BOSTON—October 20, 2023—Despite the rise and fall of hype surrounding non-fungible tokens (NFTs), a new study jointly conducted by Bain & Company and the World Economic Forum shows that businesses see benefits of NFTs and continue to apply them.

In their report, Evolution of Non-Fungible Tokens, the Forum and Bain found that the global adoption of NFTs has been relatively constant since June 2022, emphasizing that mass adoption is not over, but rather will take time to unfold.

“We interviewed more than 40 top-tier organizations on their applications of NFTs and found that, although there are challenges that may slow adoption speeds, NFTs do pose the potential to build community engagement, and revolutionize the way companies interact with their customers,” said Juan Redondo, associate partner and member of Bain’s Web3 and Financial Services practices. “However, NFTs are very incipient and will need time to evolve. To stay ahead of the curve, companies can learn from those experiences by early adopters and implement NFT strategies that will help them to identify and realize how the web3 technology can benefit their business.”

Use cases across industries

While NFT adoption speeds vary across industries, the study finds that sectors currently spearheading the launch of NFT projects include sports, ticketing, luxury, retail, gaming and art. As NFT technology continues to evolve, and as new use cases are identified, adoption is expected to spread and grow across a wider range of industries, the report concludes.

NFT technology can offer several advantages, the report notes. NFTs can provide a higher level of protection against fraud and more efficient and streamlined digital record keeping. In addition, NFTs offer users a variety of benefits such as increased accessibility, transparency, and ease of use; an example is when sports organizations link tickets to new services and experiences with the goal of increasing fan engagement.  

“NFTs can enable companies to better understand their customers when integrated with CRM systems, enabling a more tailored offer of products and services,” said Drew Propson, Head of Technology and Innovation in Financial Services at the World Economic Forum. “Though, as with any new product, companies should elaborate a sound go-to-market strategy before launching NFT campaigns. Strategizing to determine how NFTs can best be integrated into existing operations will be key for companies who wish to generate true value from such campaigns.”

Widespread adoption relies on eight factors

The report sets out eight critical factors that will impact the speed of widespread NFT adoption:

• Regulatory and legal clarity. Different countries are beginning to create regulatory frameworks for digital assets in the emerging web3 environment. However, efforts are still at a very early stage, and the industry still lacks a common taxonomy surrounding NFT use cases. To ensure mass adoption, an NFT taxonomy tailored to the nature of each use case and a regulated legal framework for basic security and protection needs to be established.
• Development of web3 ecosystem.  Web3 products and services development is uneven across industries. NFT mass adoption will be supported by customer education and the adoption of general web3 elements and functionalities. Through a better understanding of underlying NFT technology, users and companies could better recognize the benefits of NFT use cases.
• Macroeconomic and business environment. Current adverse macroeconomic environment is making companies re-prioritize their efforts and investments into more core businesses to the detriment of exploring new ways of growth through NFTs. Stabilizing crypto and other digital assets markets can create a more secure environment, a clearer legal framework, and enhance the attention of interested customers.
• Interoperability. While interoperability is critical for many use cases of NFTs, currently it is quite limited. Interoperability standards and protocols should be developed to enable NFTs to operate across different blockchain networks and platforms.
• User experience. NFT user experience is complex, causing high friction in the customer journey and preventing user adoption beyond initial enthusiasts and crypto-savvy communities. Smooth customer experience is paramount to allow mass adoption, led by wallet improvements (eg simple login with email/phone, payments with fiat, integration with web2 platforms, etc.) and the evolution of digital IDs.
• Technology development. Main chains struggle to combine affordable costs, high transaction capacity, security and decentralization simultaneously since underlying blockchain technology needs to mature overall in terms of throughput, latency and security. Achieving the technological milestone of high-capacity networks at an affordable price with strong security and reliability is necessary.
• Track record of success. Most noticeable cases across industries have developed digital collectables, while other use cases for NFTs are still small proof of concepts or tests and learn examples. The emergence of large-scale success stories will undoubtedly boost companies’ confidence, encouraging them to move beyond small proof-of-concept experiments with NFTs. These success stories need to be backed up by performance metrics that indicate the potential returns, reducing the perceived risk of investing in NFTs.
• IP and brand holders adopting the technology. Companies with a strong brand and popular IP have started developing pilots and small-scale NFT projects but have yet to commit to meaningful and valuable developments. It’s crucial for companies with strong IP, a recognized brand and extensive fan communities to launch NFTs, as this will propel widespread adoption.

Media contacts

To arrange an interview or for any questions, please contact:

Katie Ware (New York) — Email: katie.ware@bain.com

Gary Duncan (London) — Email: gary.duncan@bain.com

Ann Lee (Singapore) — Email: ann.lee@bain.com

About Bain & Company

Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future.

Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry. 

About World Economic Forum  

The World Economic Forum, committed to improving the state of the world, is the International Organization for Public-Private Cooperation.

The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas. (www.weforum.org).