Internet-meme culture gone rogue? An essential revenue tool for the modern artist? A passing fad bound to go the way of Pokemon GO?

Whatever your thoughts on non-fungible tokens (NFTs) are, they are currently having their moment in the spotlight, with everyone from the budding creative entrepreneur to the world’s largest corporations and sports franchises getting in on the action.

According to the latest NFT data from market tracker DappRadar, NFTs accumulated over $10.4bn in trading volume in the third quarter of 2021, with trades in October alone hitting $4.2bn (£3bn, €3.6bn) for a 2% month-over-month increase.

NFTs continue to sell for large sums. While Christie’s’ recent sale of Michael Winkelmann (aka Beeple)’s digital-art NFT Everydays: The First 5000 Days for $69,346,250 may have attracted the biggest headlines, NFTs have made huge strides in the wider art world throughout the year. New NFTs from Bored Ape, CryptoPunk, Ringers and Time Magazine fetched multimillion-dollar sums via sales on the Ethereum blockchain. 

So what are the biggest talking points, debates and trends happening in this rapidly developing new frontier of the art world? What’s in store for upcoming NFT projects 2021 and beyond? Read on below to find out.

Corporate bandwagon

Never the one to miss out on jumping on the latest global trends, McDonald’s announced the giveaway of 10 McRib NFTs in November to successful retweeters, marrying the popular meme-able quality of the McRib sandwich with the NFT boom.

—

The burger giant places each McRib NFT at a whopping $20 (a figure hidden in the depths of the giveaway’s terms and conditions) – over five times the amount of its edible counterpart.

Of course, given the exclusivity of each saucy token, its true market value is subject to wild speculation. Will a $69m McRib soon be on the menu? No doubt, we’ll find out soon enough.

Not to be outdone by its fast-food rival, Burger King dipped its toes into the NFT craze in an entirely different way with its ‘Keep It Real Meals’ campaign, drawing on the power of names of actor, singer and social media personality LILHUDDY, Brazilian singer Anitta and rapper Nelly – whose recent release “Lil Bit” peaked at 23 on the Billboard charts. Burger King’s partnership with celebrity-focused blockchain Sweet took a volume-based approach, offering up to six million digital collectibles unlockable via scannable QR codes on the side of its meal boxes. 

The campaign was a savvy combination of digital-art trends and classic incentive marketing akin to McDonald’s ‘Monopoly’ sweepstakes; perhaps that is the way forward for brands looking to invest their time and effort into NFTs in the short term.

Tom Mizzone, founder and chief executive officer of Sweet, speaking to Currency.com, said: “In a recent Forrester survey, they surveyed adults in the US and found that only 27% were familiar with NFTs and understood NFTs, while 45% had never heard of them.

“So yes, brands should deploy NFTs, but they need to be doing it in a way that is understandable and is easy – easy to purchase, easy to own, and easy to sell and trade, or even gift.”

Outside of fast food, this August, Visa announced its purchase of the CryptoPunk #7610 artwork for $150,000, signalling the financial services conglomerate’s arrival into the NFT domain.

—

Enter the social media giants

Announcing the launch of Facebook’s ambitious MetaVerse vision during a recent keynote presentation, co-founder and CEO Mark Zuckerberg teased NFT support in the near future. Details were scant, but the announcement dovetails nicely with the launch of Facebook’s Novi digital wallet earlier this year and its announcement of the company’s name change to Meta Platforms.

Microblogging rival Twitter also announced the development of its blockchain-linked Collectibles tab, which will allow users to display their NFT collections with other tweeters.

Self-professed “front page of the internet” Reddit made headlines with a recent job listing for a senior back-end engineer to be tasked with designing, building and shipping “back-end services for millions of users to create, buy, sell and use NFT-backed digital goods.”

The secondary market: A boon for artists

Projects worth $10,000 are becoming increasingly popular – and profitable – ventures. In October, Vancouver-based Looking Glass Labs (LG Labs) launched its newest NFT project GenZeroes, selling out in 37 minutes and generating $6.2m for the studio.

Furthermore, LG Labs stands to gain returns in perpetuity on the secondary market thanks to trades on OpenSea and similar NFT marketplaces. 

As Dorian Banks, LG Labs’ chief executive officer, said: “Thanks to blockchain technology, LG Labs is able to continue earning revenues in the form of 5% royalties from the sale of all GenZeroes in the secondary market, which is simply amazing.” The company plans upcoming NFT projects in 2021, 2022 and beyond.

Speaking with Currency.com, Jonathan Bixby, executive chairman of NFT Investments, which recently floated on the Aquis Stock Exchange, said: “What is so exciting about NFTs is how they are democratising the art industry and putting the power back into the hands of the artists. 

“Smart contracts allow artists to maintain a stake in their work as the art is bought and resold – they can continue to benefit from their work if it becomes more valuable with time.”

Evidently, blockchain technology has the potential to truly democratise the secondary market for creators – who can essentially place whatever percentage they want on all future trades – whereas secondary returns of physical art historically amounted to zero.

Are NFTs wise investments?

NFTs – just like the cryptocurrencies used to purchase and trade them – are highly speculative when it comes to price predictions. Did anyone truly expect Beeple’s piece to generate such an astronomical price tag? Any investment in new NFT projects demands extensive research, but some types could prove a wiser investment than others.

With new NFT projects come considerable opportunity, and Bixby believes that the fashion world presents one of these opportunities.

Said Bixby: “The fashion industry is highly interested in NFTs to cut down on counterfeiting, which currently costs them more than $50bn annually. 

“We’re excited to enter this space; NFT Investments recently acquired a $1m stake in AEON International, a leading developer of NFT technology for the luxury fashion industry. They boast an extensive list of high-end clients, including Gucci, Chloé and Louis Vuitton.”

A big issue in the NFT community is the shades of pump-and-dump, get-rich-quick schemes in the crypto space. Supposed creators of new NFTs can easily generate hype on social media, only to drop poor-quality assets with little to no resale value that are never be heard from again. 

Jake Elias, head of digital for The HOFA (House of Fine Art) Gallery and Artcels, told Currency.com: “That’s a huge issue within the space. If you’re not doing your own research as a collector, it’s quite easy for you to lose out on a fair amount of money.”

Dorian Banks, Looking Glass Labs CEO, shares these concerns. “There are unfortunately a lot of exit scams here. The projects look really good, the art is fine, they promise a lot of utility, they get sold out and then the project gets abandoned.”

Josh Sandhu, co-founder of the Quantus Gallery, has witnessed this trend himself. “I saw one a few weeks back. As soon as it was sold out, instead of just abandoning it and stopping answering questions, they deleted their Twitter and everything. Seeya!” He suggests thorough due diligence in the same vein of stock purchases for any buyers hoping to turn a profit..

How to recognise the best NFT projects

When asked how to determine and recognise the best upcoming NFT projects, Elias pointed to uniqueness and high community engagement.

He said: “I’d say the ones that are easier to make money on – if that is your endgame and that’s what you’re trying to do – would be the $10,000 projects like CryptoPunks where 10,000 of something will be made, generated on the blockchain, and they’ll all be unique. Those ones are definitely what people are flipping.”

Elias noted that a major hurdle for investors looking into new NFTs is a technological one: “A huge part of what we do has been trying to educate our collectors and high-net-worth individuals that actually buy and sell works of how to enter the space. It’s not as easy as you think.” 

He pointed to a lack of blockchain understanding as a major barrier to entry. The message is clear: Looking to invest in new NFT projects? Learn about the underlying technology first! 

Using recognised marketplaces for NFTs, including OpenSea, Rarible and SuperRare, may offer a higher degree of certainty for collectors, although in this nascent field, quality control is inevitably an issue wherever you shop.

Playing ball

NFTs are generating immense value in the sports sector, spelling good news for the future of NFT projects in 2021 and beyond.

The NFT-enabled digital makeover of NBA Sports – named ‘Top Shots’ – saw $219m in sales in February and $200m in March, although that figure did drop to $41m in May.

The National Basketball Association (NBA) franchise is the largest adopter of NFTs in the sports sector by a considerable margin, but Paul Lee, technology, media and telecommunications (TMT) partner at Deloitte, believes that football is not far behind. He said: “When the dust settles, a process which may take a couple of years more, NFTs are likely to become regarded as an important application of technologies that, overall, enhances the business of sports and embellishes the sports fan experience. 

“Within that period, say by 2023, it is likely that most major football leagues in Europe will have launched multiple NFT-related products. But as of mid-2021, NFTs are still in their infancy for almost all sports, with only the NBA having a comprehensive offering.”

Ticket sales is an arena where football clubs are already recognising NFTs’ revenue-generating potential. In a first for world sport as a whole, Ukrainian football club (FC) Dynamo Kyiv announced plans to offer 25% of its home-game tickets as NFTs on the New York-based Moonwalk blockchain, positioning the club as a technological leader of football in Europe.

In what it hopes will be one of the sporting world's best upcoming NFT projects in the coming season, the Rugby League World Cup announced the launch of the sport’s first official NFT marketplace and fan experience in partnership with NuArca.

Climate impact

NFTs have come under scrutiny for their costly environmental impact – an issue shared with blockchain activities as a whole, particularly the energy-intensive bitcoin-mining process.

One company approaching this issue head on is Save Planet Earth (SPE), which recently announced its ‘Carbon Credit Smart’ NFTs in collaboration with the Phantasma native blockchain.

Given Phantasma’s emphasis on monetising the energy-sapping online gaming industry, its green credentials are dubious at best, although SPE said: “Their environmentally friendly portfolio and eagerness to lower their carbon footprint makes them a suitable partner and an excellent option since SPE’s blockchain and carbon-credit exchange are still in production.”

Climate anxieties present a conundrum for creators and collectors in the NFT space, who are typically of the carbon-conscious younger generations. But there are some in the scene that are making steps to tackling these issues.

Peter Bowles, founder of early-stage online gallery NFT Arts, told Currency: “I think that new blockchains that are much more carbon-neutral than Ethereum will spring up.” NFT Arts also promotes the use of Aerial.is, which aims to calculate and offset the carbon footprint of NFT purchases.

One such blockchain, Palm – which was co-founded by none other than Ethereum co-founder Joe Lubin – promotes energy-efficient credentials and low-gas costs, despite being built itself using Ethereum infrastructure. The likes of Solana and Cardano have also touted green credentials.

Bubble or boom?

As with all major technological revolutions, sceptics talk of a digital-art bubble. Could early-stage NFT investors suffer burns akin to the dot-com bubble of the late 90s?

Not likely, says Elias: “The fact that Facebook has entered the space and Nike has entered the space, I think that kind of inclusion from those corporations just dents any talk of bubbles.”

However, he adds: “I think the bubble may be around the price of some of the assets. I think the inflation and the fact that some of these pieces are going for ridiculous amounts of money and no-one really understands why, that’s potentially where the bubble is, but NFTs as a whole? Absolutely not – they’re here to stay.”

Bixby concurred: “We don’t have any concerns about there being a digital art bubble. Digital artists are finally able to compete on level terms with physical artists – this is something truly exciting and empowering that we believe is here to stay, especially as we continue to see the introduction of new platforms and opportunities for fans to interact with creators and their NFTs online.”

Said Bowles: “At the moment, you’re seeing an area in its infancy, and you’re also seeing some artworks going for crazy money. The truth of where the future lies is somewhere between the two.” 

Gaming, the untapped market

Somewhat surprisingly, the mainstream gaming industry lags behind others when it comes to embracing NFTs. One can imagine new NFT projects from Nintendo offering collectible Mario tokens, or Microsoft’s Master Chief in NFT form, or countless other insanely popular video game franchises available as digital assets.

As of yet, neither gaming giant has entered the ring, though this could soon change.

Bixby said: “There are three billion avid gamers in the world, which is a huge market opportunity. We’re confident that they would prefer cryptocurrency to fiat, NFTs to physical art. Major developers such as EA, Ubisoft and Square Enix have all announced their intent to start producing NFT and blockchain games.”

Round-up

The year 2021 was far and away the hottest year for the nascent NFT community, in which the world’s largest corporations, social media giants and sports franchises began to recognise the untapped potential in creating, sharing and marketing these digital assets.

The arts community saw ground-breaking sales in value and volume, while major exhibitions and galleries began cropping up in the artist hotspots of New York, London and Paris.

While much bodes well for upcoming NFT projects 2021 onwards, the industry faces numerous challenges, including scams and the evident environmental impact of blockchain technology.

Collectors and investors looking to tap into the NFT market are well advised to do thorough background research before laying down cash in any upcoming NFT project. 

FAQs

Further reading

What are non-fungible tokens (NFTs)?