The Non-Fungible Token (NFT) market has collapsed. This is according to a study by Insider titled “Remember when NFTs sold for millions of dollars? 95% of the digital collectibles may now be worthless”. The report shows that the majority of NFTs are now worth nothing. During the peak of the non-fungible tokens hype back in 2021/22, the market saw massive trading volumes, but it has since sharply declined. People who initially embraced them are now facing uncertainties about the market’s future.
The report also confirms that a significant portion of the NFT market is characterized by speculative and hopeful pricing strategies that are far removed from the actual trading history of these assets.
This apparent disconnect between listed prices and actual sales suggests that many sellers are waiting for another massive surge in NFT interest akin to the boom witnessed in 2021, which may not ever occur again.
The explosive rise of NFTs: A deep dive into the 2021-2022 market surge
NFTs are digital representations of art or collectibles tied to a blockchain, typically Ethereum, and each one has a unique signature that cannot be duplicated. In 2021 and 2022, the NFT market saw a huge bull run, at one point leading to $2.8 billion in monthly trading volume.
During that time, popular collections such as Bored Apes and CryptoPunks were selling for millions of dollars, and celebrities such as Stephen Curry and Snoop Dogg participated in the hype. The boom coincided with cryptocurrency’s peak when bitcoin was trading close to $70,000. On Wednesday, the price of the crypto hovered just above $27,000.
The year 2022 proved to be a challenging period for the cryptocurrency industry. The National Public Radio (NPR) suggested that it could be seen as a pivotal moment when virtual currencies lost their appeal and became viewed with skepticism and caution by most, or simply as a period of painful growth for an emerging industry.
Presently, Bitcoin is valued at $27,223, and Ethereum at $1,630.99, a significant drop from their peak values of over $65,000 and $4,700, respectively. According to dappGambl, the outlook is uncertain, with the majority of tokens having little to no value. Their research indicates that 95% of individuals holding NFT collections possess assets that carry no real worth, which implies that over 23 million people have seen their investments become worthless.
DappGambl warns that this reality should act as a reminder to temper the excitement often associated with the token or crypto sphere. It is not just the overall lack of value; there is also a notable lack of interest in acquiring new assets, leaving artists in a precarious position.
Presently, only 21% of the collections identified by dappGambl have full ownership, meaning they have been acquired by investors and collectors. To put it differently, a staggering four out of every five non-fungible token collections languish unused. This is not to suggest that all tokens are fraudulent or that people should completely avoid them, but it is evident that some token collections have questionable value at best.
Think about Melania Trump’s NFT called “Man on the Moon.” It goes against NASA’s rules and is not popular at all. Only about 70 people bought it in two months, even though it cost $75. It is hard to see how this will ever be worth that much or become more valuable.
Melania Trump is not the only one still dealing with these tokens in 2023. Canon, a big camera company, also joined the token craze late. They talked about a place called Cadabra for selling NFT photos, but it has not started yet.
Some innovative companies like Meta (formerly Facebook), realized NFTs were not a good idea and stopped using them in March. They tried to get into it in 2022 as part of their “metaverse” plan but had to pull the plug.
If someone is just starting to use crypto now, they should be ready for things to go very wrong.
The tokens became really popular, but then they crashed, like a bubble. And it is not just about money; crypto and NFTs also hurt the environment a lot as they consume a lot of energy to mint. A lot of this energy is sourced from coal and fossil fuel generators. Most crypto and non-fungible token owners have not gained much from it.
NFT frauds and scams
NFT scams and frauds have become a serious concern amid the market’s popularity. They take various forms such as fake sales. Scammers create bogus listings, often for non-existent or stolen digital assets. Deceptive marketing tricks buyers into purchasing these fake NFTs, and once the deal is done, scammers vanish with the buyer’s money.
Phishing website scams are also a fraudulent side of these tokens. Fraudulent sites impersonate real NFT marketplaces and trick users into sharing private keys and personal info. This often leads to theft of cryptocurrency wallets or access to genuine collections. Also. scammers steal digital art and mint NFTs, falsely claiming ownership. These stolen NFTs are sold, causing legal disputes and financial losses for unsuspecting buyers.
Additionally, some groups artificially inflate NFT prices through coordinated buying and hype, then sell quickly for a profit, leaving others with devalued tokens and losses. In decentralized marketplaces, dishonest developers create contracts with hidden vulnerabilities. After raising funds from investors, they exploit these vulnerabilities, draining assets and causing losses.
In some cases, scammers pretend to be famous artists, celebrities, or influencers to promote sales or giveaways, tricking people into sending cryptocurrency or personal info. Some scammers mimic legitimate projects, attracting investors with misleading information. Once they collect funds, they disappear, leaving investors with worthless assets.
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