I think almost everyone is aware of what an NFT is to at least some extent at this point. Even though they were created all the way back in 2014, they absolutely flooded the world in the late 2021. Almost everyone promoted this “revolutionary new way of finance” as much as they could. But then all of the sudden, NFTs basically disappeared in mid 2022, as their value dropped on average by about 40-50%, with some loosing almost all of their value entirely. And with that, their relevance dropped as well.
It would almost seem that NFTs became one of the internet’s dead trends. But is it really so? Are NFTs really dead, or could someone still make some money from it? Let’s look at that.
How much did NFTs fail?
As previously said, NFTs lots a lot of their value in 2022, but why did that happen? And what is their status now?
Firstly, let’s talk straight, cold numbers. The two most popular NFT collections – CryptoPunks and Bored Ape Yacht Club, had prices for an individual NFT reach about $400,000 in their peak. But after the price fall, both prices were only slightly above $110,000. While that amount might still seem like a lot for, what is essentially a picture, but it’s still a drop of about 75%, which is, as with any kind of stock and share, an absolute disaster.
What’s even worse is the price of the whole market. In January 2022, the value of total secondary sales was around $5,45 Billion. In October, this number plummeted down to just around $700 million. That’s an almost 80% drop.
But why did a collection of mass-produced images suffer the same bubble burst as entire countries?
Why did NFTs fail?
To put it really simply – they failed precisely because they were successful. That may not make that much sense at first, but think about it. NFTs operated on the market strategy colloquially know as “another idiot” – You buy something expensive, hoping to find the “other idiot”, that will buy it for even more. This strategy has been tried before, but it never really worked, and it certainly didn’t work this time.
Well, and just like with the Dutch Tulips, people eventually ran out of idiots. NFTs suddenly started selling for less, meaning people panicked, which created this cursed spiral that left everyone where they are today, leaving many investors almost penny-less and leaving even more people, which didn’t invest, saying “I told you so.”
Another reason why NFTs fail are a lot more human, literary. The community that surrounded the NFT market, while mostly calm and collected, also consisted of some very questionable individuals. With people yelling that NFTs will completely revamp the current economy, you had people actively committing actual crimes. Either it was stealing someones art – sometimes even from passed away artists – or stealing someones information.
Basically, NFTs became a new, revolutionary thing to some, but an absolute laughing stock to others. This really didn’t help with the aforementioned “idiot market”. Because of all of those failings, NFTs didn’t become an economical revolution, but just another one of financial bubbles, which eventually had to burst.
Is there future for NFTs?
While some people think NFTs are completely dead with no salvageable value, experts like to use the “beaten, but certainly not dead” phrase. As said previously, some NFTs cost almost the same as a small house, so there’s definitely still value. The more important question is how much will this value grow? Because while it is certainly increasing, there isn’t any sign of it doing the same thing it did before.
The biggest gripe people have with the NFT industry is mostly that it’s still more about the money than the art. NFTs were first created to allow someone to own a piece of art and it still being able to be shared. This however, has devolved into art-stealing bots scraping almost every art-sharing website, hoping to basically steal someone’s art and mint it as an NFT for themselves. And while these practices, along with others have been fairly dealt with, they still left a nasty stain on the NFT market, which leaves many people still skeptical about the whole thing.s
But what about you and me? Could a regular schmo still make money on NFTs? To put it simply – yes. Just like with basically anything, you can make money if you invest. But keep in mind that the big wave has certainly passed, so you definitely won’t become a millionaire if you buy a bunch of NFTs.
While NFTs certainly aren’t dead, I doubt they will ever be really “alive” again. With their recent downfall, included with the malicious practices involved with them, it will require a miracle to bring NFTs back to even a sliver of their former glory.