Blockchain has been very popular, and every individual knew about it when cryptocurrencies took boom. However, the blockchain is not limited to crypto. It is just one part or application of the blockchain. Cryptocurrencies, NFTs, and blockchain have been game-changers in the digitized world. It gave birth to the blockchain development company, and NFT companies, and now there is no looking back!
NFTs and blockchain are amongst the two strongest players. In addition, they have revolutionized the way we look at digital assets. Furthermore, it has impacted various industries. Its extension in the system like metaverse is changing domains like education, gaming, healthcare, and many more.
The financial field is not an exception to this. The banking sector is the largest user of blockchain technology, says Statista. From basic transaction models to developing the entire ecosystem of banking based on blockchain, it has impacted on a large scale.
In this post, you will have an idea about the impact of NFTs and blockchain on the financial sector.
NFT: meaning and significance
- According to Globe News Wire, in 2022, the worldwide market size for NFT was USD 3.0 million.
- By 2027, it is expected to grow and reach USD 13.6 billion.
Non-fungible tokens are well known as NFTs. They build and boost many enterprises across the globe. Also, the basis of NFT is nothing but blockchain technology.
But why are NFTs distinctive?
First, let’s understand its name. These are non-fungible. That means nothing can manipulate or replace them. Going further, you can address NFTs as digital assets. They have software encoding for secure existence.
One more added advantage of NFTs is that it is not duplicable. It has a unique identity. Therefore, it authenticates the originality of the artwork or any asset. Furthermore, this helps in providing proper credit to the owner or creator.
Blockchain: a technology or blessing
- According to the FBI, the global blockchain market was USD 7.18 billion in 2022.
- Its reach by 2029 will be a massive hike of 56.3% and have a value of USD 163.83 billion.
Blockchain technology is a system that consists of distributed database and works on providing transparency and security at the same time. This technology is ruling many sectors across the globe. Especially in the banking and finance sector, one can witness significant growth. Also, its dominance in the financial industry is incomplete without mentioning cryptocurrency.
- According to Markets and Markets, the cryptocurrency market size was USD 1.6 billion in 2021.
- It is said to reach USD 2.2 billion by 2026.
Impact of NFTs and blockchain on the financial sector
As you already know, NFTs have a base of blockchain. In other words, NFTs are just one part of the blockchain ecosystem. But both systems have a rigorous impact on the financial sector.
- Allied Market Research says that the Blockchain market size in the BFSI industry was USD 77.1 million in 2018.
- It is said to reach USD 22.46 billion by 2026.
Basically, the financial sector deals with economic transactions. There is a large amount of data, and money transfers take place every minute. There are many traditional methods of investing and making transactions. However, technological advancement has touched and blessed the financial domain. Specifically, the boom of blockchain and NFTs have taken the BFSI sector to the next level.
There are many ways it has been affecting the financial foreground. We have mentioned a few of the benefits of NFTs and blockchain to the financial industry.
Data safety and security are the priorities!
Both NFT and blockchain concentrate on securing transactions and currency. In addition, NFT has the basis of blockchain technology. Blockchain itself is a strong technology. In the banking sector, it is adopted to make a robust infrastructure. It makes use of distributed system or ledger to secure every transaction.
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Have you heard about collaterals for loans?
Yes, NFTs can be used there. However, many collectors prefer to use collaterals instead of borrowing money. But what does that mean?
Let us understand this in simple language.
Suppose you want to get a loan. Then, you can get it for NFTs, such as art pieces or digital assets. NFT makes this possible.
One more important benefit of using NFTs is distributed ownership. When clubbed with DeFi, it offers shared ownership. As a result, it provides flexibility. In addition, it benefits users by letting them buy shared NFT instead of going for a whole unit.
It opens up avenues to scale up.
To scale up gradually, there need to be different avenues. NFTs are helpful in developing liquidity. It avails the opportunity of shared ownership. It eventually lets the traditional market get involved in the NFT boom.
It reduces fraudulent cases.
As blockchain is the foundation of NFT, it reduces fraudulent cases. Basically, it increases security. In addition, it has a unique hash for each block. This distributed design of blockchain reduces the risk of attack.
It focuses on increasing transaction pace.
The transaction pace in blockchain-enabled systems is high. Since it is a distributed ledger, it increases the transaction speed in the banking sector.
Some exciting statistics about NFTs and blockchain
- According to Artnet, the most pricey NFT has a value of USD 91.8 million.
- Fortunly says that the first NFT was issued in the year 2014.
- According to Findstack, 96% of experts from the financial domain feel that adopting blockchain has to be mainstream.
- One more piece of research from Findstack says that by 2030, the blockchain has the power to grow GDP by USD 1.76 trillion.
- Arnet says that more than 50% of NFTsales are less than USD 200.
Let’s come to a conclusion! NFTs and blockchain have the power to dominate the financial industry. They can positively impact digitized as well as traditional finance systems. That includes financial institutes, banks, and other investment areas. However, there needs to be strategized a way to incorporate NFTs or blockchain into the existing system.
To grow and sclae with the power of NFTs and blockchain, you can connect with an expert NFT development company.