The tech word loves buzzwords. Anyone who hasn’t heard about cryptocurrencies and NFTs has probably been living under a bridge. For a while it seemed like everyone was scrambling to be a part of the action, with excitement so frenzied that the graphics card market took major strain. Powerful graphic cards can ‘mine’ for cryptocurrency, though those that sunk thousands into purchasing the cards are probably rather red faced about now.
In just a few years for cryptos, and few months for NFTs, it has all come crashing down. The markets are collapsing fast, which isn’t particularly surprising for anyone that gave the concepts thought. NFTs in particular are a bizarre, poorly thought out notion that doesn’t make much sense at all. Let’s take a closer look and see why the world has largely shrugged off attempts by ‘tech-bros’ at forcing a market.
The Death Spiral Arrives
It’s difficult to believe, but in May NFT sales were peaking at an insane $2.6 billion, according to digital marketplace OpenSea. That number plummeted to $700 million in June. This doesn’t spell the outright death of the marketplace just yet, but chances are that the number will keep falling. Similarly Bitcoin has lost around 57% of its value while Ether has lost around 71%.
Of course, those invested in the market will claim that this is nothing more than a temporary blip. But anyone that can apply even rudimentary logic will spot a death spiral when they see it. After all, the fact of the matter is that very few were ever really interested in owning bits of digital code. Collectors do exist, but normally it is art or antiques being collected, and not an open-source piece of software that is as easy to replicate as copy/paste. A collector is far better off heading to Lucky Creek casino where at least the odds of a return are stable.
Why NFTs Are Failing
All markets are based on the simple idea of supply and demand. If there is a market for something, then that something can be sold. NFTs were nothing more than an attempt to force a market, based on the false notion that a product will have value later. If you buy an NFT now you can sell it later for millions, right?
But NFTs never had value, since very few are willing to actually pay for digital code. Especially since the code is freely available elsewhere. Yes, there was an initial frenzy, but the fact is that most throwing money around were doing so primarily as a get rich quick scheme. A market is, by very definition, heading for a collapse when they are no real buyers.
It is almost certainly just a matter of time before NFTs fade away for good. Cryptocurrencies may be around for some time still, but are also suffering from a case of overhype and little practical value.
Let’s never forget the Malaysian business man that purchased Jack Dorsey’s first Tweet last year, only to now be struggling to get bids of a few hundred dollars. Who would have guessed that no one had any interest in buying a Tweet? Strange.