As the crypto market sells off after last year’s go-go years — taking NFTs down with it — one industry insider believes the best is yet to come for non-fungible tokens.
“If you ask me, did I really buy a lot of [these]? No, I didn't,” Helen Hai, head of Binance’s NFT marketplace, told Yahoo Finance. “Because I still think the real value creation of the NFT is not really here yet.”
Noting that the industry is in the early stages of this technology and its applications, Hai said: “We need to understand more about the user’s perspective, and also the creator’s perspective. How can we actually connect everything together?”
“Blockchain and NFTs definitely have long term value,” Hai continued. “And in my personal opinion, NFTs are definitely going to go up. That’s the bigger direction.”
NFT sales volumes plunged nearly 50% in the first quarter this year with resale profit volume down 3%, according to a quarterly report by NonFungible, which tracks NFTs. The slowdown in the volume of buyers and sellers comes as the collectible market has become saturated with NFTs. As of February, 1.2 million NFTs have been minted, according to blockchain analytics company Nansen’s quarterly report.
Near term, Hai expects more volatility, especially in the midst of a stock market sell-off and what she calls a geopolitical recession given the Russian-Ukraine standoff.
“Temporarily, I think there will be turbulence,” Hai said. “But it’s not unlike the early stages of the internet where at this infant stage this kind of volatility always happens.”
The recent turmoil in crypto markets is spilling over to NFTs, Hai said.
“There's panic. People are wondering, ‘is this actually a single risk, or is there going to be a systemic risk?’” said Hai. “I think the system needs to be improved, but it’s clearly not a collapse of the system.”
Hai said investors need time to understand the fine line between a single risk and a systemic risk and the related impact on NFTs. Not all content is valuable, Hai said, and investors need to learn to differentiate.
“Do all contents have value on the platform, the answer is no. As well, is it that everything has no value? No,” she said. “But people need to differentiate and appreciate. It’s like going to buy art. This is a very judgmental thing.”
Hai said finding NFTs that offer value starts with education. Investing in an NFT just because it’s offered by someone famous isn’t the answer, according to Hai.
“It doesn’t work like that,” she said. “I think we need to really understand what's the true value? Is it just a picture? Is it just about the artist’s name? I think there needs to be more than that.”
Binance offers education with 800 courses, including courses on NFTs that help people to appreciate how to differentiate between different kinds of NFT's.
“The best way for the industry to grow is actually educating the users, for them to understand the risk,” Hai added. “With all the price volatility now, people need to really rethink where they put their money.”
Binance wants to shape the NFT industry with its technology and work to bring more long-term valuable content into the crypto and NFT industry. The crypto exchange is continuously looking to find new ways people can use NFTs, including initial game offerings.
“That's actually how you create a sustainable future for NFTs,” Hai said. “Increased utility creates long-term value.”
Jennifer Schonberger covers cryptocurrencies and policy for Yahoo Finance. Follow her at @Jenniferisms.