Market opportunity & potential growth

The non-fungible token (NFT) market tripled in 2020, with the total value of transactions increasing by 299% year to year to more than $250m. According to a report that studies the NFT market, NFTs are primed to become the leading emerging asset class for the virtual economy in the years ahead, both in terms of their financial value and their practical uses, and a major role of economic activity in virtual worlds.

Because of their unique characteristics, they are impossible to replicate, they can bridge the gap between the virtual and the physical economies, offering a huge market of valuable digital goods that can be scaled, collected, and traded.

The total value of all NFT transactions (which includes sales and all other transactions such as “breeding”, “minting” and renting) increased from $62,862,687 in 2019 to $250,846,205 in 2020.

The market activity has increased significantly: the total number of active wallets transacting NFTs (including buying, selling, holding, or using them in a blockchain application) skyrocketed, growing 97%, from 112,731 in 2019 to 222,179 in 2020. Similarly, the number of buyers and sellers rose from 44,644 to 74,529 (+66%), and 25,264 to 31,504 (+24%), respectively.

The number of active wallets accelerated throughout 2020, suggesting even stronger growth ahead in 2021: Q4’s total growth was twice Q3’s, and three times that of Q2.

NFT traders have also experienced unprecedented financial performance, with profits of up to $500,000 in a single year and certain traders able to generate annual profits in excess of $100,000 from trading NFTs.

Meanwhile, big-name brands are increasingly entering the space, creating lucrative NFT-based consumer goods and services.

These include fashion and luxury brands like Nike, Louis Vuitton, and Breitling creating virtual fashion products; sports brands like Turner Sports, NBA, F1, and PSG, as well as entertainment brands like BBC, Warner Music, and Paramount creating online collectibles and games; video game studios like Ubisoft and Atari creating virtual worlds, games, and tokens; and tech companies like IBM, AMD and Samsung creating new services and utilities.

The growth of the NFT market is partly the result of the increase in online activity following the pandemic, but also reflects a wider and accelerating trend towards people spending more of their time – and money – in virtual spaces on virtual goods, services, and experiences.