nft: NFTs baked the best in 2021 on various parameters: Chainalysis Report

New Delhi: The craze of non-fungible tokens (NFTs) skyrocketed in the year 2021 but it has lost its steam in the year 2022. NFTs can store data on blockchains, giving the holder ownership over the data, media, art or object it is associated with.

In 2021, users sent at least $44.2 billion worth of cryptocurrency to ERC-721 and ERC-1155 contracts, the two types of Ethereum smart contracts associated with NFTs, which are bought and sold on specialized marketplaces.

According to the data from a Chainalysis report, the value and average transaction size increased in 2021, suggesting that NFTs as an asset category are gaining value as they attract new users.

The entry of players like Bored Ape Yacht Club and Cryptopunk NFT lifted the euphoria for NFTs to the next level. NFTs, like other crypto assets can be stored in both custodial and non-custodial wallets.

Commenting on the report, Anshul Dhir, COO and Cofounder, EasyFi Network said that the report suggests a spurt in NFT trades with few localized spikes owing to specific popular NFT collections.

“NFT market witnessed massive growth in 2021, in terms of the crypto trading volume, but it will not be consistent in 2022,” he added. “The year started with bearish sentiments the world over and that could have contributed to a slowdown.”

The vast majority of NFT transactions are at the retail level, meaning below $10,000 worth of cryptocurrency. As we see above, larger NFT transactions are becoming more and more common.

According to the market participation, NFT holds a lot of potential for retail investors, who do not want to miss the bus. The majority of purchases must be led by retail investors, rather than institutional investors.

Vijay Pravin Maharajan, CEO, bitsCrunch said that there’s no doubt that NFT trading is more retail, considering that many NFT collections present themselves as unique and distinctive collectibles.

“Metaverse applications such as virtual shopping streets also tie in to that retail element for NFTs, with their compatibility and customizable nature being key factors,” he added.

Mixed trends were seen across the multiple regions including Southern Asia, North America, Western Europe, and Latin America leading the pack. However, no region makes up more than 40 per cent of monthly web visits since March 2021.

According to statistics, Southeast Asians make up most of the NFT users. Philippines, Thailand, and Malaysia top the list, with India not far behind with many celebrities flocking to the NFT space.

Southeast Asia is at the forefront of the NFT trend, said Dhir from EasyFi. “There have been some interesting projects from India as well that are fully NFT focused.”

The data shows that the number of active NFT collections increased sharply, particularly in the second half of the year. After a slight decrease in early November, growth picked up again and continued through the end of the year.

The number of active NFT collections sat at 3,264 at the end of 2021, its highest figure yet, up from just 193 at the beginning of March.

The momentum is on the rise in a very favorable way. The overall trend in nations with a high rate of NFT collection is directly proportional to the amount of public awareness, said Maharajan from bitsCrunch.

“People are usually hesitant to invest in something they are unfamiliar with, but they will undoubtedly gain more if their level of awareness rises,” he added.

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