NFT Markets Pain Point: Lack of Utility and How We Should Change This?

Vincenzo Lee, CEO of Kollect

Overview

If there is a new acronym or concept that you've picked up in the last year, it is most likely 'NFTs', short for Non-fungible tokens. An NFT is a unique digital asset representing ownership of a digital item and is then stored on a digital ledger we call the blockchain to verify and authenticate. Reports from Reuters show that in the third quarter of 2021 alone, NFT sales volumes reached an insurmountable amount of $10.7 billion; Roughly eight times more than that of the previous quarter, and thus, has been making the news constantly.

It is now common to see NFT project launches from all sorts of brands and celebrities; We all know what it feels like when there's a new project hitting the wire and making headlines globally. Some notable celebrities and brands that we have seen starting their NFT projects in recent days include Snoop Dogg, Lindsay Lohan, Coca-Cola, Paris Hilton, Ellen DeGeneres, Dolce & Gabbana, Mark Cuban, and much more. However, some of them are only digital collectibles with minimal actual usage.

Lack of Utility Results Unsustainable Growth

Although the broader NFT market has been booming, and we have seen owning some specific NFTs could bring the owner a certain social status, most projects lack true utility, meaning buyers can not further leverage their NFTs after purchasing them. 

Gary Vaynerchuk, a world-recognized entrepreneur, speaker, internet influencer, and now NFT specialist, spoke about the recent digital boom, stating that 90% of NFTs will have little to no value in 3-5 years. Coinbase founder and CEO supported Gary's beliefs. He compared it to the early internet companies in the late '90s, where he sees that due to the lack of utility, sustainability, and "value". As a result, 90% of these projects are doomed to fail. 

The market is eager to see a paradigm shift in the current NFT market, where it's still primarily driven by hype, pure speculation, and a group of niche collectors and short-term profit-taking investors. Instead, we need a more utility-driven environment to allow NFT projects to transform into a long-term sustainable model so that they can be quickly adopted and appreciated by the masses.

Initiating the Paradigm Shift

There are some projects that are making an effort to help initiate that paradigm shift and turn the NFT market into a more utility-friendly place. Kollect could be one of the