Are Nfts a Dying Hype or an Innovative Technology Here to Stay
Last Updated on November 8, 2023 by Ameer Hamza
In 2021, NFTs came into prominence at such a fast pace that they took the world by storm. Given such remarkable momentum, it was no surprise that NFTs were on the lips of everyone, from journalists and investors to art enthusiasts. These NFTs also started being sold at astronomical values, further seizing everyone’s attention.
NFTs have been around since 2014 and were typically only worth a few thousand dollars at best. This was until 2021, when NFTs like the digital collage by Beeple sold for millions of dollars. Of course, this sharp change in trajectory prompted speculation from various quarters.
Some believed these digital assets were simply facilitating a financial bubble bound to bust at one point or the other. Others believe NFTs were indeed a new class of financial assets that were here to stay. At the time, it was not easy to determine which commentators had the proper perspective. However, the NFT enthusiasm has tapered off, allowing for a more accurate reflection on whether the technology was really all hype or is here to stay.
At first glance, it may seem that persons who regarded the NFTs as unsustainable hype got it right. The most recent numbers from the NFT market seem to suggest a collapse. The negative outlook NFTs faced this year was worsened by the crypto crash. And as one could expect, NFT sales hit a 12-month low. Similarly, a token of the first tweet by Jack Dorsey, previously worth $2.9 million, struggled to get bids above $14,000 in April 2022.
These events certainly suggest a severe drop in value for NFTs. However, paying attention to the surrounding context is essential to get a more accurate picture. For instance, the decline of NFTs has not been an isolated event. Instead, it has followed a general period of decline for blockchain-based digital assets. To illustrate, the crypto market dropped from a $3 trillion value in November 2021 to less than $1 trillion.
It would have been unusual if the NFT market had performed well amidst such conditions. In addition, while NFTs have indeed dropped in value, some have been able to hold up quite well. For instance, according to Pedro Herrera, DappRadar’s head of research, the cheapest NFT in the Bored Ape Yacht Club reduced in value by only 1% over the last month. This indicates that blue chip NFT collections are performing quite alright.
Based on these facts, it might be premature to conclude that NFTs are just a dying hype. Further reinforcing this point is that NFTs have plenty of utility outside of poor market speculation, thus, indicating intrinsic value in the technology. For instance, NFTs can be used for documentation, ticketing, gaming applications, and as proof of authenticity for physical assets.
Thus, while it might be too early to tell how the NFT technology will pan out in the long run, we can be reasonably confident that the technology will not become irrelevant anytime soon.
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