Despite recent fluctuations in non-fungible token (NFT) markets, growth in the space has continued defiantly. Startups focused on NFT assets closed over 200 rounds over the past year, collectively raising over $2.6 billion in venture. That’s a 25-fold increase from the previous year, when companies featuring NFTs raised just barely over $90 million. One of the largest, OpenSea, raised $300 million earlier this year at a $13.3 billion valuation. Another massive round was closed by Paris-based fantasy sports NFT trading card marketplace Sorare, which raised $680 million in its Series B last fall at a $4.3 billion valuation. Moreover, liquidity in the NFT market is still rising, as absolute numbers of buyers and sellers actually increased over the recent period of whipsawing market swings. It seems, even as the crypto and stock markets move sideways, NFT holders can still flaunt their private, token-gated communities, bespoke experiences, and unique assets.
But, as these market corrections play out, the space will undergo a rapid evolution. NFTs have emerged as highly shareable — like a selfie backstage in a surging festival of crypto insiders. Concurrently, shareable experiences have also risen in value while most everything else has been sliding steadily toward commoditization. Extrapolating the arc of social shareability leads to one inevitability: experiences, as NFTs.
Ultimately, it’s the experience economy that drove NFT sales to historic highs in 2021, and the future of NFTs will depend on what kind of experiences an NFT can unlock. By capitalizing on experience, projects from Moonbirds to BFF are still finding ways to generate millions of dollars in revenue from NFT trading. Buyers are members of the NFT community who proudly participate and wear their swag while showing up to exclusive events.
We’re entering a world where getting on the VIP list is as easy as owning the right NFT. Here’s what you need to know about the new experience economy:
What Is an Experience Economy?
The term “experience economy” dates to 1998, when Harvard Business Review illustrated how birthday celebrations transformed from a simple cake transformed to lavish parties. Although a cake can be made with cheap ingredients, people now spend a hefty premium on a cake experience and integrating it into an instagrammable event.
In fact, Eventbrite found that more than 75% of Millennials value experiences over things. They believe experiences help shape their identities and create lifelong memories better than owning things can. Although the pandemic temporarily limited the availability of live experiences, NFTs allowed brands to provide these lifetime connections and memories virtually.
Even before the pandemic, social media and the experience economy were already intrinsically linked. When we have a memorable experience, we instinctively share photos on social media. From the birth of our children to a satisfying meal or vacation, our pivotal moments and greatest adventures are pinned and featured across our social media profiles. It’s no wonder that the current iteration of NFT market strategy involves profile pictures that the community can use to showcase their virtual experiences.
The Future of NFTs and the Experience Economy
Despite turmoil in crypto and traditional stock markets, those who bought utility tokens still have access to token-gated communities, and they are not incentivized to sell. This is how the values of early NFT projects like CryptoKitties and CryptoPunks grew.
The art being displayed in these tokens is easily recognizable, even among the flood of imitators. This means that NFT holders have exclusive access to a private community and anybody in the public can see their membership via their integrated NFT profile pic (PFP) on social platforms like Twitter. YouTube and Instagram announced they’re researching similar integrations on their platforms as well.
By controlling the arc of social shareability, brands can take NFT marketing to the next level by enshrining unique experiences. Our life experiences, after all, are non-fungible, which means they are irreplaceable and unexchangeable. You can only go to your first concert once, and tokenizing these formative experiences is one of the best ideas that’s arisen from the sector thus far.
There are plenty of examples playing out on Discord right now, from social projects like Bored Ape Yacht Club gathering celebrities to investment ventures like LinksDAO seeking to create a virtual country club. Each is finding new ways to link the blockchain to unique real-world experiences. BAYC, for example, has an upcoming movie trilogy following the launch of its unique themed restaurant.
Although crypto started this year off in a bear market, these experience-based NFT communities show no signs of slowing growth. If anything, the dropping crypto prices are giving them something to talk about and continuing engagement in these micro-communities across the web. It is becoming apparent, NFTs are becoming a mainstay in the blended reality and virtual experience.
Image by Vadim Bogulov