- Critics say NFTs are worthless and nothing more than speculative assets as the sector goes bust;
- Interest in NFTs at record lows;
- NFT market records first-ever quarterly loss,
- What happens now?
Image Source: Twitter | Baby Ghosts
Non-fungible tokens (NFTs) took the market by storm in 2020 and have gained a lot of attention over the past few years due to their potential to revolutionize the way we think about digital ownership and scarcity. However, some critics argue that NFTs have no practical use beyond the hype and are speculative investment vehicles at best.
One common argument against the practicality of NFTs is that they do not offer any functionality beyond what can be achieved with a regular file or digital asset. For example, an image or video file can be shared or reproduced an unlimited number of times without losing its value, whereas an NFT version of the same file would be unique and indivisible. This uniqueness may hold some value for collectors, but it does not offer any practical benefits beyond the ability to prove ownership.
Another concern is that NFTs are often used to sell digital art or collectibles that have little inherent value. While it is true that NFTs have been used to sell digital artworks for millions of dollars, it is important to consider whether these works would be worth anything without the NFT. In some cases, the value of the NFT may be derived more from the hype surrounding it than the intrinsic value of the underlying asset.
For example, Jack Dorsey’s Genesis Tweet NFT, which originally sold for $2.9 million in March 2021, was put into action by the owner for $48 million a year later. However, the highest bid for the NFT was a laughable $280.
Image Source: Google Images
It is also worth noting that the NFT market is still in its early stages (roughly three years) and is highly speculative. The prices of NFTs can fluctuate significantly, and there is no guarantee that they will hold their value over time. This makes them a risky investment, particularly for those who are not well-versed in the NFT market.
However, despite these criticisms, it is important to recognize that NFTs have the “potential” to offer practical benefits beyond speculation. For example, NFTs could be used to verify the authenticity of rare physical items, such as artworks or collectibles. They could also be used to create new forms of digital ownership, such as the ability to own virtual real estate or a share in a digital asset.
The Jolting Collapse of NFTs in 2022
The craze for non-fungible tokens (NFTs) has been on the rise over the past few years, with the market for these digital assets reaching an all-time high in 2021. However, it appears that the bubble may have finally burst, as the prices of NFTs have been collapsing in recent months. As a results most experts suggests NFTs are worthless.
Image Source: Google Images
There are a few factors that have contributed to this decline in NFT prices. One of the primary reasons is the sheer number of NFTs that have flooded the market in recent years. With the increasing popularity of NFTs, there has been a rush to create and sell them, leading to a saturation of the market. As a result, the supply of NFTs has far outstripped the demand, causing the prices to plummet.
Another factor that has contributed to the decline in NFT prices is the speculation and hype surrounding these assets. Many people were buying NFTs as an investment, hoping to sell them for a profit later on. However, as the prices started to drop, these investors began to panic and sell off their NFTs, further driving down the prices.
In addition, there have been instances of fraud and scams in the NFT market, which have caused people to lose confidence in these assets. Some NFTs have been found to be copied or stolen, leading to a lack of trust in the market. This has also contributed to the decline in NFT prices.
Overall, it appears that the NFT market has reached a point of oversaturation and speculation, leading to the current collapse in prices. While it is possible that the market could recover in the future, it is uncertain when or if this will happen.
NFT Crash Triggered By Interest Evaporation
Source: Nonfungible.com | NFT Daily Sales Chart
As highlighted already, interest in NFTs has almost entirely disappeared over the past few months. With the crypto market in its worst crypto winter cycle, NFTs have taken a huge hit, considering their whole premise is largely based on hype.
With fewer traders and investors willing to engage with the market in the absence of the familiar euphoria, the NFT space is contracting aggressively. This supports the claims by critics that the market is simply driven by hype and not by any fundamental factor or real-world application.
According to data from Google Trends, the global search for the word “NFT” has slumped dramatically. After peaking at 100 between January 23 and January 29 of last year, the global search for NFT has plummeted to a low of 9 as of the first week of 2023.
Source: Google Trends
In its report on the NFT sector in November 2022, Statista remarked that the number of active NFT wallets dropped by about 17% between Q2 and Q3 2022. Backing this report is another quarterly report from NonFungible.com in Q3, which claimed that the sector had recorded its first-ever quarterly loss. In Q3 of last year, the sector shed over $450 million in assets, according to the report.
The report also showed a massive 77% drop in USD trades between Q2 and Q3, with global trading volume sliding to $1.7 billion that quarter.