In the web3 world, the ubiquitous three-letter acronym NFTs (non-fungible tokens) has commanded attention since 2021. The pandemic put crypto on everyone’s radar, and NFTs rode that wave ever since, seeing Beeple’s "Everydays - The First 5000 Days" digital art piece sell for $69 million back in March 2021.

Since then, the NFT market has slowed down, with transaction volume in 2023 dropping 37%, sitting at around 4.8 million ETH. Despite the dip, large brands continue to explore NFT use cases – for instance, Nike launching its limited series of NFT collectibles featuring iconic moments in sports history, coupled with exclusive digital merchandise and experiences. This strategic move not only highlights the brand's commitment to innovation but also demonstrates the potential for NFTs to redefine fan engagement and brand loyalty.

In collaboration with YouGov, earlier this year we surveyed hundreds of web3 users to conduct a deep dive into the minds of today's crypto consumers for the WalletConnect Pulse report. In doing so, we discovered unique crypto personas and unlocking invaluable insights into their behaviors. One such group was coined the “NFT Nerds,” defined as passionate and actively participating in buying, trading, and selling NFTs. We also interviewed some of the industry’s leading experts to gauge valuable projections on the future of web3’s critical elements.

An expert opinion: How will NFTs shape web3?

Fireblocks’ Sergio Silva, an expert spotlighted in the report, is no stranger to the space. He is excited about the continued evolution of consumer experiences through NFT, noting that the enhanced infrastructure – built during this latest bear market – sets the stage for better experiences for both builders and consumers.

“In 2024, I expect NFTs to become supercharged versions of cookies, used to document every digital interaction among people and with brands," he adds in the report.

Interestingly, of the nearly 300 consumers surveyed, 35% said they are most excited to see (and interact with) more NFT experiences. The data also shows that interest in NFTs remains robust, with 19% owning them and that number increasing with more active user groups.

The ongoing appeal of NFTs and their significant influence on user engagement within the Dapp ecosystem cannot be overlooked. These observations strongly imply that the advancement of web3 hinges greatly on NFT innovations, and those committed to advancing this domain will play a pivotal role in attracting more users.

It also comes as no surprise that the NFT Nerds see these digital assets as more than just digital art or collectibles. They believe NFTs hold significant potential for the future and that is why they are among the most optimistic user groups. According to other industry experts highlighted in the report, NFTs are set to transform consumer experiences entirely, serving as distribution platforms for digital and physical goods. They highlight the significant infrastructure developments, such as user-friendly wallets and low-cost Layer 2 solutions, which have greatly enhanced the landscape for creators and consumers.

One such expert, Peter Pan from 1kx, says, “NFTs are far from their last breath, and still a crucial tool for creators and projects to monetize and nurture communities. The rise in non-financially collected NFTs suggests a broader understanding and use of ownership.”

From the eye of the beholder: What lies ahead?

As experts suggested above, NFTs are poised to function as “supercharged” cookies, offering a heightened level of data gathering and insight into the relationships between creators and their fans. But, beyond this, there are myriad other use cases for NFTs that people are currently exploring.

Let’s take a look at what may lie ahead:

NFTs in digital fashion

For upcoming years, the fashion industry is set for a digital transformation fueled by NFTs. With 17% of brands having dabbled in NFTs in 2021 and the luxury NFT market expected to reach $25 billion by 2025, there's significant growth potential. Brands like Dolce & Gabbana and Gucci lead the charge, offering exclusive digital collections. More so, with 31% of consumers more likely to buy an NFT from a trusted brand, integrating NFTs into luxury fashion presents a massive opportunity.

NFTs for rent

With daily sales often exceeding $10 million, and a prediction of the market reaching $231 billion by 2030, users want to own NFTs. Buying NFTs can be expensive for many investors, but renting them, offered by most NFT marketplaces, is a game-changer. Renters benefit from NFT renting as it grants access to exclusive content, offers a cost-effective option for enjoying high-value assets, and may have a smaller environmental impact. NFT holders also benefit from increased market exposure and the ability to maintain ownership while generating continuous income. More and more marketplaces offer NFT rental services, with prominent platforms including IQ Protocol, Vera, and Defy.

Social Tokenization

Today, social tokenization allows creators and influencers to offer exclusive content and experiences to their dedicated communities through customized NFTs. Some suggest that b[y 2025, this trend will see communities taking center stage](https://medium.com/predict/secrets-behind-social-token-development-how-social-tokens-transform-communities-and-create-digital-1841a1daa067#:~:text=At its core%2C a social,their audience in novel ways.), empowering individuals to monetize influence and strengthen connections with followers. Social tokenization will democratize access to loyalty subscriptions, fostering deeper engagement and rewards while providing new ways for monetization. Notable examples include Chiliz, known for issuing tokens linked to pro football; Rally, which helps influencers mint tokens and NFTs; and Whale, whose token represents partial ownership of a vast NFT collection and grants access to community membership and voting rights in DAO proposals.

AI-integrated NFTs

Becoming a hot topic In the latter part of 2023, AI-generated NFTs respond to user prompts to create unique and intricate images. While the training process of these generative models may lack clarity, the advanced prompts produce high-quality images, effectively enhancing audience involvement – where digital artists and collectors actively participate in the creative process. Platforms like NFPrompt, built on the BNB Chain, have gained popularity recently, for this emerging domain. Decentraland and CryptoVoxels are also a great examples of virtual galleries powered by NFTs. These platforms bridge the gap between physical and virtual art possibilities, opening new ideas for artistic expression and commerce.

Creative NFTs for web3 gaming

Web3 gaming empowers gamers to be stakeholders in virtual economies through NFT ownership, while also facilitating trading, selling, and monetization within games. These NFT-backed games are ushering a new era of gaming, offering immersive experiences and vibrant player-centric economies. Games like AI Arena and RFOX VALT have introduced AI-powered NFTs for PvP combat and customizable apartments within the game world. Delysium uses AI MetaBeings for dynamic gameplay. Despite benefits like enhanced engagement, challenges regarding fairness and data privacy must be addressed as AI integration evolves further in gaming.

The growing influence of NFT enthusiasts

Experts agree that NFTs are poised to play a much bigger role in our lives. According to James Richard Fry of leading NFT marketplace Rarible, NFTs are currently tapping into only a fraction of their full potential, primarily functioning as assets rather than exploring their diverse range of use cases. "In the future, these tokens will be an integral part of everyday life, as common as emails, representing not just assets, but also a new language of value, ownership, utility, and identity," he states in the report.

The insights gleaned from the NFT mavens paint a vivid picture of the enduring potential of NFTs within the crypto community. With a significant percentage of users actively owning NFTs and expressing a desire for more crypto experiences centered around them, it's clear that NFTs hold a prominent place for crypto enthusiasts.

Despite a majority of users reporting satisfaction with their overall crypto experiences, the high level of confidence expressed by NFT enthusiasts underscores the resilience of the community and its ongoing commitment to exploring the possibilities of web3 technology.

While some of these insights may not be entirely new, experts foresee a revival or breakthrough phase, which will increase their importance in the web3 ecosystem.

To unlock more insights into today's crypto consumer trends, download the WalletConnect Pulse today.