The digital art world was once abuzz with the promise of NFTs, or Non-Fungible Tokens. These unique digital assets, often linked to art pieces, collectibles, or even tweets, were the talk of the town in late 2021 and early 2022. But a recent study reveals a shocking truth: a staggering 95% of these tokens are now economically worthless.
According to an analysis by dappGambl, the focus was primarily on NFTs on the Ethereum blockchain, the most popular platform for creating, trading, and transferring these digital assets. The study identified 73,257 collections, out of which 69,795 had a market valuation equivalent to zero Ethereum (ETH).
While the study didn’t delve into NFTs on other networks like Solana, Polygon, or even Bitcoin with its controversial Ordinals, it’s logical to assume the trend is universal. The transaction volume for NFTs was a mere $80 million in July 2023, a drastic fall from the $2.8 billion in August 2021. This decline is a conclusive indicator that the NFT bubble has long since burst.
dappGambl also pointed out that the supply of NFTs significantly outweighs the demand. Currently, four out of every five NFTs remain unsold. This oversupply isn’t surprising, considering that during the peak of NFT popularity, collections were created for just about anything. For instance, the slap that Will Smith gave Chris Rock at the 2022 Oscars quickly turned into a series of NFTs that were nothing more than memes of the event.
Perhaps the most glaring example of this downfall is the case of the first-ever tweet by Jack Dorsey, Twitter’s founder. Someone paid $2.9 million for the NFT of this tweet in March 2021. Fast forward to April 2022, and the highest offer for this digital asset was a paltry $280, far from the owner’s expectation of at least $48 million.
The decline in NFT value also coincided with the fall in cryptocurrency prices. When the market plummeted in mid-2022, NFTs took a severe hit. Many assets lost half or more of their dollar value almost overnight.
Despite the grim statistics, some NFT collections still hold market interest. According to dappGambl, about 8,850 NFT collections have the highest market valuation. Even within these, 1,614 are valued at zero dollars. Only 80 NFTs are worth more than $6,000, a far cry from the millions that used to be the norm.
Is this the end of the road for NFTs? Not necessarily. While most collections may be “dead,” the underlying technology still holds promise for practical applications. However, the initial hype was clearly overblown, and many are now paying the price for their FOMO.
So, the next time you think about jumping on the latest investment bandwagon, remember the cautionary tale of NFTs. They went from being the future of digital ownership to digital dustbins, almost in the blink of an eye.