How will NFT make a comeback in 2024?

Author: Scott Kominers, Steve Kaczynski, CoinDesk; Compiled by Songxue, Golden Finance

At the end of 2023, we saw a resurgence of interest in NFTs. NFT products are sold at major brick-and-mortar and online retailers. We are seeing the launch of major blockchain-based games. More established companies are entering the NFT space. Therefore, NFT-based branding is expected to be a significant driver of Web3 adoption in 2024.

The next wave of successful NFT products will likely be very different from most of what we’ve seen before. Many of these products will no longer be focused on a small number of high-value assets, but will be produced in large quantities and sold at more affordable prices, targeting a wider consumer market. They will focus on direct value creation rather than speculation. Many customers will acquire and use these digital assets without even realizing they are running on crypto rails.

We’ve seen companies like Nike, Reddit, Starbucks, and others experiment with mass-market NFTs as digital collectibles, and yes, even former U.S. President Donald Trump. Likewise, NFT-native brands like Pudgy Penguins, Cool Cats, and Kitaro Studios have also created “phygitals,” NFTs that come with an association with a physical product. Meanwhile, major players like Ticketmaster and newer players like tokenproof and YellowHeart are testing NFTs for event tickets, memberships, and other forms of fan engagement.

This type of product offers consumers unfamiliar with NFTs the opportunity to experience the digital ownership that this new technology brings. They are often sold at prices we would consider “normal” consumer goods.

While early entry to NFTs required users to use complex self-hosted wallets, these NFTs often adopted platform designs that flooded the underlying blockchain technology with partially or fully managed wallet systems. But that doesn’t stop consumers from deriving utility from the tokens and integrating them into their digital identities on social media and other platforms. This also doesn’t stop them from participating in the broader NFT ecosystem if they choose (in fact, in many cases, they can even transition their own branded NFTs to self-hosting if they wish).

At the same time, making digital assets more accessible, both technically and price-wise, can greatly expand the addressable market and provide a foundation for brands to build on.

As we describe in our upcoming book, "The Everything Token," coming out in January, NFTs offer a way for companies or creators to move beyond decentralization by turning customers into community members. Benefit from the power of value creation: the asset itself creates a network that connects holders to the brand and each other; at the same time, ownership incentivizes consumers themselves to share the brand with others and help build it.

For example, Starbucks Odyssey members have set up entire third-party websites dedicated to the program and organized unofficial meetups and events without direct Starbucks involvement. This extends to the digital realm as well, meaning that without these NFTs, community members may not stay connected in the digital and physical worlds.

This works just as well for small businesses and individual creators as it does for large corporations. But it works best when the community can be broad and growing.

For brands like Starbucks or Nike to make the most of their NFT products, they must ultimately be able to bring these products to their global customer base. Instead, every time a customer wants to be part of a brand’s digital ecosystem, they should be able to do so.

This means that the smaller, more widely accessible NFT products we are already seeing are not just experiments – they are the future. The success of “open version” creator NFTs in early 2023 illustrates how effective this strategy can be for creators. And throughout the year, it was clear that companies had been figuring this out as well.

As a result, we expect to see brands flexing their muscles in “small” NFTs in 2024. In the future, they may attract more consumers into this field.