How Long Will it take for the NFT Ecosystem to Hit 1 Million (active) users?

A question posed by Andrew Steinwold,

And a very interesting topic to dive into.

 

Current Status and Growth of the NFT space

NFT’s exploded on to the Crypto scene with Cryptokitties.

If you think about it, the hype that followed with CryptoKitties selling for up to $170k gave rise to a lot of devs creating in the NFT space.

We saw a lot of breeding games, art projects, etc on the blockchain.

These catalysts accelerate the space and give faith to developers to create.

Current Growth Stats,

According to nonfungible.com report,

we see some consistent growth for the overall NFT market cap over the years with a 50% predicted forecast for 2020.

We grew 500% within 1 year of the NFT token standard being introduced, from 2017-2018. Which was the perfect catalyst to get the industry started.

In the next 2 years we saw 20-50% growth which is still HUGE considering the whole crypto market was in a devastating bear market during this period. Not only did NFT projects continue to build, they GREW.

Current Active Wallets

Looking at Andrew’s piece on opensea blog, we can go with his rough estimate of 20,000 Wallets have traded on Opensea. It’s hard to find this metric. You can read the blog post to see how it was derived.

One interesting comparison is, comparing the Bitcoin Wallet Growth Graph with NFT Wallets.

20,000 wallets was August 2012. So does it makes sense to compare the current NFT market levels to those of Bitcoin in 2012?

Maybe.

But there are some stark differences.

Check out this image of market cap comparison between our neighbouring crypto communities,

Yes, that little blue dot on the far left bottom is the NFT market cap in exact size comparison with the others.

The ETH community alone is 120x the NFT market cap.

If we assume a correlation with active wallets and market cap, then we can loosely determine, if we were to even grow as much as half of Ethereum, then we’d be at ~1M Active addresses.

When NFT’s Though?

The good thing is, BTC & ETH have done 8-10 years of educational work for us. Introducing the concept of Blockchain or ‘cryptocurrency’ in the minds of people and the larger audience.

So we can leverage this to grow,

BUT there are some big hurdles I’ll discuss later.

For now, it looks fair to assume, as Andrew did, we’re sitting pretty at Bitcoin 2012 levels.

What followed from 2012 to 2014 was a surge to 100x in new Bitcoin wallets! In the space in just 2 years.

Hurdles,

Will we follow this trend? Let’s look at the HUGE hurdles we need to overcome before this acceleration.

Accessibility – To invest in cryptocurrencies, you can simply sign up to a centralized exchange, (ew), and buy any coin you want with a few clicks. No need to learn metamask, eth fees, security keys, etc. The NFT space needs this sort of simplification and structure to accomodate the non tech savvy.

The reality is, the majority don’t want to deal with the management of their security keys. “You lose your keys, you lose everything”, doesn’t sound too inviting when I explain NFTs to my friends.

Eth Gas – Eth fees can suck sometimes, especially when an NFT project bottlenecks the network. Solution? Maybe Eth 2.0 but in the short term we need a scaling layer. Matic is well positioned, the integration of them in popular NFT projects can help provide the speed and ease of marketplace activity when the bulls come running. PS, I own 0 Matic at time of writing this.

Simple Comparative Data – We have a HUGE void in data for NFT’s. If a new comer comes to the space, is his only way to know where and what to invest in, to research the market place activity of every NFT project?

There needs to be something like CoinMarketCap. You check current prices, compare it to a historical graph and decide whether to buy or not. It can be done with Decentraland at least. I’m sure it can be done with others.

Increase Trading/Investing Options – ERC721’s aren’t very liquid, especially those of higher value. We’re seeing projects like Niftex experiment with sharding or fractionalizing these to open the door for split ownership through an ERC20 representative of certain NFTs.

Want a piece of a $100k USD Digital Land? You can own 1/10,000 shares via Niftex.

These services need to be mainstream.

Utility – The dominant use case for NFT’s is to collect. We need more use cases. NFT’s can be used to represent ownership of anything. Imagine cars, houses, real life things of high value, represented via NFTs? Long away away but makes sense.

Catalysts

We need a catalyst to push the next stage of awesomeness in the NFT world.

Just like how NFTs exploded when Cryptokitties came to the scene, we need another, more sustainable and larger push.

Larger Brands integrate NFTs – Can you imagine if Pokemon released an open marketplace with NFT’s? Mass awareness on this level could be HUGE for the space. Probably not Pokemon, but when this happens, (and it will), we will see some major growth.

Influencers – We all know the power of socials. A few large Influencers can take this to the next level almost single handedly.

Crypto Bull Run – Bitcoin moons to $100k? If even ONE NFT project gets some of that spotlight, it would be huge for this space. If my Bitcoin went from $10k to $100k, I’d happily throw even $50k of that on NFTs.

So How Long Bro?

Alright, relax passive aggressive me.

2020, we’re seeing many alpha releases and features being rolled out almost daily. It’s a race to be relevant in many cases but competition is a great way to push growth.

2021 & 2022, we should see some OUT OF THIS WORLD use cases with these projects.

Virtual worlds on blockchain open the doors to unimaginable levels. Integrating smart contracts into actions in world. Something like hooking in to Chainlink Oracles to mint an NFT in world when a certain event happens, (It rains), etc.

Or Funding a full business pitch in one of these virtual worlds through crypto.

Things like this are going to make the NFT space a place you’d hate to not be part of.

If the next 2 years don’t do it, the following 2 years should.

I’d say 4 years is a very conservative estimate to 1M users. If we follow Bitcoin Wallet trend it could be 2.

Regardless, I, and many other people in this space will be working hard to push it!

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