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Mooners in the NFT Market

With a market cap of $7 billion, you would be hard-pressed to find an individual that hasn’t heard of an NFT. Investors, collectors, even high-profile celebrities like Jay-Z and Gary Vee have purchased NFTs. Yet, this enthusiasm has been met with equal parts skepticism. Memes of NFT screenshots and concerns over a recreation of a Black Mirror episode has led to many denouncing the usage of NFTs. The truth is much more nuanced and requires a fundamental understanding of the NFT market.

the NFT Ecosystem

There are 3 main stakeholders in the NFT ecosystem: the artist, the buyer & the collector. The artist uses NFTs as a way to sell art. With each change of ownership, the artist is paid a percentage of the transaction. Buyers use NFTs to support their favourite artists and share their work online, while collectors may use NFTs as speculative assets through buying and selling, depending on how the value varies.

NFT transactions take place on marketplaces. A NFT Marketplace is a seamless platform where digital artists and buyers can directly interact. Popular NFT Marketplaces include OpenSea, Rarible and CryptoPunks.

What is driving the discussion around NFTs?

NFTs owe their popularity to a multitude of factors – speculation, first mover advantage and Covid are among the most prominent. The NFT craze originated due to the impression that you could make it big, fast. This might be best exemplified by the sale of a digital collage by the artist Beeple for $69.3 million. Speculation over the next multi-million dollar project has driven many to NFTs in hopes of turning a quick profit.

With big name corporates such as Meta, Microsoft and Pepsi moving towards the Metaverse, many are convinced that the Metaverse is the future. First mover advantage will make it more possible to monopolize brand equity and market share. The notion that one would be able to become an influential figure in the new universe creates a frenzy to enter the NFT market ASAP.

All these drivers would not have been possible without Covid-19. The pandemic provided a downtime never experienced before in modern history and accelerated the adoption of technology in many traditional markets. As more cultural experiences are migrating online, we are witnessing a far larger take-up among ordinary consumers. Many turned to NFTs to supplement income using NFTs during the economic downturn and artists saw NFTs as a way to continue showcasing themselves during a quarantine that prevented live demonstrations.

faces of the nft market

Big names are making headway in the NFT universe. Lionel Messi launched his NFT Collection in August 2021. Featuring 3 digital art pieces, Messi’s influence was on display as the NFTs’ sales spiked to US $3.4 million on the first day of launch.