The large NFT bust | PYMNTS.com
Flashback about 15 minutes ago, and non-fungible tokens (NFTs) were the latest craze to sweep the payments industry. Jack Dorsey sold his very first tweet for $ 2.5 million. Tampa Bay Buccaneers (formerly New England Patriots) tight end Rob Gronkowski has announced plans to sell more than 300 NFTs highlighting moments during this year’s Super Bowl and the other three Super Bowls of his career.
Gronkowski said he was interested in the NFT market at the time. “I see what’s going on, and it’s exploding,” the athlete said in an interview. “I wanted my fans who live in the digital world to be able to have a part of this action.”
And Gronkowski was far from the hottest action in town from NFT. Even Jack Dorsey’s multi-million dollar salary for the phrase “I just set up my Twitter” – made “authentic” by the transformative powers of blockchain – was only slightly spicy by the standards of the booming market. from a few weeks ago. In early March, a digital-only work of art sold for almost $ 70 million. This was the very first sale by a major auctioneer for a work of art that does not exist in any physical form.
“Without NFT, there was legitimately no way to collect digital art,” said Beeple, the artist behind the $ 70 million sale. Born Mike Winkelmann, Beeple designed concert visuals for artists like Katy Perry and Justin Bieber before embarking on the wild but seemingly lucrative world of NFT trading. “I really think this is going to be considered the next chapter in art history.”
It turned out to be a short chapter. Because the future of digital commodity certification is currently collapsing, with the value of NFTs having fallen by around 90% over the past month. On May 3, NFTs hit their peak, registering $ 102 million in transactions in a single day. The seven-day periods surrounding the peak generated $ 170 million in transactions.
And then reality set in, as consumers around the world remembered that a blockchain-certified digital version of something that they can easily download as a free copy might not be many’s best investment. millions of dollars.
But the market crash didn’t just affect the massive, flashy art sales that grabbed the headlines about a month ago. According to Gizmodo, the market has been mostly pushed forward and dominated by crypto collectibles – that is, little pixel art faces called CryptoPunks, or portraits called Hashmasks, or something called Twerky Pepes. (based on the popular frog character who has become synonymous with both of the images like 4chan and the far right online).
And overwhelmingly for a crypto-backed business, NFTs have lost the fleeting quality that made them a hot buy: it’s no longer cool. The number of NFT wallets has declined by more than 70% over the past two weeks as consumers are less attracted to digital collectibles as potential investments.
The bubble has undeniably burst. Now the question is whether he will find a way to reform and bounce back. It’s not an unknown phenomenon: Beanie Babies were known as an ‘investment’ in the 90s, only to become a running joke about bad investments, only to regain value as nostalgia turned them into real items. collectible, with “rare” babies selling in the thousands on eBay.
But Beanie Babies are a physical commodity, so investing in a pristine baby means the buyer has a real stuffed animal they can display on a shelf or use to chase the monster under the bed at their leisure. But an NFT will always be in digital form, indistinguishable from any other digital copy except for the blockchain-based receipt which claims one was actually prepared to pay money for it.
Additionally, blockchain-based fads don’t have much history to make a comeback. Do you remember the ICOs? No one has talked about it since around 2017, when the new independent coin offering was rolling out, loaded with celebrity mentions. The market eventually became so overheated that the SEC had to issue an official warning to investors about celebrity-backed coin offerings.
And the ICO fever has already burned even stronger than the NFT trend recently. As of November 2017, the market had 270 coin-backed projects and raised over $ 3 billion through ICOs, with actors like Paris Hilton, rapper The Game, and boxer Floyd Mayweather acting as boosters.
And while there is no certainty that NFTs will disappear as quickly and completely as ICOs before them, it seems pretty certain, given how quickly the bottom has fallen from the market. There are a huge number of people holding digital copies of a million dollars today, wondering why they thought it was a good seven or eight figure expense.
And while NFTs weren’t the first, and surely won’t be the last, bubble built from the blockchain, they were certainly a fun twist on a bad idea that managed to break through really, really big. And we can’t help but be excited to see the next brilliant investment opportunity that blockchain bounces our way.