NFT Sales Hit $25 Billion in 2021, But Growth Shows Signs of Slowing

From cartoon apes to video clips, sales of NFTs reached some $25 billion (roughly Rs. 1,84,690 crore) in 2021 as the speculative crypto asset exploded in popularity, data from market tracker DappRadar shows, although there were signs of growth slowing towards the end of the year.

Prices of some non-fungible tokens, cryptocurrency assets representing a digital item such as an image, video, or even land in virtual worlds, rose so fast last year that speculators sometimes ‘flipped’ them for a profit within days.

The art world has been quick to cash in, with auction houses selling NFTs representing simple cartoons for millions of dollars with no physical objects changing hands. One NFT artwork fetched a record $69.3 million (roughly Rs. 510 crore) at a Christie’s sale in March.

Meanwhile, some of the world’s top brands, including Coca Cola and Gucci, have also sold NFTs.

NFT sales volume totalled $24.9 billion (roughly Rs. 1,83,960 crore) in 2021, compared to just $94.9 million (roughly Rs. 700 crore) the year before, DappRadar, said on Monday. DappRadar collects data across ten different blockchains, which are used to record who owns the NFT. 

Estimates of volumes vary by different data provider, depending on what is included. Transactions which take place ‘off-chain’, such as major NFT art sales at auction houses, are often not captured by the data.

CryptoSlam, which also tracks multiple blockchains, said the 2021 total was $18.3 billion (roughly Rs. 1,35,250 crore). NonFungible.com, which tracks the Ethereum blockchain only, put 2021 sales at $15.7 billion (roughly Rs. 1,16,030 crore). Ethereum price in India stood at Rs. 2.5 lakh as of 11:20am IST on January 11.

This means the money spent on NFTs in 2021 is roughly equivalent to the amount pledged at COP26 to help countries phase out coal, or the funding made available by the World Bank to buy and deploy COVID-19 vaccines.

Sales peaked in August, then declined in September, October and November before picking up again in December, data from the biggest NFT marketplace, OpenSea, showed.

This does not appear to be correlated with fluctuations in the price of cryptocurrencies, which are often used to buy NFTs, as bitcoin and ether rose in the September to November period.

Around 28.6 million wallets traded NFTs in 2021, up from some 545,000 in 2020, DappRadar said.

While some see NFTs as the future of ownership in the online world, buying NFTs as a vote of confidence in the development of “Web3” or the metaverse, others are baffled as to why so much money is being spent on items which do not physically exist.

Just 10 percent of traders accounted for 85 percent of all NFT transactions, research published in the journal Nature said. 

While the most expensive known NFT sale was $69.3 million, a common price range was $100 (roughly Rs. 7,390) to $1,000 (73,900), NonFungible.com said.

Prices of the most sought-after NFTs were highly volatile. The average sale price of a CryptoPunk image rose from around $100,000 (roughly Rs. 73 lakh) in July to nearly $500,000 in November. By December it had fallen to around $350,000 (roughly Rs. 2.5 crore), CryptoSlam data shows. 

Collectible NFTs were the most popular category, followed by art, NonFungible.com said. Some of the most eye-watering NFT sales have been for land in online metaverse environments.

Virtual real estate investor Republic Realm bought land in the virtual world The Sandbox for $4.3 million (roughly Rs. 30 crore) in November. 

© Thomson Reuters 2022