The blockchain and digital asset industries are fast-moving, in the 12 years Bitcoin has existed, we have seen many influential trends in the blockchain and digital currency space come and go. Initial coin offerings (ICOs) used to be wildly popular but now they are virtually non-existent, and on the flip side, non-fungible tokens (NFTs) have existed for nearly a decade but experienced widespread adoption for the very first time this year.
If you have been in the crypto sector for long enough, you come to realize that it has cycles, and in each cycle, there are new trends that are created while the old trends get muscled out.
Here are a few of the most influential trends that took place in the blockchain and digital currency industry in 2021.
The death of DeFi coins and tokens
In 2021, DeFi coins and tokens, which often took the form/name of different foods and animals, stopped being hot investments and trading opportunities; the era of Sushi tokens and Badger coins came to an end in 2021.
The death of these DeFi coins and tokens was predictable, the only utility that many of them had was that they allowed traders to make money. Most of the coins and tokens did not have a sustainable revenue-generating business model, a working product, or a roadmap.
Regardless, both retail and institutional investors loved these tokens due to their low liquidity and low trading volume which allowed those that got in early to have their bags pumped by everyone who followed. The DeFi dynasty ended when digital art NFTs became popular and investors started rotating out of DeFi coins and tokens and into NFTs—ever since then, investors have not looked back at the DeFi coins and tokens that pumped their portfolios and increased their net worth.
2021 was a monumental year for digital art NFTs; the market for NFTs grew exponentially. Some blockchain-based NFT sales even made it onto the list of the highest prices ever paid—at auction or private sale—for an artwork by an artist living at the time of sale.
So why did NFTs experience so much success? Unlike many of the concepts in the blockchain and digital currency space, NFTs had a reference point that any consumer or investor could collect data from to better understand the world of NFTs, that reference point was the market for fine art.
NFTs and fine art have many similarities, a few of the most notable ones are scarcity, the clout that comes from owning a rare piece, the well-developed communities that support the art, and the network effect that the members of these communities often have which bolsters more interest in the art. Additionally, the price of some NFTs creates a barrier to entry which can give projects prestige (like owning a very expensive car), which makes the expensive art at hand even more desirable.
Interestingly, during periods when the digital currency markets are on a downtrend, many people rotate money out of coins and tokens into NFTs because NFTs tend to […]