2022 Prediction: NFTs will reach new heights
Around the new year, I like to take a moment to reflect on what has transpired in the previous months and make some predictions about what is to come. So far, I have written about trends I see in the hospitality industry, non-COVID related challenges to the global economy’s recovery, and the rise of plant-based seafood. Now, let’s dive into one of the buzziest trends to come out of 2021: NFTs.
2021 will go down in the history books for many things, including the introduction of new trends in trading and cryptocurrency.
When I wrote about NFTs last summer, I did so, in part, because they were so new and confusing that it was hard to discern what all of the buzz was about. And while they can still be a bit difficult to understand, I think we can safely say that NFTs have transcended the status of “newest fading trend.”
In fact, in the past 24 hours alone, $162 million has been spent on roughly 93,000 NFTs.
Encouraged by this rapid success, it seems like everyone is clamoring to get a piece of the action. For example, dozens of celebrities–from Snoop Dogg, Paris Hilton, to social media stars–have waded into the medium, which has also helped to make NFTs more familiar among consumers. It’s become so mainstream that Samsung has even incorporated a new “NFT Aggregation Platform” into its smart TVs.
And while NFTs initially took off in the art world, and as a marketing tactic for other brands, large retailers are taking steps to translate these tokens into physical sales.
So, given that NFTs are not innately about tangible goods, how do they benefit retailers? According to CBI Insights, one reason is that NFTs have the potential to help merchants reduce online transaction costs and bypass intermediaries (think Amazon and Alibaba). For luxury brands, NFTs have the potential to create a unique and exclusive shopping experience as well as serve as a way to authenticate goods.
Walmart, for example, just this week announced that it was moving towards creating its own cryptocurrency and collection of NFTs. Here is an oversimplified example of how this could work: Walmart would tokenize ownership of a sweater and sell it to any consumer, the consumer would then redeem the token and get the sweater delivered. By circumventing credit card payment–and thus, a transaction fee–Walmart has increased its margin on the sale.
However, the use of NFTs is being examined far beyond retail. Some are already weighing the role that NFTs can play in real estate transactions.
Here is one thing I can say for sure: as major consumer brands test the boundaries of, and forge new trails in, NFTs, barriers are being removed for smaller retails and other industries. And, if the past six months are any indication, I believe that NFTs will continue to become more popular in 2022.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.