By George Ward
The non-fungible token (NFT) space was already in the red even before the FTX collapse, trimming the market capitalization of digital assets down further in what is considered a challenging year for the fledgling industry.
NFT To Overcome Setback
According to industry experts, the once burgeoning ecosystem is on its way to recovery after the FTX debacle caused a plummet in the value of crypto assets across the board.
Massive user funds are still stuck in the FTX exchange, and the firm is still facing a liquidity crisis. However, users have attempted other ways to remove their funds.
One such method is the buying of NFTs in the Bahamas. However, many NFT community members are against the new method.
The reason is that it bypasses bankruptcy regulations and attaches negativity to NFT. Meanwhile, an executive at the NFT firm, Enjin, Oscar Franklin Tan, noted that the assumption of others is not a fair summary of what NFTs are used for, given the current situation.
Tan disclosed that other products are also being utilized as NFTs. However, he added that this has nothing to do with the NFT technology and more with the loopholes the Bahamas users exploit.
Furthermore, Tan is among the industry players confident about the NFT industry’s survival amid the turmoil hovering over the crypto space. However, the expert highlights the need for the sector to focus on making NFTs acceptable as digital proof of ownership.
He said, “NFT came with a lot of hype with artists displaying excessive exuberances, which is the same with other new technologies.”
The Enjin executive added that the digital collectible space would stabilize and consolidate to become one of the robust virtual communities. He also predicted the emergence of the second generation of more innovative and sustainable NFT models.
NFT Is More About Utility
Several players within the digital collectible ecosystem see NFTs with utility in the market as more likely to survive the challenges. According to Jamie Thomson, founder of the NFT game studio Vulcan Forged, NFTs with utilities have a higher chance of navigating the market turmoil.
Thomson added that NFTs based on speculation and hype are more at risk of hitting the rocks.
“With fewer speculations, there will be more mandatory utility. NFTs are crucial to a project’s operations like crypto tokens because their utility eliminates the influence of price fluctuations.”
An NFT creator, Jonathan Schultz, also revealed that the era of speculation-based NFTs is steadily declining. That’s why more projects have utilities for use cases.
The creator added that for the NFT ecosystem to survive, it must do away with too many memes around digital art. The collapse of the FTX Group also extended to its NFT marketplace.
It effectively means that the FTX centralized-based NFT marketplace is closed. Nick Rose Ntertsas, CEO of Ethernity, noted that the NFT ecosystem is no longer centralized.
He argued that the sector has become more decentralized and transparent.