NFT: Creating Buzz in Digital Ecosystem

During one of the worst pandemics in human history, cryptocurrencies made waves in the market. If the bitcoin saw wild fluctuations, Non-Fungible Token (NFT) was the talk of the digital ecosystem. From companies to investors to celebrities to artists, NFT has become a top investment option. As a result, its market cap grew more than 54 times from $338 million by the end of 2020 to more than $18 billion on June 9, 2021.

What is NFT?

An NFT is a metadata composition, making it one of a kind. Each NFT reflects digital ownership backed by an asset. NFT gives a digital identity to physical or digital assets. It can be associated with any form of tangible or intangible assets. Further, just like other cryptocurrencies, NFT is channeled through blockchain technology.

NFTs have been around since 2012, some built on the bitcoin network but most operating on the Ethereum network. The first-ever NFT was minted in 2014 by artist Kevin McCoy. Later, in 2017, it again came to prominence when it debuted in the Ethereum network for a digital collectible game. However, in terms of popularity, NFT remains a comparatively new entrant among other cryptocurrencies.

Why all the buzz now?

As we mentioned earlier, its market cap has grown more than 54 times since 2020. This growth has come from a series of high-end trading in NFT assets:

Exhibit 1: Major NFT Trades in 2021

Counterpoint Research-Major NFT Trades in 2021

Source: Counterpoint Research

NFT has now gained much prominence but the potential it holds is yet to be fully discovered. The first applications were across Metaverses, Art, Gaming, Sports, Collectibles and Utility. However, AR/VR, Real Estate, Event Ticketing, Brand Licensing and Tokenizing of real-world assets also show promise. Further, we are seeing many new players from different segments starting to invest and trade in NFTs.

Exhibit 2: Brands Entering NFT Market

Counterpoint Research Brands Entering NFT Market

Source: Counterpoint Research

What makes NFT different from other cryptocurrencies?

Though it is a decentralized form of currency just like other cryptocurrencies, NFT is different from other cryptocurrencies in the following key aspects:

  • NFT opens the possibility of multiple-owner scenarios for a particular asset. Therefore, rather than being owned by one, it holds the potential to be owned by many in pieces.
  • An NFT’s value is uncertain. It depends on how scarce or popular it is considered by the potential buyer.
  • An NFT is not equal to any other NFT. Each token is assigned a digital hash that distinguishes it from every other NFT. Therefore, no two tokens are equal, either in value or in their properties.
  • Little volume with exceptionally high value of assets.
  • The secondary market is relatively less active.


During the pandemic, when most of us shifted to our workstations at our homes, the artists and art galleries were among those recognizing the urgent need for digitalization. NFT emerged as a blessing in such a scenario. Further, NFT managed to capture attention quickly, leading to a smoother transition to the blockchain across various use cases. However, it is still a long road ahead in making NFT mainstream.

We are also witnessing some concerns being raised over NFTs. Environmental impact and crypto-bubble are the two major concerns here.

Related Posts

COVID-19 as a Catalyst in the Deeper Acceptance of Digital Payment Platforms

Looking at the impact of COVID-19 on digital payment platforms, its acceptance in the near term will be improved leading to a stronger role in the longer term.

COVID-19 has damaged both, demand and supply. With lockdown across various parts of the world, many manufacturing and production units are shutting down. It led to a steep fall in the supply of intermediary as well as final goods. The COVID-19 crisis does not seem to be a short-stay guest, it will result in the exit of many small to medium scale businesses from the market. On the demand side, people are facing a threat to their livelihood, pushing the economy generations back.

Cash as a medium of exchange losing its dominance

During the COVID-19 crisis, cash is seen as a potential carrier of the virus; governments and regulatory bodies are discouraging its use. The urgent need for essential goods is forcing people to switch to digital payments sooner than perhaps they would otherwise have done. For those for whom cash is their only means of payment are finding it harder to make purchases.

Furthermore, with many bank branches also closed, retail stores have limited options for processing cash into their bank accounts and they do not want to be left holding large amounts of cash that may be vulnerable to theft.

Shift towards the digital payment platforms and examples

During the lockdown, the frequency as well as the total monetary value of transactions, has declined. However, with people only buying necessary goods and more goods in one go, the value per transaction is increasing, and people are increasingly relying on digital platforms:

  • Cash use in Britain has halved in just a few days following the government’s imposition of a nationwide lockdown. Stores selling essential goods and services are trying to avoid cash transactions. For transactions of GBP30 (~$40) and under, most stores can accept contactless payment by credit or debit card, or mobile payment, for example Apple Pay.
  • In Australia, basic amenities outlets are also asking customers to use contactless technology to avoid touching EPOS machines.
  • PayCargo, Florida based online payment platform has launched a new service to help the freight and shipping community.
  • While official coronavirus cases in Russia are low, the country has still instituted a lockdown in Moscow and other major cities. Here too, there is a push for digital payments to discourage the circulation of banknotes.

Emerging regions, such as Africa, which is known to have the largest unbanked population, are implementing measures to shift a greater volume of payment transactions toward mobile money and away from cash.

  • M-Pesa, the dominant player in Kenya is waiving fees, and the daily transaction limit has been raised from Ksh70,000 (≈$660) to Ksh150,000 (≈$1400).
  • Paga, a mobile money operator based in Nigeria, with free P2P transfers, now allows for free transfers up to roughly 5000 Naira (≈$15) from customer accounts to bank accounts, to encourage more digital payments.
  • Ghana’s monetary body also eased know-your-customer (KYC) requirements on mobile-money, allowing citizens to use existing mobile phone registrations to open accounts with the major digital payment providers

People’s anxiety about obtaining enough food and medicine is offsetting long-standing concerns about the potential for fraudulent activity that may have prevented stronger uptake so far. This new spike in activity will encourage payment providers to continue investing in service quality and anti-fraud measures, though fraudsters will also see the increased use of digital platforms as a golden opportunity.


Until 2019, digital payment adoption was slow and varied significantly by country. Reasons included cultural, demographic and technological – many of which were a function of economies being at different stages of development. However, the uncertain longevity of the COVID-19 crisis will lead to the public being habituated to digital payment platforms, almost by force. With handset penetration improving significantly, with nearly 5.1 billion total unique mobile users and 3.7 billion unique mobile internet users at the end of 2019, it will help smooth the adoption of digital platforms for payments.

And with more competitors providing digital payment platforms, the competition should help to sharpen the service experience for users as poor performance will lead to users voting with their (digital) wallets.

Kenya, Prioritizing Banking Over Banks

Kenya is a leading example of how technology complements developing the banking and finance sector. While mobile banking is a path to financial inclusion, it is important to retain monetary control in the economy.

M-Pesa is renowned as one of the foremost initiatives in mobile-based money transfer, financing and microfinancing. It was launched in 2007 by Safaricom, is jointly owned by Vodafone and the Kenyan government. Since its launch, it has expanded successfully to six other African markets including Tanzania, Egypt, and Ghana. M-Pesa has revolutionized financial inclusion in Kenya. It has become a staple for the financial sector – used to pay salaries, book bus tickets and settle invoices in most of its markets. In Kenya, it has expanded into more advanced financial services including small loans, supply chain finance, insurance and a growing number of in-store and eCommerce services.

How can M-Pesa develop banking and finance?

In response to the under-exploited potential of Kenya’s economy and M-Pesa’s grip over part of the financial services system, Safaricom is planning to transform M-Pesa into a bank for the unbanked. Safaricom’s strategy is to expand M-Pesa rapidly in the seven African countries where it already operates as well as in new markets, such as Ethiopia, where it doesn’t have any telecoms operations. While Safaricom can achieve a first-mover advantage, it also potentially opens the market for competitors, though its accrued experience will be hard for new players to replicate.

Adding savings services

Safaricom is testing a new mobile savings service called Mali that adds a new dimension to the M-Pesa offering. Potential customers tend to have uneven incomes with periods of relatively good income interspersed with other leaner periods. Having a trusted platform that can be used to securely manage short-term savings can help both individual savers and support smoother flow of finances within the wider economy; previously savings would likely remain as cash that is unavailable to the financial systems.

Revolutionizing lending

Lending is an important function to ensure a smooth supply of money in an economy. It helps bridge the gap between those with excess funds and those who need financing. Since, the first M-Pesa mobile loan was issued in 2012, lending has been a core service of the platform, though not as well publicised as payments.

New players are entering the market, Carbon, for example is a Nigerian fin-tech start-up that has announced its launch in Kenya. Carbon wants to become a pan-African bank.

Kenya, and many other emerging African markets, have young populations that are highly mobile-communications oriented and also have a high propensity towards consumption. As a consequence they will likely rapidly adopt new solutions if the benefits are clear.  However, mobile banking, which has the power to close the financial exclusion gap does not imply giving up on traditional methods of banking. As mobile banking gains power, central banks will need to be agile in accepting the advantages that new technology brings, while being mindful of potential downsides to the economy in terms of money supply and financial security.

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