NFTs Almost Completely Worthless, Crypto Researchers Find – Rolling Stone

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A team of researchers have crunched the num­bers to explain why you don’t see peo­ple hawk­ing ugly car­toon apes on the inter­net as much any­more: NFTs, or non-fun­gi­ble tokens, once vaunt­ed as a rev­o­lu­tion in cryp­to and dig­i­tal art, are large­ly worthless.

Dead NFTs: The Evolv­ing Land­scape of the NFT Mar­ket” is a new report from dappGam­bl, a com­mu­ni­ty of experts in finance and blockchain tech­nol­o­gy. Upon analy­sis of 73,257 NFT col­lec­tions, the authors found that 69,795 have a mar­ket cap of zero Ether (ETH), the sec­ond most-pop­u­lar cryp­tocur­ren­cy behind Bit­coin. In prac­ti­cal terms, that means 95 per­cent of NFTs wouldn’t fetch a pen­ny today — a spec­tac­u­lar crash for assets that reached a trad­ing vol­ume of $17 bil­lion amid a fren­zied bull mar­ket in 2021. The study esti­mates that some 23 mil­lion investors own these tokens of no prac­ti­cal use or value.

What’s more, sup­ply vast­ly out­stripped demand for NFTs. Just 21 per­cent of the col­lec­tions includ­ed in the study can claim full own­er­ship, mean­ing around four out of every five col­lec­tions remains unsold. With buy­ers becom­ing more dis­cern­ing, the report notes, “projects that lack clear use cas­es, com­pelling nar­ra­tives, or gen­uine artis­tic val­ue are find­ing it increas­ing­ly dif­fi­cult to attract atten­tion and sales.”

And, while head­lines dur­ing the hey­day of NFT spec­u­la­tion focused on indi­vid­ual pieces that sold for the equiv­a­lent of mil­lions of dol­lars in cryp­to, almost none are so exor­bi­tant­ly priced today. Less than one per­cent are list­ed at more than $6,000, and the bulk of the most expen­sive col­lec­tions are priced between $5 and $100. Almost a fifth of the “top” col­lec­tions have a floor price of zero. Even among the more expen­sive NFTs, the report notes, such prices may be set “with­out any bear­ing on tan­gi­ble, real demand,” reflect­ing wish­ful think­ing from sell­ers and poten­tial­ly dis­tort­ing investors’ view of an NFT’s mea­ger inher­ent value.

The dappGam­bl researchers con­clude that while we may nev­er see an NFT boom like the one in 2021–2022, the assets may evolve in a way to sur­vive the wipe­out. For exam­ple, they could be giv­en a spe­cif­ic func­tion, becom­ing a pass for spe­cial event access or a vir­tu­al item to be pur­chased and trad­ed in video games. 

This, how­ev­er, would not address per­haps the great­est draw­back of NFTs, which became a major con­tro­ver­sy as they peaked in pop­u­lar­i­ty: their envi­ron­men­tal impact. Non-fun­gi­ble tokens are mint­ed on the blockchain, a process that requires ener­gy, and bought and sold in mar­ket­places that run on cryp­tocur­ren­cies “mined” with com­put­er rigs that have a sig­nif­i­cant car­bon foot­print. But mint­ing tokens alone car­ries a cost. The “Dead NFTs” report observes that the near­ly 200,000 NFT col­lec­tions “with no appar­ent own­ers or mar­ket share” iden­ti­fied by the study caused car­bon emis­sions equiv­a­lent to the annu­al out­put from 2,048 hous­es, or 3,531 cars.

Of course, enthu­si­asts didn’t wor­ry too much about that when NFTs were a hot com­mod­i­ty. And if they ever make a mod­est come­back, cli­mate con­cerns will like­ly be brushed aside again. Can’t let some­thing like that get in the way of the next hype cycle. 


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