 to Napster to YouTube and social media, has eventually been colonized by big industry and seen its world redrawn. True or classic NFTs, traded solely by .Eth and hosted on wallets like MetaMask will remain. But expect the NFT schism to happen soon as the digital format makes the leap to mass adoption.