THE RISE AND FALL OF THE NFT ART MARKET
In 2021, NFTs were all the rage as digital art collectibles that were bought, sold and traded for millions. Short for non-fungible tokens, these “digital assets” roused the attention of many, as they were portended to be the next art-and-investments-game changer at the time. But three years since the NFT bull run of 2021, many questions over its future have been raised, particularly – “Are NFTs dead now?”
A recent study that looked into the active prices of NFT collections found that most NFTs are now practically worthless – and its findings pretty much serves as the clincher for what can be called the “rise and fall of the NFT art market”.
What are NFTs anyhow?
Short for non-fungible token, NFT refers to a type of digital content that’s unique and not readily replaceable.
Its digital nature pegs it to be practically anything multimedia, which characterizes drawings, paintings, videos, music and/or a combination of these as possible NFT artworks or collectibles.
What makes NFTs different from regular digital art is that NFTs are “minted” with a record that identifies who the owner of a particular piece is. When it is “minted”, a file certifying the ownership of an NFT piece is made in a digital blockchain (a type of digital ledger), and this file certifies that it is unique and cannot be readily copied or altered.
Since NFTs work with a digital blockchain, its marketplace works much like how most cryptocurrencies like dogecoin and bitcoin operate. The leading NFT marketplace is part of the Ethereum blockchain (which a type of cryptocurrency), and is the reason why the ETH cryptocurrency is largely associated with NFTs.
Like collectibles such as one-of-a-kind trading cards, NFT art draws its value from cultural cachets.
The NFT Bull Run of 2021
In the midst of the pandemic in 2021, the NFT market went through what can be called a massive surge of interest.
In March that year, a video made by an AI-backed robot named Sophia was auctioned for nearly the equivalent of $700,000.
The robot was developed by the Hong Kong-based Hanson Robotics firm, and the piece was auctioned in the “Nifty Gateway” NFT marketplace where musician Grimes (the ex of billionaire industrialist Elon Musk) also sold an NFT video for a whopping $5.8 million.
Still in March that year, a digital artist named Krista Kim made history in sealing the deal for the “first NFT house sale”.
Basically, Kim sold a “metaverse compliant” rendering of a house – a virtual house, basically – for more than $500,000.
Just as Kim was making headways with her virtual real estate sale, former Twitter CEO Jack Dorsey made waves as well by selling the first-ever published Tweet as a type of NFT art. The tweet – dated March 21, 2006 – reads “just setting up my twttr”, and it was sold for $2.9 million.
The biggest NFT deal at the time, however, took place on March 11 when an American digital artist named Beeple sold an NFT piece for an astounding $69.3 million. The sale has been identified as the first ever major NFT artwork that was sold in an art auction.
From then on, NFTs of different colors and hues – from Bored Ape collections to CryptoPunk lines – were bought, traded and sold for millions, with different celebrities and personalities enjoining others to invest in NFTs.