The non-fungible token (NFT) industry in the UAE is expected to grow by 45.5 per cent on an annual basis to reach US$982.1 million in 2022, according to a businesswire report last month.
The NFT industry is expected to at a compounded annual growth rate (CAGR) of 32.1 per cent during 2022-2028. The NFT spend value in the country will increase from $982.1 million in 2022 to reach $4.75 billion by 2028, the data showed.
The adoption of new technology driving the NFT market growth in the UAE. More and more entrepreneurs, businesses, and celebrities are entering the fast-growing industry. With the country being long considered a desirable destination for doing business, the UAE appears to become a global hub in the flourishing field of NFTs, the report showed.
“Consumers are interested in buying into stories, in buying into experiences. When you’re buying a product you’re just buying the physical product. But when you are buying an NFT you’re buying a whole lot of things that are linked with it,” Arshad Zaheer, Senior Partner at YAAP, told Khaleej Times in an interview.
The biggest advantage of NFTs is the fact that they sit on blockchain. “Thus every ownership can be tracked. The content creator knows that my work cannot be copied there can’t be any pilferage that could be happening,” Zaheer said.
While more and more countries are seeking to impose strict regulatory measures on NFTs, there has been a notable surge in the buying, selling, and creation of the NFTs in the UAE, the businesswire report said. “In the Middle East and Africa region, particularly in the UAE, there has been an uptake in NFT-related activities. In 2022, Art Dubai – the largest contemporary art fair in the Mena region – welcomed nearly 100 international and local art dealers and a digital collection of 17 platforms and galleries dedicated to showcasing and selling NFTs,” the report pointed out.
Over the last 12 months, several innovative NFT marketplaces have also emerged in the country, which has made it relatively simpler for the general public to buy, sell, and trade in NFTs. “From NFT-based startups to cryptocurrency exchanges, several players are entering the UAE NFT market; the presence of several NFT marketplaces has also supported the rise in NFT trading transaction value and volume, the trend expected to gain further momentum over the next three to four years in the UAE,” the report said.
A major positive about NFTs is the social impact that they can bring about. Recently, TOMS, the apparel company, released an NFT on one of its iconic shoes, with proceeds from the sales being donated to TOMS Impact Partner International Medical Corps. “So if you just buy the shoe, the proceeds will be donated once. But as an NFT, every time it is sold and resold, because there is a very smart contract linked to it, the benefits will go on and on,” Zaheer said.
The value of NFTs will go up by way of scarcity by way of design and by way of people talking about it in content in social media, Zaheer said. “So social causes get amplified on blockchain and NFTs and thus brands are adapting to it,” he added.
Zaheer believes that the opportunity for NFTs is immense. “Since the emergence of social media almost a decade and a half ago brands have tasted community building. This is only going to get bigger with time,” he added.