What happened to NFTs?

In the animated series The Simpsons, Homer Simpson's get-rich-quick schemes usually end badly. In one of the recent episodes of the long-running cartoon, Homer aimed to make millions by first turning his son Bart, and then himself, into an NFT. However, the result was the same, and his dreams were dashed when he learned that the "NFT craze was over."

The episode received great applause from fans for successfully mocking the NFT market, which flared up like a flash in the pan a few years ago. Analyses show that the value of NFTs fell to its lowest level in October 2023. However, according to a report by Joe Tidy from the BBC, some still think there is hope. NFTs can be defined as digital certificates of ownership purchased with cryptocurrency.

The artworks sold here are not works with a physical presence like a painting or a sculpture. Therefore, NFTs, or "digital certificates," represent rarity and ownership. Anyone who wants to can digitally access these works, for which millions are spent, and download them to their own computers.

Just like Bitcoin and other cryptocurrencies, NFTs use blockchain technology, and transactions are recorded through this technology. Thanks to this system, the artist can reach buyers directly, bypassing auction houses, and can also receive a commission on the resale of the digital work. Researchers at Dapp Radar report that the value of NFT transactions has reached its lowest point since the NFT market peaked. Trading volume (the amount of money generated from all sales) has fallen by 89% since the beginning of 2022. The market size, which reached 12.6 billion dollars in the first quarter of 2022, fell to 1.39 billion dollars in the third quarter of 2023.

PARIS HILTON HAS ALSO STOPPED SHARING NFTS

Last month, Yuga Labs, the creator of Bored Ape NFTs, announced that it had made layoffs without giving numbers. The Bored Ape Yacht Club, consisting of 10 thousand NFTs, had become one of the most famous collections. With the interest of famous names including talk show host Jimmy Kimmel and Paris Hilton, this collection found buyers for millions of dollars. However, Paris Hilton has not posted about NFTs on X, formerly known as Twitter, for a year. Yet, in January and February 2022, she was posting almost every day to promote the collection she held. According to the NFT Price Floor website, which tracks the value of NFTs, the floor price of Bored Ape NFTs has fallen from its peak value of 268 thousand dollars to 56 thousand dollars. US collector and artist Taylor Whitley sold six of the seven Bored Ape NFTs in his collection because the offers were getting worse.

Speaking to the BBC, Whitley says, "I didn't really want to sell, but the market is really bad, so this is the smartest thing for me to do. I think the NFT market could shrink even further." Last month, Taylor sold his most valuable Bored Ape for 212 thousand dollars. Yet he had previously turned down much better offers. If he had sold when the market peaked, he could have gotten at least 10 times more for his NFTs. But as an early investor in the market, the profit he made is still huge.

For example, he bought his last sold work for 200 dollars and earned a thousand times that from the sale. Are NFTs really dead, as mocked in this episode?

“I THOUGHT THIS WAS A BUBBLE”

There are millions of works in circulation in the NFT sector that are much less valuable than Bored Ape NFTs. Scottish artist Angie Taylor used to be able to earn up to 8 thousand dollars from the works she put up for sale as NFTs. Now she sells her works for 600 dollars. She has returned part-time to the day job she left when NFTs were at their peak. Taylor says, "I still sell small things, but I also have to work a salaried job. I can no longer make a full living from this."

Taylor always thought the "bubble" would burst:

"I had budgeted for the day this would happen. Because I thought this was a bubble, and that it would burst somewhere just as it had inflated."

THINKS IT WILL RISE AGAIN

However, Adam, known as Little Fish in the digital world, did not hesitate to pay 663 thousand dollars for a crypto punk work recently. To him, what was happening was just like buying winter coats in the summer. The owner of the work he bought had rejected an offer of 1.18 million dollars a year ago. Adam believes that the value of NFTs will rise again and that he will be the one "laughing" when that time comes. Adam's analogy of seasonal changes parallels the current state of the cryptocurrency market. Well-known cryptocurrencies like Bitcoin and Ethereum (ETH) are still quite valuable despite major losses in value. The largest known NFT investor is Vignesh Sundaresan, known by the pseudonym MetaKovan. The 69 million dollar record NFT sale of American artist Beeple was one of the biggest reasons for the market's massive jump in March 2021. Sundaresan, who bought the Beeple, says, "We still have a long way to go before we can know if this is a good investment," and continues: "This was definitely a huge amount, but it wasn't a significant portion of my wealth." Sundaresan still believes that NFTs have a bright future for collectors, but he also thinks that the values of the early days are over: "Everything happens very fast in crypto, and I don't think the next phase of NFTs will be about price." Vignesh also criticizes the industry that exploits the speculative market and bankrupts many people, saying, "I haven't seen a sustainable company built on NFTs."

“EXPERIMENTAL WORKS COULD SAVE THE MARKET”

There are also firms like Pudgy Penguin that turn NFT works into real toys. The firm gives a royalty to the NFT owner for every toy sold. Incentives such as physical versions of NFTs and memberships to special events are being introduced for buyer interest. The British NFT entrepreneur known as Pranksy points to experimental initiatives like this as the key to the market's recovery. He also predicts that the market will recover, but admits that it is unlikely to reach the levels seen before.

News Source: 12punto