Three years into the new decade, the 2020s are already shaping up to be a memorable period. With the rise of fads like cryptocurrencies and NFTs (non-fungible tokens), it’s clear that the digital landscape is continuously evolving. However, the question remains: what happened to NFTs?
NFTs are unique digital entities that circulate on a blockchain, which is an ongoing ledger containing records of identifiable digital entities. The “non-fungible” aspect of NFTs means that they cannot be replicated, although some argue that screenshots could defy this definition.
NFTs gained significant popularity in 2021 and 2022, capturing public attention. One noteworthy collection was the Bored Ape NFTs, which featured digital illustrations of apes in various costumes. This led to a mini gold rush, as collectors sought out the next must-have collection.
Prices for these digital drawings skyrocketed, and some collectors even touted them as the next evolution of art. For example, Beeple’s “Everydays: the First 5000 Days” sold for $69.3 million, while Pak’s “The Merge” sold for $91.8 million to 30,000 collectors who pooled their funds together.
The emergence of NFTs created a new economy and sparked debates surrounding their social, societal, and artistic merits. Yet, it seems that the dream may have turned into a rude awakening for those who invested heavily in NFTs, as reports suggest that the NFT market has crashed.
According to a study by dappGambl, a community of blockchain enthusiasts, the “vast majority” of NFTs are now worthless. The study examined over 73,000 NFT collections and found that nearly 70,000 of them (around 96%) had zero value in ETH (Ethereum), the cryptocurrency commonly used in NFT transactions.
Additionally, the study states that over 79% of these NFT collections were never sold in the first place. The market phrase “demand is outstripping supply” has been used to describe this situation, meaning that most NFTs hold little to no value, much to the dismay of their creators.
However, dappGambl’s analysis has faced some criticism. Critics argue that the sample of 73,000 NFTs could include a significant number of everyday-person-minted NFTs, which are generally less attractive to buyers. This implies that the overall market may not be as bleak as the study suggests.
Yet, even when analyzing the “top” NFTs, dappGambl’s report reveals a decline in value. Among the top 8,850 NFT collections analyzed by CoinMarketCap, 18% had a floor price of $0, and 41% were modestly priced between $5 and $100. Less than 1% of the analyzed NFTs held a price of over $6,000, showcasing a significant drop compared to earlier high-value sales.
In 2021 and 2022, the NFT market was trading at over $2 billion per month, but now it has fallen to $80 million. Although there is still a considerable volume of NFTs being traded, individually, they are not worth much.
The future of NFTs is uncertain, and predicting their fate is difficult. They could experience a similar pattern of rises and falls in value like Bitcoin. If you invested in NFTs, it would be wise to assess their current prices and determine if they hold any value. Selling them while they still retain some worth could be a prudent decision.
Only time will tell if NFTs regain their momentum or fade into obscurity. For now, they serve as a reminder of the rapid changes and fads that define the digital era.
