Top 12 Trends Shaping the NFT Future in 2024

Since being introduced in 2012, non-fungible tokens (NFTs) have quickly become mainstream. From digital art¹, to digital assets and the virtual world², the NFT market brought new possibilities for proof of authenticity and digital ownership.

This means NFTs aren’t limited to the monkey images of the Bored Ape Yacht Club. In this article, we will discuss the top 12 trends that are likely to shape the future of the NFT space.

1. Expansion beyond art

NFTs have expanded beyond digital images into different sectors to certify and verify qualifications and achievements.

The use cases of non-fungible tokens that have gone beyond digital images include:

• Music: Artists can tokenize their songs, sell merchandise, and receive royalties.
• Fashion: Digital versions of physical luxury goods and fashion can be created and be used in the metaverse.
• Gaming: NFTs can represent video gaming items, characters, and virtual lands to establish a new level of interactivity.
• Luxury goods: Luxury goods’ authenticity can be certified with NFTs.
• Metaverse: NFTs can represent unique digital assets or property, enabling users to authenticate and trade virtual goods, experiences, and spaces.
• Supply chain: Digital records of an item’s journey, from production to sale, can be turned into NFTs to ensure traceability, authenticity, and provenance.
• Ticket sales: NFTs can tokenize tickets, securing and verifying proof of purchase. This reduces fraud and allows secondary market transactions where original ticket issuers can benefit from sales.
• Asset tokens: NFTs can tokenize assets by digitally mirroring physical or digital assets on the blockchain, thus providing ownership of these assets. This also allows fractional ownership of assets.
• Identity and credentials: Non-fungible tokens can be used to confirm identity and credentials by digitizing personal identity through a tamper-proof digital passport.
• Loans and financial instruments: NFTs can represent loans, debts, and financial instruments powered by smart contracts for a decentralized finance space.

2. Interoperability

The expansion of digital ecosystems necessitates interoperability between different platforms, systems, and games. NFTs could be the cornerstone in allowing these systems and services to work in unison.

Smooth exchange and interaction between NFTs across diverse platforms, blockchains, or applications enables innovation and broader adoption and utility of NFTs. This likely increases market efficiency and leads to more vibrant digital economies. As such, the scope of interoperability directly influences how expansive and inclusive the NFT landscape evolves to be.

Some everyday life examples of NFT interoperability include:

2.1. Wrapped CryptoPunks and Wrapped Kitties

CryptoPunks and CryptoKitties are popular on Ethereum. However, CryptoPunks isn’t fully compliant with the ERC-721 standard used by most NFT marketplaces. To solve this, Wrapped CryptoPunks³ were created, which are ERC-721 compliant NFTs that represent ownership of the original CryptoPunks.

The same process has been applied to CryptoKitties, creating Wrapped Kitties⁴. This is a form of interoperability, as it allows these NFTs to be traded on any ERC-721 compatible marketplace.

2.2. Cross-chain bridges

Some projects have built bridges between different blockchains to allow NFTs to move across them.

For example, a user might want to transfer the value of their Ethereum NFT to the Bitcoin Blockchain. BRC-721E was recently created to let NFTs be transferred from Ethereum to Bitcoin. This use case has been useful for Ordinal Inscriptions.

2.3. Interoperable standards

Some new blockchains have been designed with interoperability in mind. For example, Polkadot and Cosmos networks are designed to allow different blockchains to interoperate. Projects built on these networks could allow NFTs to move across different blockchains.

3. Physical-digital bridge

NFTs can connect the physical with the virtual world. Physical assets can be linked to NFTs to confirm their authenticity, represent ownership, and prove provenance. The NFT would act as a digital twin or proof of ownership for the physical asset.

For instance, an artist might create physical artworks as well as NFT representations of them. The owners can then independently trade the digital art. In recent years, there have been examples of such bridges which could have a significant impact on trading, ownership, and asset management.

3.1. Glenfiddich Rare Whisky

In October 2021, Glenfiddich sold 15 bottles of a 46 year old whisky, $18,000 a bottle. These bottles weren’t physically given to the buyers. Instead, each was represented by an NFT that the buyer owned. The physical bottle would only be handed over when the buyer decided to transfer the NFT back to Glenfidich, thus creating a physical-digital bridge⁵

3.2. Nike CryptoKicks

In 2019, Nike ran the Nike CryptoKicks⁶ that allowed the consumer to have a digital representation of the shoe they bought. This enabled the consumers to have a “virtual locker” of their shoes, and to trade the NFTs independently of selling the physical product.

3.3. VeeFriends

The internet personality, Gary Vaynerchuk, launched VeeFriends⁷ that comprises 10,255 unique hand-drawn characters available for purchase as NFTs. These NFTs serve 2 purposes:

1. Representing art as digital content
2. Offering real-world perks, like access to conferences, personal consultations with Vaynerchuk, and other experiences

The result is a physical-digital connection.

4. Improved legislation and regulation

The future of NFTs could be tied with legal and regulatory oversight to protect owners, creators, and consumers of NFTS:

4.1. Intellectual property (IP) rights

IP rights are a major legal concern with NFTs. Presently, the purchase of an NFT doesn’t necessarily confer ownership of IP rights of the content. The future could see more clarity on the transfer of these rights and handling of infringement.

4.2. Consumer protection

Many consumers may not fully understand what they’re purchasing when they buy an NFT, leading to potential misunderstandings or disputes. Enhanced regulation stipulates clearer explanations and disclosures from sellers, while also providing avenues for dispute resolution.

4.3. Fraud prevention

With the NFT boom, there have been more instances of fraud⁸, like people minting money off NFTs of artworks they don’t own or plagiarized. Better regulation could include measures to prevent and penalize such fraudulent activities.

4.4. Sustainability

As many NFTs are hosted on energy-intensive proof-of-work blockchain technology, there are environmental concerns. The future of NFTs could see an increased push for greener alternatives like technologies such as proof-of-stake blockchains, or see the implementation of new environmental standards on NFT platforms.

4.5. Taxation and securities law

As financial transactions, there is an argument for NFTs profits and losses to be reported for tax purposes. Clearer regulations and guidelines around NFT taxations could provide clarity in this aspect.

In addition, there’s also the question of whether new value of some NFTs could be classified as securities, which would subject them to a host of existing regulations. Regulatory clarity on this issue would be crucial for the ongoing development of the NFT market.

4.6. Cross-border sales

As the NFT market is global, there needs to be international cooperation and legislation to address issues related to cross-border sales, such as: 

• Jurisdiction 
• International consumer protection
• Taxation

5. Increased accessibility and understanding

5.1 Democratization

One key prospects for the future of NFTs is its further democratization. As NFT marketplaces get more user-friendly and blockchain becomes more understood, we can expect more engagement and mainstream adoption with the technology. This will help more creators to mint and a wider audience to buy and sell NFTs.

5.2. Education

NFT market growth has brought with it a necessity for better education of what NFTs are, their potential use-cases, and the risks associated with them.

As the sector matures and more new technologies develop, we could see a rise in resources dedicated to this type of education, ranging from online courses, to podcasts and seminars. Enhanced understanding will equip users with the knowledge needed to navigate the space responsibly.

5.3. Decentralization and ownership

The future of NFTs could revolve around more decentralized models of ownership and revenue sharing. As understanding of blockchain tech and NFTs grows, we might see more initiatives leveraging NFTs to grant users direct ownership over their assets, bridging the gap between the physical and digital world. This shift could upend traditional models in many industries, from music and digital art to gaming and real estate.

For more on NFTs

To learn more about NFTs and its derivatives, read:

• PSBT vs Smart Contracts: Detailed Comparison
• A Deep Dive into Smart Contract NFT
• What are NFT Royalties & How Bitcoin Ordinals Can Help

This article was originally written by former AIMultiple industry analyst Bardia Eshghi and reviewed by Cem Dilmegani.

Sources

• 1. “Grimes sold $6 million worth of digital art as NFTs.” The Verge. March 2, 2021. Retrieved on July 12, 2023.
• 2. “Investors Snap Up Metaverse Real Estate in a Virtual Land Boom.” NYT. November 3, 2021. Retrieved on July 12, 2023.
• 3. “Wrapped Punks.” Retrieved on July 12, 2023.
• 4. “Wrapped Punks.” Retrieved on July 12, 2023.
• 5. “Glenfiddich Sells $18,000 Super-Rare Whisky As NFTs – Here’s What That Means.” Forbes. October 27, 2021. Retrieved n July 12, 2023.
• 6. “Nike and Rtfkt take on digital fashion with first “Cryptokick” sneaker.” Vogue Business. April 23, 2022. Retrieved on July 12, 2023.
• 7. “VeeFriends.” VeeFriends. Retrieved on July 12, 2023.
• 8. “NFTs and Financial Crime.” Elliptic. 2022. Retrieved on July 12, 2023.