NFTs aren’t dead – they’re dying.
Headlines predicting the death of Bitcoin are nothing new. Over the past decade, we've seen every commentary on why “Bitcoin is dead,” yet the current crypto winter has brought very few of these dire pronouncements.
This time it looks a little different. It might be hard to write off such praise with Bitcoin (BTC) hovering around $28,000 and a Bitcoin ETF on the horizon. Ethereum doesn't seem to be dead.
But the blockchain industry and its commentators still want a corpse, and that's what they got in the rotting cadaver of the Nifty Token (NFT) market.
Related: The economy is booming – which means it might be time to start buying Bitcoin
NFTs are dead. He died. Lifeless. NFTs are “Norwegian Blue” from Monty Python's Dead Parrot Sketch. And the grave dance began; To quote a recent Rolling Stone headline, “Your NFTs are really—eventually—completely worthless.
Rolling Stone is right – most NFTs are actually worthless.
However, this should come as no surprise to anyone who has been in crypt for a few cycles. Most of the ICO tokens from the 2017 bull market vintage died in the winter of 2018/19. Similarly, countless DeFi protocol tokens after DeFi-Winter of 2020.
Today, there are more than 1.8 million tokens with a total market capitalization of just over $1 trillion. But the top 10 largest protocols and tokens account for more than 93% of the total.
Do the math. That's a long, absurd tail of zombie coins. Most of all symptoms die. So why should NFT be any different?
The barrier to entry was (and still is) low for an NFT project hoping to strike it rich. Anyone can create an NFT collection in a few minutes with just a few keystrokes, and it looks like he did.
Related: Bitcoin ETFs: A $600B milestone for crypto
What happened in mid-2021 when business activity and financial frenzy flooded into this new corner of the crypto market? The free market responded exactly how it should: it provided. And supply ≠ quality, especially in this industry.
We've seen the same cycle over and over again, this is going to be the first real NFT winter.
A-listers have quietly taken down their NFT Twitter avatars. Jimmy Fallon is not shilling on late-night TV with Paris Hilton. Ashton Kutcher's Stoner Cats have settled with the Securities and Exchange Commission (SEC). A sense of collective embarrassment abounds.
From around $1 billion per week in mid-2021 to early 2022, NFT trading volume has dropped to $100 million today.
It is dark. But, as I said about NFTs in October 2021, “Peaks and troughs aren't new, it's what comes out of them that matters.
For the curious and open-minded, while the general view that “NFTs are dead” is prevalent today, there are signs of life amidst the rubble.
In September, news broke that PayPal had filed a patent application in March for its NFT purchase and transfer system.
Pudgy Penguin continues to expand into physical toys, first sold on Amazon in March and soon to 2,000 Walmart stores across the US (disclaimer: the penguin jpeg I have is fat).
In a similar effort to merge the physical and the digital, Doodles teamed up with casual shoe brand Crocs in a similar collaboration between Gary Vee's Veefriends and Reebok.
At a concert this summer, Harry Styles fans will be able to download an app that features a self-protecting digital wallet for future NFT awards. Meanwhile, Justin Bieber is partnering with a blockchain music platform to turn a song into NFT with royalty streams to NFT holders.
Top auction houses continue to bring major artists into the NFT world, such as Keith Haring with Christies, and Sotheby's teaming up with Ledger to offer premier digital art buyers the co-branded Ledger Nano X (hardware bag).
If you keep looking you will find more and more signs of life, because NFTs are not “dead”.
What NFTs are and the underlying technological precursor they offer will not “die”, any more than blockchain will. Weak hands, weak teams, scams, copycats and quick bucks will simply continue to improve as they fade into history.
As we move from this NFT winter into a new season, expect NFT projects to become more sophisticated and commercially viable, enriching the ecosystem in new and meaningful ways.
Tama Churchouse is the COO of Cumberland Labs, an early stage Web3 incubator, and the founder of Digital, a community-driven NFT wiki that serves as a comprehensive resource for the NFT community.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
