NFT

Non-fungible tokens (NFTs) have rapidly evolved from a niche cryptocurrency feature to a mainstream digital asset class, encompassing art, collectibles, music, and more. Since their inception in 2017, NFTs have seen significant growth, peaking at over $12 billion in trading volume in January 2022. This study explores the complexities and motivations behind NFT purchases, particularly focusing on the role of intrinsic and extrinsic motivations.

Key Findings

1. Market Dynamics:
   • The NFT market has experienced two major growth phases: an initial phase from 2017 to 2019 driven by early cryptocurrency adopters and a second phase from 2020 to early 2022, spurred by COVID-19 lockdowns and broader consumer adoption .
   • Despite being labeled as speculative bubbles, the NFT market comprises a wide range of creative collectibles, offering both social status and potential financial returns .
2. Technical Complexity:
   • Purchasing NFTs involves several technical steps, including creating a digital wallet, acquiring cryptocurrency, and paying gas fees. This complexity can deter casual buyers and requires a high level of technical literacy and persistence .
3. Buyer Motivations:
   • The study identifies that intrinsic motivations (e.g., personal satisfaction and enjoyment) significantly drive NFT purchases. Buyers are often motivated by the novelty and emotional connection to the digital items rather than purely financial gains .
   • Extrinsic motivations, such as expectations of future value, also play a crucial role. High expectations of future value can enhance the effect of intrinsic motivations on purchase intentions .
4. Market Perception:
   • The market perception of future value heavily influences NFT prices. Buyers should consider whether an NFT project is reinvesting in its intrinsic value or merely riding a wave of popularity .
   • NFTs are increasingly viewed as digital luxury goods, with a significant portion of buyers treating them as collectibles rather than speculative investments .

Implications for Ikigai Labs

1. Focus on Intrinsic Value:
   • For successful NFT projects, focus on engaging buyers who are intrinsically motivated by the pleasure of collecting. This involves designing high-quality, emotionally resonant NFTs that appeal to core audiences .
2. Market Positioning:
   • Position NFTs as luxury goods, priced accordingly to reflect their perceived value. However, manage expectations carefully to avoid overpromising and underdelivering, which can harm the brand's reputation .
3. Buyer Education:
   • Educate buyers on the technical complexities and risks associated with NFT purchases. Providing comprehensive guides and support can enhance the buying experience and build trust .
4. Long-Term Engagement:
   • Develop NFT projects that offer long-term value and engagement, rather than short-term speculation. This includes creating ecosystems around NFT collections that encourage ongoing participation and community building .

Conclusion

This study highlights the importance of understanding the nuanced motivations behind NFT purchases. For Ikigai Labs, focusing on the intrinsic value and emotional connection of NFTs, while managing market expectations and educating buyers, will be key to sustaining and growing a successful non-custodial NFT marketplace.

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For further detailed reading, refer to the original study document.