The Rise and Fall of NFTs
- September 29, 2022
Non-Fungible Tokens give proof of ownership of a digital object. NFTs have unique qualities that cannot be exchanged for others of the exact same type. NFTs are primarily centered around digital art, but can also include collectables, trading cards, event tickets, music, digital video clips, and virtual fashion. Although digital files can be copied many times over, NFTs are designed to provide ownership of the work. Original artists are still able to retain the copyright and reproduction rights, but only one person can own the original NFTS.
Many believed NFTs would be the next big thing and would have a larger impact than what they actually have. On one hand, many people saw NFTs as the future of collecting fine art. On the other hand, people saw NFTs as the new trading collectables. Many believed that 2022 would be the best year for NFT marketplaces. However, there were no guarantees that NFTs would be profitable, which many people learned with the fall of NFT purchases.
Since their peak in 2021, NFT sales have dropped about 46%. The amount of NFT trading has decreased but their prices remain high, meaning NFTs that remain in circulation are still recognized as truly valuable.
One of the main reasons NFT sales decreased is attributed to the crash in the cryptocurrency market. Since NFTs are purchased with Bitcoin, Ethereum, and other cryptocurrencies, trading-related activities are no longer profitable. In addition, the NFT market has seen a large amount of scams, which cooled the trading and purchasing of NFTs. With these trends, it is unlikely that the NFT marketplace will return to its peak since its short-lived mass enthusiasm has disappeared.