The global number of non-fungible tokens (NFTs) transactions is likely to rise from 24 million in 2022 to 40 million by 2027, a new report said on Monday, cautioning the vendors about unregulated environment which is home to fraudulent activities and scams.
The report by Juniper Research stressed that vendors who partake in the NFT space may risk brand damage by association, due to the role NFTs have had in illegal activities, such as money laundering, scams and fraud.
“Environmental issues were also raised as a major concern, with the current way transactions are facilitated on the blockchain creating massive energy usage,” said the report.
The report said that metaverse-linked NFTs will be the fastest-growing NFT segment over the next five years, increasing from 600,000 transactions in 2022 to 9.8 million by 2027.
It highlighted rising demand for immersive experiences as a driver of metaverse adoption.
To capitalise on this growth, the report urged consumer-facing businesses to create NFT-based content to meet changing demands from a younger, tech-savvy demographic, who are more ready to purchase novel forms of online and digital content.
An NFT is a unique token that exists on the blockchain, meaning it cannot be replicated.
This unique token could represent real-world items like artworks or music, with the ability to be traded with a transparent transaction history.
The report emphasised the need for regulators to work with industry bodies to standardise processes with reduced environmental impact and built-in consumer protections to enable vendors to utilise NFTs as a medium to further engage with consumers.