Survey: Consumers believe NFTs are getting riskier
The ongoing “crypto winter”, which has seen the values of cryptocurrencies fall from 2021 highs, has damaged consumer perception of NFTs.
Exclusive research from consumer insights firm GetWizer, VIP+’s partner on “The Demographic Divide,” a special report exploring changing attitudes in media and technology, found that non-fungible tokens are now viewed differently by the public than just six months ago, before the cryptocurrency crash.
Most NFT marketplaces used cryptocurrency as a payment mechanism, which exposed them to market downturns and evaporated the value of many collections. This has had a major impact on how those who are aware of NFTs see their level of risk.
In January 2022, GetWizer found that 28% of those aware of NFTs considered them a bad investment. This has increased by 16 percentage points to 44%, while the percentage who think NFTs are a good investment has fallen by 9 percentage points, from 37% to 28%.
Over a quarter of those who know about NFTs still consider them a good investment. Perhaps unsurprisingly, this is driven by those who own NFTs, with two-thirds positive about potential customers and only 1 in 20 considering them an unwise investment.
It is markedly different among non-NFT owners, with over half negative about NFTs providing long-term value and only 15% seeing them as good investment opportunities.
Awareness of NFTs has increased rapidly over the past 12 months. When VIP+ first conducted this study, nearly two-thirds of US residents 15 years of age or older were unaware of NFTs. It has gone down to 43% now. However, the share of ownership has fallen slightly in the last six months (from 15% to 13%), but is still greater than a year ago (10%).
Ownership is strongest among 15-29-year-olds. One in four reported owning an NFT, and they’re the only age group that hasn’t seen a decline since crypto winter began.
As VIP+ has previously noted, NFT values have fallen as most are tied to cryptocurrency. This has had a serious impact on the total value of monthly NFT sales as measured by Cryptoslam, with July’s figure of $647.2 million the lowest monthly total since June 2021. The sales in April, just three months prior ($3.7 billion ), was 5.7 times greater.
Nevertheless, it is important to note that the total number of transactions per month tells a completely different story. Sales may be down, but trades are not. In July, 5.6 million NFT trades occurred across metered blockchains, up slightly (0.46% or 25,800) compared to June, with April’s number of transactions only 1.1 times larger than July, a far smaller difference than sales .
Market volatility has affected how the public views the overall stability of NFTs. While a majority (59%) still believe they will be around in five years, this figure has fallen from 71% just six months before, in January.
This has also damaged the consideration of cryptocurrencies being used to pay for NFTs. While this was not a majority consensus in January, when 42% agreed, it has fallen further to a minority view among consumers, now with a third believing it is important for cryptocurrency to be the sole source of payment for NFTs.
The perception of NFTs as a technology that will change art and entertainment has also fallen, with fewer than half of those aware of NFTs now considering them as having the ability to do this.
This sentiment has not changed much among NFT owners, who remain bullish. But it is the opinion of those who are aware but do not yet own – the potential growth market for NFTs – that is most important to consider. With so many entertainment companies ramping up their NFT plans, it’s important to find ways to ease concerns about the growth part of the market.
This can be achieved with a number of different strategies. Demonstrating the utility that NFTs can offer and shifting popular perception from possible to fraud to useful technology is one. Exploring free drops, either by inserting QR codes into programming as Discovery did with “Shark Week” or by rewarding viewers for watching at any time, is another.
NFTs are at a pivotal moment in consumer consciousness. There is much that the technology can offer, but when the NFT value bubble emerges, many have seen them as little more than a means of squandering capital. It is the perfect time for entertainment firms to introduce NFTs that provide utility – rather than speculative investment options – and change public perception for good.
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