Source: Sipa Asia / Shutterstock
Source: Sipa Asia / Shutterstock
The prices of digital collectibles, such as art objects and sports, are falling, again focusing on the fact that the nascent market for so-called non-consumable tokens is more than a passing craze.
Average NFT prices (essentially negotiable digital certificates that use blockchain technology to prove ownership and provenance of online assets) have fallen nearly 70 percent from a high in February to about $ 1,400, according to Nonfungible.com, which tracks various NFT markets.
An explosion of interest in NFTs peaked last month when a Beeple digital artwork was sold for an astonishing amount $ 69.3 million. For some, this sum showed that NFTs were controlled by the excess of investors in a world full of stimuli and destined to crumble. Others studying technology argue that using blockchain to create digital collector shortages is a lasting innovation rather than a fashion fad.
“It’s not significant to characterize a concept as a financial bubble,” he said Chris Wilmer, a University of Pittsburgh scholar who co-edits a blockchain research journal. “The ‘NFTs’ are nothing more than a ‘cryptographic bubble.’
Punched
The NFT boom fell as prices cooled from the February high
Source: Nonfungible.com
Sales of blockchain-based digital assets were already underway in 2018, when 10 collectors paid $ 1 million for a digital image of a rose. Today, tweets, baseball clips and even comic digital characters are also marketed as NFT.
Read more: Crypto Investor moves on to Picasso later $ 69.3 million NFT miss
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Companies are looking to expand the applications of the technology. While digital art is “sparkling,” music and film can provide viable NFT companies, said Kathleen Breitman, co-founder of the blockchain platform Tezos. There are even inquiries about loans against NFT, he said.
Researchers have also begun to study whether NFTs have low correlations with other investments, including cryptocurrencies such as Bitcoin, which hint at a potential, albeit highly controversial, role in portfolio diversification.
At the same time, NFTs are far from risk-free, either due to further price falls, the so-called laundry negotiation, in which seemingly genuine offers are made by small groups to create an illusion of high demand, or simple frauds.
“Scammers”
“While cryptography that enhances NFT art facilitates authentication of provenance, it’s still easy to be fooled by fakes if you’re a non-expert user who doesn’t know how to authenticate the work securely,” Wilmer said. of the University of Pittsburgh. . “Expect to see a lot of scammers taking advantage of this.”
While trading volumes and average prices are well below recent highs, other data shows that many NFTs continue to gain substantially by 2021. During the first quarter, the market value of 38 NFTs tracked by CoinMarketCap multiplied by eight times up to $ 22.5 billion.
Time will tell if the NFT boom is deflated or if volatility is part of a new market that is going through a period of price discovery. On the one hand, the pandemic and the subsequent blockades that have caused it have accelerated the latter process.
“The interest in building a person (and owning things) in the digital world has been springing up for years,” he said Berna Bershay, analyst at Empire Financial Research. “With so much time spent networking last year, the desire to own digital assets was probably dragged down for several years by the Covid-19 crisis.”
– With the assistance of Sunil Jagtiani