Surprise, surprise. NFTs, or non-fungible tokens, are now worthless. Hands up who didn’t see that coming? Let’s recall that an NFT is a digital thing – in this case an image – that could still be replicated and copied but for which the owner, held the artwork’s letter of authenticity via a token on a blockchain.
For a short while some entrepreneur so-called creators (of questionable artistic merit, let’s be honest) made some mediocre digital art and made millions of dollars. Good for them.
The Bored Ape Yacht Club is the greatest example of this mind-boggling trend where fictitious art was overvalued, sold and resold, and ultimately is now worth nothing.
Cryptocurrency-focussed website dappGambl analysed 73,257 NFT collections and concluded that the “vast majority of NFTs are worthless”.
It found that “an eye-watering 69,795 of them have a market cap of 0 Ether (ETH). This statistic effectively means that 95% of people holding NFT collections are currently holding onto worthless investments. Having looked into those figures, we would estimate that 95% to include over 23 million people who’s (sic) investments are now worthless.”
Ouch.
Most NFT investments dissolve into nothing
But, if all of those hapless investors are honest with themselves, NFTs were never worth anything. It was another tech fad that preyed on two of humanity’s worst characteristics: greed and the fear of missing out. Perhaps FOMO, more than anything else, made rational people – who knew they were buying something that was not unique no matter how much the NFT hype claimed otherwise – invest in these ethereal nothings.
By the time the talentless former US first lady Melania Trump released an NFT image of her eyes, called, wait for it, Melania’s Vision, you knew this trend was meaningless.
“The hype around NFTs peaked in the 2021/22 bull run that saw nearly $2.8bn in monthly trading volume recorded in August 2021,” reads the dappGambl report, which used data from NFT Scan and CoinMarketCap. “From this, NFTs captured the collective imagination worldwide with multiple news reports of million-dollar deals for sales of certain NFT assets.”
Read More: The risks of crypto and NFTs (as told by terms of service agreements)
But by July 2023, this weekly trading value had dropped to just $80m, just 3% of its August 2021 peak, dappGambl adds.
Now they are worth nothing.
Two years ago, the first tweet by Twitter co-founder Jack Dorsey sold as an NFT for $2.9 million in March 2021. It was that kind of hype that propelled NFTs to the absurd valuations they received.
Now that the bubble has been deflated, the rush of NFT-related press releases has also died down. For this alone, I am relieved, as will be thousands of other tech journos who are hit with as many desperate attempts for free publicity with every new social media trend.
Many alcohol and fashion brands tried to hop onto the bandwagon, literally, by launching their own range. Who wants to buy an image of a bottle of cider or lipstick – which can be cut-n-pasted for free?
This is a worrying sign that so many big brands think the way to market their product is with whatever new trend emerges – remember the awkward fourth-industrial revolution nonsense before the pandemic?
Thankfully we’ve all been spared the NFT drivel – until it makes an inevitable comeback when more people will lose money buying worthless digital things because, you know, FOMO…
- This column first appeared on Financial Mail.