Another bubble or NFT rebirth?
In 2021 a friend of mine bought an NFT for €1800. Today it costs €10. The difference is impressive. With the market downturn, all token purchases a year ago lost 80-90% of their margin. The highest story is related to Logan Paul, an American YouTube blogger. In 2021, he purchased an NFT called K4M-1 #03 from the Azuki Bumblebee collection.
The property was worth 623 thousand dollars. July 13, 2022, Paul
published a tweet, saying the token price fell to $10. His Genesis Rocks №65 and №68 transformed from $155 thousand to $25. According to DappRadar, Paul’s NFT is worth $7,272 (prices are still unmatched).
When the first artNFTs appeared, most people just smiled skeptically. However, the growing excitement and interest transformed the market into a dramatic new dimension – the world of digital collecting. Amazing and promising. Later, Coca-Cola, Gucci, Dolce & Gabbana, Tiffany & Co, Nike, Adidas entered the NFT market. Christie’s and Sotheby’s introduced and would successfully sell NFT. The 2021 DappRadar report states that the trading volume of the NFT market exceeded $23 billion, while the minimum value of the top 100 NFT collections was $16.7 billion.
The war in Ukraine, increased interest rates, accelerating inflation, crypto winter and a “bearish market” forced investors to refuse risky assets.
According to Chainalysis, in July 2022, the average cost of NFT sales fell by 92% since the beginning of May 2022, after falling from $3894 to $293.
The annual volume of NFTs fell by 97% compared to the 2022 highs: from $17 billion in January to $466 million in September.
Source: Dune Analytics; Dashboard by @hildobby.
Despite the rapid decline and waning interest, the predictions for the industry are favorable. According to Verified Market Research, the NFT market is expected to have reached $231.98 billion by 2030. It is predicted to grow at an average of 33.7% per year for 8 years. The analyzes link this growth (not rapid, but gradual) to the originality, individuality and openness of NFT.
I agree that the NFT market was inflated. However, we cannot call it a bubble. The collapse has another reason that many do not remember. I think art tokens fell in price when they started to be used as a quick, big and easy income. People forgot the reason NFTs were created – proof of ownership of a unique digital asset. Digital seal, not the way to make money. That is why today we hear about the need for a new approach to NFT: tokens without added value will be replaced by the investment in NFT as a driver of social change.
The Decentralized Society: Finding Web3’s Soul article E. Glen Weyl, Puja Ohlhaver and Vitalik Buterin offered the concept of Soulbound Tokens (SBT). They cannot be bought, sold or transferred. According to the authors, Web3, which must become the basis of the decentralized society, lacks “soul”. SBT can encode webs of trust into the real economy to establish the origin and create the digital reputation of its owners. It will be a kind of CV with information about a person’s achievements: education, additional courses, work experience, attended conferences or participation in DAO.
Now we are facing the turning point for NFT – a complicated and difficult to predict.
There are two development scenarios:
1. The market dies, as in its time ICO. The dust settled, the tension settled.
2. The market will be cleansed and use this system for intellectual property rights and the functionality the NFTs are designed for.
I am convinced that BFT must not be seen as a digital resource, but go beyond digital art by meeting different options for its use. Without a doubt, artNFT is remembered, impressive and sometimes causes confusion. But the symbols themselves should be taken back to the path designed for them in the first place – as proof of authenticity and product ownership.
It will end the speculation operations and prove the practical value of NFTs.
Keep an eye open.
