The following is a guest post from Forest Bai, co-founder of Foresight Ventures.
Consumer interest in NFTs is overwhelming, undeniable, yet still far short of its peak potential.
Over the last several months, forward-thinking tech enthusiasts and ordinary customers alike have witnessed the emergence of a new industry, the first salvo in an outright revolution for the blockchain-based collecting sector.
Consider the numbers. Sales volumes for nonfungible tokens are projected to top $13.2 billion by the end of the year — and while this figure is impressive enough on its face, it doesn’t quite convey the explosive growth reported over the latter half of the year.
According to DappRadar, sales volumes skyrocketed from $1.3 billion in Q2 to an incredible $10.7 billion in Q3. In August alone, sales volume on OpenSea, the largest NFT market, topped $3.4 billion.
This sudden surge comes just as NFT innovators are beginning to reimagine what it means to engage in online collection or digital ownership.
“NFTs are designed to give you something that can’t be copied: ownership of the work,” the Verge’s Mitchell Clark wrote in August, “To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original.”
By providing this sense of exclusivity and scarcity, NFTs have opened the door to prestige collecting on the Internet; consumers can experience a thrill from finding and claiming rare or appealing NFT assets. Often, the experience isn’t limited to collection alone. NFTs can also serve as keys, unlocking special discounts, membership privileges, or perks.
But as consumers have flocked to the market, many have found themselves stopped at the metaphorical gates.
Growth in the NFT market has been driven almost exclusively by tech-savvy buyers who already know how to navigate the blockchain. Onboarding is a challenge; if a consumer doesn’t have specialized knowledge, obtaining assets can be difficult to the point of impossibility. According to a report from NonFungible.com, only 265,927 active wallets were trading NFTs on ethereum in Q3.
But if the NFT market has achieved such heights with such a small pool of consumers, how high could it rise if the sector opened to the mainstream?
Understanding the NFT market’s accessibility problem
Fundamentally, the NFT market’s accessibility issues stem from consumers’ lack of blockchain knowledge. Figuring out how NFTs work can be difficult, especially if a would-be collector doesn’t have a baseline understanding of blockchain and cryptocurrency. Moreover, a consumer who doesn’t understand the blockchain might be hesitant to engage with it, let alone invest money in technologies that use it.
“One of the difficult things about understanding NFTs is the jargon barrier; all the terms that explain how it works are really only familiar to people who already get crypto,” Abby Ohlheiser explained for the Technology Review earlier this year.
“A lot of the information on NFTs comes from its biggest evangelists: the marketplaces that sell them, the people who invest in them, and the artists who create them. To everyone else, it’s a bamboozle,” she concluded.
That said, a consumer’s hurdles don’t disappear once they understand blockchain. Every stage of the onboarding process — from setting up a crypto wallet to purchasing cryptocurrencies and managing gas fees — can be confusing and user-unfriendly to laypeople. It wouldn’t be unreasonable for non-expert consumers to become frustrated and quit midway through the onboarding process.
Given these challenges, it’s likely that while many aspiring digital collectors want to engage in NFTs, they cannot or will not do so until the experience is substantially more straightforward. For now, this means that millions of potential users and untold billions of dollars in prospective sales are currently locked out of the market.
Currently is a crucial distinction here. The potential for sector growth is real and present; if NFT innovators can find a way to make market entry feasible for non-expert consumers, they could spark an NFT boom.
Unlocking NFTs for the masses: what would it take?
Today, the onboarding process is the onboarding process. The single most significant hurdle consumers face when attempting to purchase blockchain-based collectibles. Customers want to collect NFTs; they simply don’t know how to get started.
To remove this barrier to entry, vendors need to develop an onboarding process that offers a straightforward, intuitive, and layperson-friendly experience. A consumer should be able to purchase their first NFT even if they don’t know anything about blockchains or cryptocurrency — which means that any store or trading platform should minimize jargon that could confuse or alienate prospective consumers.
Establishing a straightforward transactional flow is equally important. At present, consumers often need to visit several platforms to obtain cryptocurrency, transfer it to their wallet, and purchase an NFT. Only determined customers will slog through the process; consumers motivated by impulse or hobbyist interest might decide not to bother.
NFT vendors should facilitate all-in-one transactions with fiat onboarding to cut down on the hassle. Consumers should be able to visit an online store, pay with a common currency, and automatically convert their holdings into crypto.
While this requirement may pose a technical challenge, allowing non-expert consumers to enter the market with fiat currency is a necessity. Otherwise, the market will never tap into mainstream consumers who do not have crypto holdings for lack of interest or knowledge.
Lastly, vendors should establish easy-to-navigate stores; consumers should feel as comfortable purchasing NFTs as they do their favorite products on Amazon. Given how new NFTs are, some consumer hesitancy is to be expected. Having a familiar shopping experience — i.e., viewing product catalogs, putting items in a cart, checking out, etc. — can help defray customer uncertainty and encourage buying behavior.
The NFT sector’s accessibility problem can be solved simply by making onboarding easier. Consumers don’t need to read a treatise on modern art to buy a painting; why should they need to attend a crash course in blockchain technology to purchase an NFT collectible?
Amid a rising tide of consumer interest, there has never been a better time for a truly accessible, consumer-friendly NFT purchasing platform to emerge. If vendors can empower non-experts to start collecting, they could very well turn the recent NFT sales surge into a full-on revolution.