Sales of NFTs reached around US$25 billion last year as the speculative crypto asset exploded in popularity. But there was sign of growth slowing toward the end of the year. This is compared to just US$94.9 million in sales the year before.
What’s the difference between Bitcoin and NFTs, again?
Just a quick recap: From a technical perspective, cryptocurrencies, like Bitcoin and Non Fungible Tokens (NFTs) are related because they use the same blockchain technology when they’re bought and sold.
But, the difference between an NFT and a traditional crypto is that the price of one unit of crypto is equal to any other single unit of that currency. So, for example, If a Bitcoin is US$40,000, then regardless of who owns it, it’ll all be worth the same amount.
But an NFT is a single unit meaning that its price goes up and down by itself and isn’t tied to anything else. It’s also entirely unique, so what that means is that one NFT can’t be replaced with anything else.
What’s new with NFTs?
With that out of the way, according to DappRadar on Monday, sales of NFTs reached just under US$25 billion last year as the speculative crypto asset exploded in popularity. But there was a sign of growth slowing toward the end of the year. This is compared to just US$94.9 million in sales the year before.
Just for a bit of perspective, the amount in NFT sales in 2021 is around the same that was pledged at the COP26 to help countries phase out non-renewable energy like coal. It is also the same amount the World Bank made available to buy and deploy COVID-19 vaccines.
Big household names like Coca Cola Co. and Nike Inc., as well as high-end luxury brands like Gucci have quickly gotten into the arena, either launching their own NFTs or acquiring startups that make digital assets. These digital assets are then launched in virtual worlds for avatars to buy and collect or own.
One of the most talked about collaborations from last year was Balenciaga’s collaboration with Fortnite, which sells skins – virtual clothing and accessories for avatars at under US$10.
World famous art houses have also been quick to get involved, representing digital artists like Beeple who sold a piece of art titled, “Everydays: The First 5000 Days,” for US$69.3 million.
But even though we often only hear about these hefty price tags attached to these new digital assets, last year, the common price range for NFTs were between US$100 to US$1,000, according to NonFungible.com.
What’s new with Bitcoin?
On Monday, the price of Bitcoin fell over 5% to its lowest in over five months, dipping below the US$40,000 mark.
This marks the lowest since August 5 and comes after a record high of US$69,000 in November.
The Nasdaq also fell over 3% overnight in its largest one-day percentage drop since February of last year, after investors mull over the impact of government stimulus withdrawal and an interest rate hike as inflation rates continue to increase to record highs.
Chief operating officer of crypto fund distributer Stack Funds, Matt Dibb, explained that the fall in the value of Bitcoin “correlated with the ‘risk off’ move across most traditional asset classes.”
He explained that movements in crypto markets are growing more aligned with traditional markets as the number of institutions and investors trading both crypto and other assets increases.
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