The cryptocurrency industry has been debating non-fungible tokens (NFTs) for a few years. NFTs have shown to be a powerful force in the Web3 ecosystem, even though some people continue to doubt their usefulness. We will examine some of the most important advancements in the NFT space in 2023 and make predictions for 2024 in this blog.
THE RISE OF BITCOIN ORDINALS
One of the most significant events in the NFT space in 2023 was the emergence of Bitcoin Ordinals. Created by software engineer Casey Rodarmor, Bitcoin Ordinals allows users to inscribe data onto the Bitcoin blockchain, creating digital artifacts that can be traded as NFTs. This development has led to increased adoption and sales volume for NFTs on the Bitcoin network. However, it has also sparked debates about its impact on Bitcoin’s blockchain and its potential to clog up the network.
REGULATORY ISSUES SURROUNDING NFTS:
In August 2023, the U.S. Securities and Exchange Commission (SEC) charged Los Angeles-based entertainment company Impact Theory for allegedly selling unregistered securities in the form of its NFT collection, Founder’s Keys. This was followed by another charge against Stoner Cats 2 (SC2), the creators of the Stoner Cats animated series, for selling unregistered crypto asset securities. These charges have sparked debates about the regulatory status of NFTs and how they should be classified under securities laws. Many in the industry argue that these charges could stifle innovation and hinder the growth of the NFT market.
CREATOR ROYALTIES:
Another major issue that has been debated in the NFT space is creator royalties. While many NFT marketplaces have traditionally coded royalties into smart contracts, some have started experimenting with optional royalties’ models, allowing buyers to choose whether they want to contribute royalties to an NFT project. This has led to concerns about creators losing out on royalties whenever their NFTs are sold, with research data revealing losses of around $20 million for Web3 creators in just two leading collections made by NFT company Yuga Labs. Some argue that this trend could lead to a race to the bottom in terms of royalty rates, as buyers seek out cheaper alternatives.
THE FUTURE OF NFTS:
As we move into 2024, it’s clear that the NFT space is here to stay. With new innovations like Bitcoin Ordinals and regulatory challenges from the SEC, we can expect further advancements and developments in this dynamic and rapidly evolving sector. Some predictions for 2024 include increased adoption of NFTs across various industries, such as real estate and art, as well as more focus on sustainability and environmental concerns related to blockchain technology. Additionally, we may see more collaboration between traditional art institutions and Web3 platforms, as well as further developments in interoperability between different blockchain networks. Overall, it’s an exciting time for the NFT space, and we can expect many more surprises and developments in the coming year!
