There is no NFT hype anymore but research shows that major brands see a potential value in the technology. NFTs have the potential to create novel and innovative ways to connect with consumers and foster more meaningful customer relationships, a report by World Economic Forum and management consultancy Bain & Company shows.
A couple of years ago, the NFT market boomed when artist Mike Winkelmann, online called Beeple, sold a digital piece of art at Christie’s auctions for USD 69 million.
The WEF report says that governments and regulatory authorities have an important role in creating policies and standards that will protect investors and build confidence in the NFT market.
Despite that fall in NFT trading values, it’s too early to write off NFT, is a conclusion from the report.
After the hype of past years, more companies across industries are experimenting and testing NFTs, moving away from speculators and focusing on adding real value for customers.
A regulatory framework has yet to be developed across jurisdictions to clarify what companies can and cannot do.
“In addition, customer experience is one of the main pain points for mass adoption since current wallets and the overall Web3 ecosystem are still quite complex for the broader audience.”
Organizations planning to release NFTs should integrate them into existing operations and ensure a comprehensive strategy is in place prior to launch, the report recommends.
NTFs were created in 2014 and the market boomed in between 2021 and mid 2022, with transaction volumes peaking at the beginning of 2022. By the second half of 2022, volumes started to drop due to cryptocurrencies’ volatility and overall market instability, leading to transactions plummeting by the end of 2022.
The report says companies have been testing different use cases to integrate NFTs through new forms of loyalty programmes, royalties, physical and digital collectables, or new gaming experiences, among others.
“The adoption of NFTs has different maturity levels across industries, with sports, ticketing, luxury, gaming, consumer product goods/retail, and art leading the way in terms of the adoption and development of use cases.”
“Nevertheless, as NFTs continue to evolve and new use cases are identified, adoption will likely continue to grow across a wide range of industries. The future development of NFTs relies on several pillars, such as regulation, interoperability, market momentum and ease of user experience.”
The report says that regulatory and legal clarity remains a challenge due to the lack of standardized taxonomies and regulatory frameworks across jurisdictions.
“Further development of the Web3 ecosystem and a favourable macroeconomic situation could encourage broader NFT adoption.”
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