How Nextgen Web3 E-Commerce Platforms Are Revolutionizing the NFT Space
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How Nextgen Web3 E-Commerce Platforms Are Revolutionizing the NFT Space

Created 8mo ago, last updated 1w ago

Contributor: how can the NFT space continue to grow and prosper? NFTify takes a look.

How Nextgen Web3 E-Commerce Platforms Are Revolutionizing the NFT Space

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A $69 million digital artwork or a $100,000 video clip of an NBA basketball play seems insane. Although all of this was unthinkable a few years ago, sales of digital content are breaking records weekly. The reason behind the skyrocketing prices for digital content is none other than the non-fungible token, popularized today under the acronym NFT, which is a digital token generated by blockchain technology.

Its properties of authenticity, transparency, immutability and traceability create "digital scarcity," a highly valued attribute by artists, content creators, influencers, musicians and personalities from the highest spheres of entertainment and a driving force behind this new digital movement being called the "New Digital Age."

Sales in this incipient market are already showing signs of maturity, as is reflected in the figures from the main platforms that act as custom-designed marketplaces for various types of NFTs.

The future is promising, if we extrapolate the figures collected by sites such as Nonfungible.com, which show the growth in demand for art driven by verified digital scarcity, coinciding with a boom in vendors offering their creations in these marketplaces.

"Sales of non-fungible digital tokens soared to more than $2 billion in the first quarter, more than 20 times the volume of the previous quarter," CNBC recently reported, alluding to figures from the latest NonFungible.com report.

Even more interesting is the fact that there is an imbalance according to the company between the number of buyers in this market and the sellers, a ratio of just over 2:1.

NonFungible.com points out that this difference between supply and demand is "a sign of massive interest in the newcomers, but also of the desire of the current owners to keep their assets, which generates a phenomenon of scarcity in the market."

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But Why So Much Interest in NFTs?

NFTs are digital tokens digitally signed by the creators to designate an official copy of a digital medium, allowing artists, musicians, influencers and even sports franchises to sell their products or creations, which would otherwise have no value.

The fundamental reason for the high valuations is that for each sale of an NFT, the transactions are registered in a shared ledger and distributed on the blockchain on which it is generated (mainly Ethereum), so its public record remains unchanged and, in turn, serves as a kind of certification of authenticity that cannot be altered or erased.

Unlike conventional tokens or cryptocurrencies, NFTs are completely unique and not interchangeable with any other asset, hence the concept of non-fungibles. And because of this property of being unique and impossible to replicate, they bridge the gap between the virtual and physical economy, offering a market for valuable digital goods that can be scaled, collected and traded.

As demand rises based on these attractive properties, NFTs are providing investors a way to monetize their digital assets collected within the virtual space, which are rapidly growing as more people confined by the COVID-19 pandemic create active digital lives (shopping, gaming, art appreciation and buying, and so on). Driven by these trends, the total value of all NFT transactions increased from $62.8 to $250.8 million in 2020, and is expected to exceed $2 billion in 2021.

NFT Market Challenges

Despite the amazing growth in the NFT market over the past two quarters, a slowdown is inevitable if NFT platform technology does not catch up. NFT markets face scalability, high gas fees and other technical difficulties.

Although sales volumes have been through the roof in Q1-2021, it is worth noting that the NFT market has been showing signs of a recession, especially in the art market, in the last month.

The average price of NFTs decreased almost 70% from a peak of around $4,000 in mid-February to around $1,340 in the last few days, generating concern among the main market players such as sellers (creators).

Although a fall was inevitable, the truth is that there is an excessive saturation of platforms in the NFT market that is making it difficult for buyers (read fans, investors, collectors) to differentiate and navigate to find the best match.

For some specialists, there is an overvaluation in the markets, while for others, it is only a matter of time before people place a higher value on the digital ownership of tokenized assets, that is NFTs.

However, for this to happen, it is essential that there is an evolution in the way NFTs are traded, as is the case with dApps in other sectors of the blockchain ecosystem given the demand for use cases and problems inherent in the scalability of first-generation blockchain platforms like Ethereum.

Like transactions in the world of cryptocurrencies, NFT creators and traders of all genres have not escaped the high transaction fees or slow speed of transactions that occur on the main platforms.

To the above, add that there are limitations in these marketplaces in admitting all types of NFTs under the different standards that have been created both in Ethereum (ERC-721, ERC-1155), and in direct competitors such as Binance (BEP-721, BEP-1155) for example; making the environment even more difficult for a simple deployment for most newbies.

When adding to these technical challenges the high entry barriers created by fragmented NFT markets, small companies and entrepreneurs are finding it difficult to promote their own brand to sell, issue and market their NFTs.

Scalability to Survive

The NFT market needs to solve the above problems inherent in first generation blockchain platforms such as Ethereum. Despite the fact that this blockchain is in the phase of an improvement in its protocol, it is not entirely guaranteed that it will be successful and, as a consequence, support improvements and the sustainability of the markets that revolve around it, such as DeFi, NFT, gaming, and so on.

For this reason, we are observing the development of some e-commerce platforms focused on decentralized finance and NFTs on alternative blockchains such as the Binance Smart Chain and Polkadot, each clearly with its respective advantages.
Such is the recent case of MocktailSwap Finance on BSC, an AMM-focused DeFi protocol that has launched the first semi-fungible token under the ERC-1155 standard on the Binance Smart Chain, offering more evidence of innovation in the decentralized finance sector. However, complaints of centralization around BSC are a worrying factor for many developers today.
On the other hand, it highlights the case of NFTify, a platform focused on e-commerce designed for the digital world, which allows a place to build a market and an influential NFT brand, owing to its association with PolkaFoundry, a hub to create borderless and frictionless DeFi dApps in the Polkadot ecosystem.

NFTify enables NFT stores to operate on the converging Polkadot blockchain, benefiting from its scalability and interoperability, as well as leveraging PolkaFoundry's UX capabilities that make it as easy to develop (or migrate) applications as it is to download and use an Android app, bringing the NFT market to the masses.

With its deployment on Polkadot, NFTify promises to revolutionize the NFT market to create, mint and commercialize these “New Age Digital” assets, thanks in large part to the almost infinite technical possibilities that the Polkadot ecosystem allows compared to current blockchain platforms.

Faced with a lack of robust marketing channels and thus sales opportunities, the NFT market is anxious to set up shop in a blockchain ecosystem capable of scaling it to a higher level of efficiency and operability, which is in line with the high demand and use cases that the decentralized finance sector is generating.

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