The rise and fall of NFTs
“Cryptocurrencies, blockchains, NFTs and the constellation of hyped-up technologies known as web3 have been celebrated as a way to liberate the internet from the tech giants who control it now”, says Farhad Manjoo in The New York Times. Instead, these new technologies are “doing the opposite: polluting the digital world in a thick haze of errors, swindles and expensive, largely unregulated financial speculation that ruins whatever scrap of trust still remains online”.
Non-fungible tokens (NFTs) are unique digital tokens. Like cryptocurrencies, NFTs exist on a blockchain (most commonly the Ethereum blockchain). Unlike cryptocurrencies they are “non-fungible”, meaning that they are not interchangeable for each other. Where bitcoin aspires to be digital cash (or digital gold, as its advocates call it), an NFT is supposed to be the digital title deeds to a particular property or artwork.
The NFT market enjoyed a big boom last year, say Alex Hern and Dan Milmo in The Guardian. An investor paid $69m for a work by visual artist Beeple. Items created by Coca-Cola, including “customised jackets to be worn in the metaverse”, fetched $575,000. The first tweet by Twitter co-founder Jack Dorsey, dubbed the “Mona Lisa of the digital world”, went for $2.9m.
Yet the boom has now come unstuck. An attempted re-sale of Dorsey’s tweet attracted just $14,000 in auction bids earlier this year. Trading in NFTs “fell to a daily average of about 19,000 this week, a 92% decline from a peak of about 225,000 in September, according to data website NonFungible”, says Paul Vigna in The Wall Street Journal. The number of active wallets in the NFT market is down 88% since last November. Google searches for “NFT” have fallen 80% since January. “The NFT market is collapsing.”