In 2022, Bitcoin (BTC) more than doubled its previous record price, the Ethereum (ETH) ecosystem soared, institutional investors moved into cryptocurrencies, and Dogecoin (DOGE) became a household name.
But the one thing everyone couldn't stop talking about, surprisingly, were JPEGs.
By this time in 2020, non-fungible tokens (NFTs) were a niche. Now they are a big phenomenon.
Over the course of 12 months, not only did the term enter popular culture and make ownership of a digital asset a more widely known concept, the industry also skyrocketed to billions of dollars in monthly trading.
Many people have strong opinions about NFTs. Whether it's glamour, disgust, or a little FOMO — fear of missing out on an opportunity — NFTs are intensely loved and hated.
Depending on who you ask, it's either the future of properties or just some cynical and environmentally disastrous grand scheme.
But what is an NFT after all? Contrary to popular belief, an NFT is not a JPEG file. It's not a profile picture of a bored monkey or a pixelated face, a sports highlight turned into a digital collectible, or a cartoon monster fighting over you in a video game. Those are all the things an NFT can represent .
Basically, NFT is a token built on a blockchain that proves that you are the sole owner of this unique digital item (whatever it is).
Smart contracts, or the code that moves NFTs, enables the sale or transfer of an NFT, establishes perpetual copyrights for artists, uses assets within games and metaverse worlds, and more.
Gradually and then suddenly
In early 2022, it was sports and celebrities that took NFTs from a niche market to a phenomenon.
Dapper Labs' NBA Top Shot generated more than $200 million a month in trading volume in both February and March — more than the entire NFT market had generated throughout 2020.
Celebrities and artists have also rocked the NFT industry this year, likeGrimes , Rob Gronkowski or crypto-focused creators like Pak and 3LAU .
But it was digital artist Beeple who put an exclamation point on NFT fever by selling, for $69.3 million , a single NFT at a Christie's auction in March — the third-biggest single sale by a living artist.
Come to think of it, this may have been the beginning of the NFT fever: a sign that a frenzy had outgrown true appetite in the marketplace.
Sales on Top Shot began to stabilize and more and more celebrity releases failed to earn significant revenue. Many wondered if the NFT fever had just been a passing hype.
That said, the market generated $2.5 billion in trading in the first half of 2022, split almost evenly between the quarters, but the fever in the first quarter paved the way for a very calm and quiet second quarter.
However, as cryptocurrency prices started to rise, the NFT market was replenished with rocket fuel and took off to new highs in August.
OpenSea, the leading NFT market, soared from $150 million in ether trading in July to $3.4 billion in August.
At the time, the crypto world's most original and completely native projects led the way, demonstrating the potential for creativity, community and functional usefulness with digital assets.
Bored Ape Yacht Club (BAYC) continued the CryptoPunks' heyday, treating their NFT profile photos as an all-access ticket to an exclusive club full of benefits, while also giving holders the right to market the images.
Art Blocks used Ethereum's own blockchain to produce algorithmically generated art, as EulerBeats did, but with music.
Meanwhile, Axie Infinity demonstrated the enormous potential for video game NFTs, quickly becoming the industry's biggest NFT project as millions of gamers bought and battled with little cartoon monsters similar to Pokémon.
Some even earned their daily bread from it. Another project, Loot, started with NFT lists of digital items. Now, the decentralized community that has emerged is developing gaming experiences around NFTs.
As the metaverse takes shape, immersive worlds like The Sandbox and Decentraland represent the expansion of the digital frontier, offering virtual land ownership that can be customized, shared and even monetized.
It's a world of NFTs, and if the ambitious plans of Facebook and others come to fruition, we could be living in it soon.
agitation and revolt
With $10.67 million of third-quarter trading volume and an estimated $22 billion from the start of the year to date, according to data from DappRadar, the NFT market is booming.
It appears to be maturing as well, as other use cases emerge amid a migration to useful NFTs. NFTs are considered an important foundation for Web3 – in other words, they are the keys to the metaverse.
Meanwhile, NFTs helped introduce people to cryptocurrencies and blockchain technology. Many are colorful and charming and connect to the art and culture that people already love.
Even if integration and usability are a work in progress, NFTs have made cryptocurrencies more accessible. As Alex Svanevik, CEO of Nansen, told Decrypt in October , "DeFi have brought capital to crypto and NFTs are bringing people to crypto."
But NFTs have a perception problem. Of course, it's absurd to us that someone would spend millions of dollars on a Twitter avatar. But this is just the tip of the iceberg of obstacles that the market will need to gradually resolve before moving forward.
The environmental impact of Ethereum continues to dominate the narrative around NFTs, even if collectibles and assets issued on blockchain platforms that consume less energy (like Solana ), in addition to the scams and intrusions that continue to happen across the crypto industry.
Strong criticism of NFTs is prevalent on social media and companies and projects that want to exploit the sector often face reprisals.
That didn't stop major brands from thinking about the possibility, as suggested by the McDonald's and Budweiser releases. Budverso is on its way, according to its promoters, but so is White Castle's Tinderverso and Sliderverso.
Even the oldest and most outspoken advocates of the NFTs probably couldn't have predicted the explosive year of tokenized digital collectibles. But will the fever last forever?
Some in the industry believe that most NFTs will not be able to sustain long-term value.
Even Gary Vaynerchuk, a major collector and creator of NFTs, warned of a market downturn in an “NFT winter,” explaining to Decrypt that he believes only big projects will succeed.
If NFTs really are the foundation of the next generation of the internet, then they can get pretty mundane. Much to the chagrin of critics, NFTs could be everywhere soon, representing ownership of anything in our digital lives.
In the future, they may no longer be called NFTs. We might not even think about them anymore. They won't be special anymore. They will just exist. After all, when was the last time you referred to your music as a “collection of MP3s”?
But in 2022, NFTs were amazing, new, disturbing and captivating. In 2022, we could still be in the throes of fever.
*Translated and edited by Daniela Pereira do Nascimento with permission from Decrypt.co .
The post The year 2022 was of non-fungible tokens (NFTs) first appeared in Bitcoin Portal .