Filecoin says it is uploading one non-fungible token (NFT) per second on its decentralized storage network, or about 86,400 NFTs each day. Although many have lauded the growth of tokenized digital artwork, some critics say the latest numbers suggest that the industry is getting crowded.
“While NFTs are growing – and possibly becoming saturated – major variety game and esports companies will not enter the market until the issue of fraud is solved,” said R.J Mark, founder and CEO of esports and gaming outfit Verasity.
According to Pooja Shah, head of product at Protocol Labs, more than 7.75 million NFTs are now stored on the Filecoin database, representing over 55,000 gigabytes of data. Platforms such as Opensea, Makersplace and Jigstack are utilizing Filecoin to store their non-fungible tokens, she said.
Filecoin is an open-source protocol that stores data online using blockchain technology. Created by Protocol Labs, the decentralized storage network allows users to rent hard drive space that they can manage on their own or have Filecoin do that for them. Anyone can add and retrieve their NFT data on the network.
Shah said the number of users looking to store non-fungible tokens on Filecoin is “accelerating”. She did not specify the type of NFTs that have seen the greatest number of uploads. However, the most popular non-fungible tokens are collectibles, art and utility, according to Dappradar.
‘NFT projects with value will grow’
The market is typically dominated by small transactions, with nearly 60% of NFTs traded in the three months to September costing between $100 and $1,000. This suggests that creators may be looking to make easy money by creating NFTs on anything they consider valuable.
Now, without a limit on who or what can issue an NFT, or who can create markets for crypto artwork, critics have started to question whether there could ever be a ceiling on the number of NFTs issued.
But not everyone agrees with this assessment. Emil Angervall, co-founder and chief operating officer of Corite, a platform that enables fans to invest in artists, believes that projects with real value will see growth.
“Naturally, a growing number of NFTs is a reflection of its adoption, which is good for the traders and the creatives,” Angervall told Beincrypto in an interview.
“It is less important to look at raw numbers to determine the state of the market. One NFT is not equal to another NFT. The number of web pages was a relevant number in the early days of the Internet, but it’s hardly something we care about today. We care about the sites and services that provide value. The same is true for NFTs,” he explained.
Using the example of Spotify, where more than 60,000 tracks are uploaded each day, Angervall argues that decentralized markets will inevitably face similar challenges, as the cost of distribution – and storage – decline.
“This means that there will be an infinite amount of content, the total value of the market will grow, but the vast majority will have little to no value,” he said.
Filecoin cashes in on Ethereum’s problems
The argument is that Filecoin is getting more numbers because it has become too expensive to transact or store data on the Ethereum blockchain, where the majority of NFTs have traditionally been built.
Cheaper blockchains such as Solana and Ronin have also benefited from Ethereum’s gas fees nightmare. Dappradar says Ronin accounted for about 20% of non-fungible tokens market share during the third quarter of 2021. The network is capable of processing and storing large volumes of NFTs.
In addition, Filecoin has recently struck deals with major non-fungible token entities such as Opensea and Flow Blockchain, leading to a sharp increase in the number of digital artwork uploaded to the platform.
“Both networks [Opensea and Flow Blockchain] are home to top NFT projects, meaning that a big share of this multi-million-dollar market now goes to Filecoin, as together, they have created surging demand for transactions on Filecoin,” said Zack Horn, chief knowledge officer of Adacash, a token with a reward system on the Binance Smart Chain.
The total amount of NFTs sold during Q3 soared to $10.7 billion, up more than eightfold from the previous quarter, data from Dappradar shows. The third-quarter figure was up from $1.3 billion in Q2 and $1.2 billion in Q1, said the market tracker.
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