Digital artist Beeple shocked the world in March when he sold his “Everydays” collage at Christie’s for $ 69 million as a non-fungible token (NFT). Suddenly it seemed like every news organization was writing an explanation for this phenomenon, trying to answer the question: why would anyone pay the price of an original Monet, a Picasso, a van Gogh for this? which is essentially a glorified JPEG?
NFTs are used in many different industries – like music, art, and sports collectibles – so there are issues putting them all together. But even by the time Beeple made its record sale, the NFT market as a whole was already in decline. NFT’s weekly trading volume peaked at nearly $ 200 million in the last week of February, fueled by $ 125 million in activity on NBA Top Shot, the Dapper Labs-owned platform for the buying and selling basketball clips on a blockchain.
Now, NFT activity is down in almost all traceable metrics. Last week, the NFT market saw around $ 35 million in sales, according to data tracking company DappRadar, down significantly from its peak in February. During the same period, the number of people using NFT marketplaces fell by 80%, from a peak of 650,000 people to a more modest 128,000.
“It certainly feels like NFTs were the biggest crypto story a few months ago and it’s not anymore,” Daniel Roberts, editor of the crypto-focused news site DecryptQuartz said in an interview. “That doesn’t mean NFTs are dead, which is what people would like to say in the screaming headlines, by any means. But there was a real cycle of hype that has dissipated somewhat.
The rise and fall of the NFT
The idea of NFTs, copies of digital media assets placed on a blockchain, was invented years ago, long before the concept took off and became popular among digital artists and crypto enthusiasts.
Anil Dash, CEO of software company Glitch, co-created the first proto-NFT at a conference in 2014. But he’s skeptical of the current hype around NFTs. He attributes much of the recent NFT boom to a “crypto asset surplus.”
The prices of bitcoin and ether cryptocurrencies have climbed over 400% and 1700% respectively since the start of 2020. He believes there is a disconnect between people who care about art and those who care. of technology with little crossover. “To me it is very, very clear that the increase and the attention has been [that] not many crypto obsessed guys suddenly started to care about art, ”Dash said in an interview. “There is a very little overlap which I think will persist after the arrow has passed or the bubble burst, but that part is really hard to see because of the noise around everything else.”
Roberts compared the NFT boom to the explosion in Initial Coin Offerings (ICOs) in 2017, a new cryptocurrency fundraising strategy which produced little success and alarmed regulators.
“Even though a lot of it was junk and the SEC cracked down on a lot of ICOs, some token sales from that era were legitimate and survived and still exist and had a real business purpose,” Roberts said. “Likewise, I think there will be a separation between the wheat and the chaff, a gradual shake, where a lot of NFTs that were just money in the midst of the hype will disappear and in hindsight look silly. , but there will be use cases of NFT that stick around and prove to have real stamina and value.
What’s the next step for NFTs?
NFT providers recognize that the boom is over, for now. They see it largely as a natural contraction of a booming industry and look to the future.
Lindsay Howard, community manager for the NFT Art Market Foundation, said that while the company definitely experienced an initial boom around February when it was first launched, it is starting to see a “promising” aftermarket and works with an average increase of 200% over their original. selling price.
“We were aware that the markets were going to change and we were always convinced that collectors were investing in the current practices of artists on our platform,” she said.
Blockparty, another NFT marketplace, has historically relied on NFTs for blockchain-based ticket sales, but has pivoted its business this year to become a more general platform that can support NFT sales across various websites. CEO Vlad Ginzburg has said he wants the company to be the Shopify of the NFT marketplace.
Ginzburg stressed that he wanted the company to support NFT sales on various websites, connect to many different blockchains like Ethereum and Flow, and facilitate transactions by accepting credit cards and other types of payment. This will make the NFT market more inclusive, user-friendly and less expensive. “Intentionality and purpose are in the name Blockparty,” he said. “It’s a party. It’s inclusive.
But he is also wary of the complete bursting of the bubble, especially at the end of the crypto race. “If we don’t make it user-friendly… we risk becoming a bubble. “
Dash, who co-created the first NFT with artist Kevin McCoy, has since kept his distance from the market. He is skeptical of the NFT market, which he sees as bloated and full of scammers. But he sincerely hopes it succeeds in a way that supports artists as he originally intended. “My most positive interpretation,” he said, “is that it goes back to the people who were genuinely interested in it a few months ago.”