For Part One of this article on misunderstandings about NFTs and more, click here.
Over the past few months, non-fungible tokens, also known as NFTs, have burst into the public consciousness, expanding and even challenging our collective understanding of digital ownership. So, for the skeptics or even the investors that think that NFTs are a fad that will boom and/or bust, or even a bubble that’s bound to burst, I’ve got news for you. NFTs are here to stay and will become second nature to all of us in just a few years.
Must-haves for the next phase of NFT evolution
Despite the recent popularity of the NFT market, the NFT ecosystem is still in an experimental phase. The future use cases of NFTs are endless and that’s why NFTs are not just a fad. They’re definitely here to stay.
But in order for NFTs to be pervasive, a few things need to happen, including a drastically improved user experience. NFTs currently have a cryptocurrency user experience. The user experience needs to evolve to an Apple or Amazon Prime type of experience. Here are a few critical actions that need to happen for the real potential of NFTs to unfold:
Discovery and search
If NFTs are ever going to live up to their potential for mainstream consumers, then they need to be represented and available in mid-market landscapes and not just in luxury, top-of-the-line opportunities. The average consumer needs access and the ability to search, compare and shop. The discovery phase in a person’s buyer journey is critical. Many don’t know exactly what they want until they see it, then they want to read comments and compare the product to other offerings. And let’s not underestimate the power of impulse purchases. This will likely also drive specialization of NFT marketplaces based on specific use cases.
Standards and regulation
NFTs have the opportunity to correct the mistakes of the crypto past by leveraging advanced blockchain technology, backed by mainstream institutional players, as well as responsible regulations. Critical mass adoption relies on secure platforms, ease of use and transparency. To truly realize the potential of NFTs, standards around the content and information included in each NFT need to be made and met. Regulations around the creation, marketing and sale of NFTs should also be put in place to make sure that fraud is reduced and standards of ownership are upheld. Additionally, larger institutional intermediaries, that can include auction houses, insurance institutions, banks and other organizations, can offer safe guards and guarantees during the creation and throughout the lifecycle of the NFT – providing owners and investors with additional layers of protection and added reassurance.
Non-crypto user experience
Let’s face it, most consumers and financial investors don’t deal in crypto every day. What they do interact with is their seamlessly beautiful mobile device, intuitive apps and websites and experiences that make their life easier throughout the day. The crypto UI/UX is not always user-friendly, especially for those who are crypto illiterate. Therefore, when I began my own process to create an NFT for a piece of my artwork, I wasn’t surprised by what I encountered – a complex and lengthy experience that mirrored today’s disconnected crypto experience.
As a lifelong “techie” and an experienced crypto investor, even I had trouble with some of the tasks, including connecting to my virtual and physical wallets and trying to transfer funds struggling with versions that weren’t compatible. Then, when I had to complete the NFT transaction – due to congestion on the underlying Ethereum blockchain sealing the transaction took about an hour or so. Someone who is not as well-versed in this ecosystem would’ve been frustrated, confused and most likely walked away.
For NFTs to achieve critical mass and adoption in a variety of industries and verticals, the tech and user experience need to shield the users from the feel of the underlying blockchain and move towards the seamless and frictionless experience we’ve all come to demand (and love) on our favorite websites and apps.
NFTs are here to stay
NFTs are certainly not going anywhere. In fact, they will only grow in popularity and in use cases. As with any investment, people need to do their homework and fully understand the market and item that they are investing in. Just because an NFT has been created for something doesn’t always mean that it’s a valid investment. Markets and prices fluctuate and they will continue to do so as NFTs gain speed.
With the NFT market growing, larger mainstream investors are taking notice and participating. As clear regulations start to take shape, NFTs will become a natural extension of our everyday digital lives.
So, to adequately answer the question of whether or not NFTs are in a “boom or bust” market, its less about the behavior of NFTs and more about how investors and organizations view the entire ecosystem. Those that realize the power of NFTs early on and embrace their usefulness in all aspects of our financial lives, will most certainly experience a “boom.” For those skeptics that miss the opportunity to participate in this ecosystem that’s in its infancy but on a rapid growth trajectory – will unfortunately find themselves feeling the burn of a “bust.”