Nigeria NFT market opening opportunities amid challenges

By Alexander Chiejina

Nigeria has joined the circus as news about Non-Fungible Tokens (NFTs) keeps spreading like wildfire. A non-fungible token (NFT) is a distinctive identifier that denotes ownership of tangible or intangible goods, like artwork, music, collectibles, in-game items, films, and even real estate that fetches high prices. The coin of the underlying blockchain is utilised for NFT transactions, and these tokens are cryptographically secured in a blockchain (such as Ethereum, Solana, Avalanche, etc.).

NFTs have been in existence for some time, but they are now becoming more well-known and influential since they are a popular means to acquire and trade digital art. The digital art, music, and other digital assets being marketed as one-of-a-kind, unique NFTs have become increasingly popular in recent years, fueling the spectacular rise of the NFT market. Along with the growth of NFT-based gaming and virtual real estate, the industry has seen an increase in NFTs featuring athletes and celebrities.

According to Grandview Research, the market for non-fungible tokens was valued at $20.44 billion in 2022 and is projected to increase at a Cumulative Annual Growth Rate (CAGR) of 34.2 percent from 2023 to 2030. The expansion of the industry can be related to the increase in interest in digital artwork. The market’s growth is fueled by an increase in demand for NFTs on a global scale, motivated by their distinctiveness, transparency, and other notable characteristics.

NFTs are indivisible, unlike traditional assets, and cannot be divided among many owners, providing buyers with the legitimacy and security of ownership while safeguarding them from fake NFTs. The need to create distinctive digital identities and the growing interest in digital ownership have been major factors.

Don Jazzy, head of Mavin Records in Nigeria, raised the bar in Nigeria’s music industry in 2021 when he earned up to $300,000 in ten minutes on an NFT by working with a digital artist to make three works of art and commissioning him to add a background sound. The first African artist, Jacon Osinachi Igwe, displayed several NFTs at Christie’s, a prestigious auction house in London.

The founder and director of the Africa Tech Summit, Andrew Fassnidge, stated that the NFTs market is an intriguing one that is changing in an interview with Business A.M.

“We are looking at NFTs’ increased utility. Instead of merely being utilised for NFT art, they can also be used for digital identity and other inventive applications that will surface over the following few years, therefore I believe there has been a change in the potential applications for NFTs. Additionally, Fassnidge said that QORE ID Nigeria had considered employing NFTs for ideas like demonstrating the provenance of items and the date and timestamp of creation, as well as for digital identity.

The potential to profit from their digital inventions is one of the most important options NFTs offer to Nigerian creators. With NFTs, producers can market their digital works of art, music, and other digital assets as one-of-a-kind, exclusive commodities, boosting their rarity and value. The Nigerian creative sector could undergo a transformation as a result, since artists are no longer restricted to reselling their works through established venues like record labels, galleries, and publishing houses.

Nigerian innovators have the chance to show off their work to a worldwide audience thanks to NFTs. Creators can now share their work with the world more easily than ever because of the internet, but NFTs take this to a whole new level. Creators can access a worldwide audience and possibly sell their works for much more money by selling them as NFTs than they would be able to do on the local market.

Efosa Ighodaro, founder and chief executive officer, Hashgreed, the first African NFT marketplace, who spoke on the question of the growth or death of the NFT industry in Nigeria, said: “In the future, we’ll be seeing more celebrities in Africa adopt NFTs. NFTs will be used in movies and as a means of showcasing African art internationally. You should consider original ways to incorporate NFTs into your daily lives as an individual. You are the first step, and we can all do our part to ensure the success of NFTs in Africa.”

The ‘digital arts evangelist’ thinks that NFT is the way of the future. “Without a doubt. The blockchain, which has been the most disruptive technology in the previous 100 years, is the foundation of NFT,” he adds.

In Nigeria, several regulations govern the content that is displayed or posted on online platforms, according to Raphael Irenen, associate at AELEX, a top Nigerian legal practice. 

“For instance, parties involved in the sale and purchase of NFTs, as well as platform owners where the sale of NFTs is conducted, are required to abide by the Nigerian Communications Commission Internet Code of Practice, particularly regarding content accessible by minors, and Section 23 of the Cybercrime Act, which forbids content reflecting or pertaining to child pornography in Nigeria. As a result, they need to make sure that the NFTs they want to sell do not include any content that is against the law in Nigeria,” Irenen said.

The global NFT market has been driven by the expanding adoption of blockchain technology. Blockchain offers a decentralised and open platform for confirming ownership of NFTs and logging ownership information, ensuring their rarity and provenance. A global audience and market for NFTs have been established by the growth of social media and digital platforms. Influencers on social media, well-known people, and creatives have used their online platforms to market and sell NFTs to their followers directly, establishing a direct line of communication between producers and consumers. 

The reach and usability of NFTs have increased thanks to this direct-to-consumer strategy, which has accelerated their acceptance across a range of demographics. Traditional industries and the NFT sector coming together has created new opportunities and drivers. Industries including sports, gaming, music, and fashion have adopted NFTs to provide their followers and clients with distinctive experiences, limited edition digital assets, and exclusive content.

The idea of digital scarcity has been the market’s main motivator. With the use of NFTs, producers can build scarcity in the digital sphere, emphasising value and exclusivity. NFTs are coveted and sought-after due to their limited availability and distinctive qualities, which increases demand and raises pricing. This element of scarcity has drawn people and investors looking for new opportunities in the digital economy, as well as the capacity to demonstrate ownership and authenticity.