Non-fungible tokens, or NFTs, are a blooming sector of the cryptoeconomy. They can be understood as digital collectibles, like CryptoKitties, which are verifiably unique and can be deployed in a multitude of ways, for example as art, ad space, gaming pieces, and beyond.
Like crypto’s decentralized finance arena, most of the NFT activity happening today is happening on Ethereum. And like DeFi, the promising NFT ecosystem seems to be on track for solid growth in 2020. But how much growth might we reasonably expect?
Here, cue in NonFungible, a tracker site for all things crypto-collectibles and blockchain gaming, whose team just published their “Non-Fungible Tokens Yearly Report: 2019,” an excellent trove of information covering last year’s happenings.
Therein, the experts at NonFungible notably estimated that the market capitalization of the NFT economy could reach a valuation over $315 million USD in 2020. If that projection pans out, the NFT market would be bigger than it’s ever been before.
Breaking Down the Numbers
At the end of 2017, the NFT market had a market cap just over $30 million, per NonFungible. One year later, and despite a bear market sinking its teeth into the cryptoeconomy throughout 2018, the NFT market grew some 480 percent to $180 million.
In 2019, the market saw steady growth, rising around 17 percent on the year to just short of $211 million. As the sector has seemingly been heating up in recent weeks, the NonFungible team has estimated that 2020 will more than double the previous year’s growth, with their target being a 50 percent rise to $315 million.
The rise in NFT users over the last few years roughly tracks that market cap trajectory. Per NonFungible, the number of addresses that owned NFTs was 58,000 in 2017. That number rose to 111,640 in 2018, and then growth acutely evened out as NFT addresses peaked at 113,287 in 2019. With the fresh uptick in activity in the space, the tracker site projects a 30 percent climb in addresses for 2020, toward the 147,000 mark.
What Could Drive the Growth?
There are a few factors that appear to be playing into a hotter NFT market in 2020. For one, the wider cryptoeconomy seems to have been tilting bullishly in general in recent weeks, so that increased interest and activity around Ethereum and ETH spills over into niche arenas like NFTs.
Beyond that macro point, there are more focused trends to watch. The launch of the virtual world Decentraland on the Ethereum mainnet on February 20th was a huge development that was years in the making. An associated $100,000 prize campaign has drawn in plenty of new users that are partaking in NFTs for the first time.
These dynamics help explain why Decentraland’s NFT parcels and wearables have been among the best-selling NFTs in recent weeks. But the project isn’t the only virtual world that’s been heating up.
For instance, Cryptovoxels is another like-minded project that has become the de facto gallery world for the cryptocurrency arena’s digital artists on SuperRare — Ethereum’s biggest art platform right now — as Zima Red‘s Andrew Steinwold noted in his latest NFT Data Dump:
“SuperRare is continuing its strong growth streak. Wallets up 6.67% last month and breaking over 1,000 holders of SuperRare art. Again we see SuperRare stats highly correlated with Cryptovoxels. The reason being that Cryptovoxels has become the defacto NFT art platform so SuperRare artists and collectors will make their galleries inside Cryptovoxels.”
Beyond digital worlds and digital art, the rise of Ethereum’s top digital games — namely Gods Unchained, CryptoKitties, and Axie Infinity — is another key dynamic to watch as this year proceeds.
There’s still plenty of room to grow, to be sure, but with so many trends coming together in rapid fashion, an NFT market cap of $315 million seems reasonable in 2020. Let’s see what happens from here.
