ZoneBitcoin EditorialIf I had to choose an appropriate word to talk about NFTs today, I would use the words “awkward”, “embarrassing” or “troublesome”. Yes, that’s exactly the feeling I have right now, looking at the NFT market.
As much as we were enthusiastic about the craze for NFT dating from the summer of 2021, we might as well be nauseated seeing what it has become today.
As I write this article, the last NFT that has met with great success is that of Donald Trump, the former president of the USA. Yes, if you missed the news (and you're lucky), his inveterate businessman's mind did not miss the opportunity to get rich easily.
He created a collection of NFT cards bearing his image. So, does that surprise you? These cards of nameless narcissism give certain holders the privilege of participating in draws to win gifts. Thus, the lucky ones will be able, for example, to dine with the ex-president, win caps, be invited to events and other prizes of this type. Nothing new in the west...
En plein bear market, the sale of Donald Trump's cards is rather honorable. With an initial purchase price set at $100, some cards today sell for 6 ETH (around $7000). Others, rarer, cost up to 20 ETH (or $25,000) on the secondary market.
The 45,000 NFTs sold like hot cakes to the delight of Trump who thus collected a whopping $5 million. Card holders can now have fun buying and reselling cards in the hope that a Trump fan agrees to buy his card for more than he got it himself... With the system of the royalties inherent in each sale, the president could earn money in perpetuity, as long as his cards sell.
So this is what the NFT market looks like today...A speculative market which has nothing to envy of the French gaming industry where buyers are not looking for anything other than the ticket Winning NFT.
However, even if we want to describe the current period as one of decline, we must necessarily note the progress in the field. There are not only dark aspects in the (short) history of NFTs and let's see.
NFTs: The period of euphoria 2021-2022
NFTs had their heyday during the Covid-19 pandemic. Containment was clearly a factor in the success of online sales during this period. Stuck at home, people had no choice but to order everyday items online. NFTs have not escaped this movement. While the first NFTs were bought by a group of cryptocurrency enthusiasts, the machine very quickly got carried away.
Artistic institutions wanted to get involved (and take a piece of the pie, naturally). The mainstream media was talking about record NFT sales with undisguised ardor. The world of art embodied by Christie's got excited (and still gets excited) in front of digital works of art. The price of certain digital works exceeded that of the sketches of a Van Gogh or a Picasso. For example, the NFT work of the artist Beeple sold for 69 million dollars.
The art market then took off again and other industries rushed into the breach.
It quickly became the turn of the luxury industry, which was quick to see new distribution channels there. First there was Gucci, then Adidas, Puma, and now we no longer count the brands that have created NFTs. The goose that lays the golden eggs was all found; the market was in turmoil and buyers were rushing for the smallest NFT. Everyone thought they had found the winning golden ticket. This would lead them directly to the wheel of a Porsche… (We will return to the Porsche flop in the conclusion).
It didn't take long for stars and celebrities to jump into this lucrative new market. Failing to release new successful music, they found in NFTs a new way to talk about themselves. Paris Hilton or Justin Bieber made headlines after acquiring the famous NFTs of the “ Bored Ape Yacht Club". Rappers like Snoop Dogg created NFTs bearing their likenesses and bought virtual land in the metaverse and even gave virtual concerts…
In short, the craze for NFTs, in June 2021, was at its height.
The millionaire's quest
New NFT projects were emerging every day. Of the success stories each one crazier than the other continually came to feed this juicy new market. Children became millionaires overnight (literally) like the 14-year-old creator with Beluga NFTs. Graphic designers and digital artists who sought recognition became recognized (and profitable) artists by creating graphics of the greatest banality.
To top it all off, we were able to rejoice in the system of NFT royalties which offered a new source of funding for artists. We were proud to see so many projects donate funds to charitable causes. Better yet, we all stamped with joy when we saw that the donations (forUkraine among others) used NFTs for a good cause.
That was the euphoria of the beginning. Then... In the blink of an eye, everything started to crumble.
There, in 2023...We are just starting to regain our senses...In the end, you will see that it is a good thing.
The fall of the NFT market….
According to data from Chainalysis, since the second half of 2022, the excitement has faded. Buyers have deserted NFT marketplaces and fewer and fewer projects are being offered. Like a house of cards (the word is well chosen), the NFT ecosystem collapsed before our incredulous eyes.
This drop in trading volume began with the disastrous fall of cryptocurrency EARTH, which then marked the beginning of the bear market and an unprecedented series of bankruptcies of all kinds... 2022 year turned out to be a hangover year deep which endorsed dreams of quick fortunes. Investors are disappointed with cryptocurrencies and a fortiori of their NFTs. Goodbye dream of wealth, goodbye dream of glory.
In this context, the media are relaying the monstrous losses suffered by NFT holders. The latter realize that they have purchased digital works which are no longer worth more than a banal image in format Jpeg.
Similarly, some celebrities like Justin Bieber are then the target of mockery on the networks for having bought NFTs at exceptionally high prices. He bought for more than 1 million dollars a famous " Bored Ape Yacht Club"Today, he could resell it for $70,000, making a nice loss of more than 900,000 euros....
However, ordinary people can certainly be appalled by the magnitude of this potential loss, but they can also rejoice at the lesson learned. Optimism is part of the investor's DNA, you might say.
Indeed, today, it seems that the marketing strategies developed for sell NFTs are (finally) recognized. This will perhaps cleanse the NFT market of everything that prevents it from flourishing properly.
Celebrity deception
As we mentioned above, with NFT purchases, celebrities have gained a huge amount of visibility. And, that was the end goal of their sudden interests in digital art. This is true for a good number of them. Make no mistake. Remember that they also contributed to making NFTs known to a wider audience (and also, necessarily less informed).
—>Read the article: But why do stars buy NFTs (the real reason)?
Today, the masks are falling. Deceptions come to light. Some people have the courage to denounce certain unfair practices. For example, YouTubers like Logan Paul who took advantage of the general drunkenness to sell rotten NFT projects like "CryptoZoo" are denounced. Today, it is under the radar of some investigations like the one launched by the youtuber CofeeZilla.
That being said, Logan Paul does not risk being condemned by the courts, even if it turns out that it was a shameless scam. For what ? For the simple reason that he always told his community to only invest with knowledge of the facts. Yes, you know, the famous DYER (“do your own research”) which exonerates anyone who promotes a crypto project.
Understand that with this magic formula, if investors lose money, it is up to them to take responsibility. So Logan Paul and the others risk no more than a small loss of credibility.
Ghost communities interested in profit (and profit only)
Dance the criteria for investing in an NFT, there is above all one criterion that has a huge impact on the future price: it is the community. If in the first NFT projects, we could see an organic growth of the community, today, it is important to know that the members are fictitious: they are "bought".
Followers are accounts fake and/or members who signed up simply to receive "gifts". Unsurprisingly, most of them are not interested in the project itself. Therefore, this fictional community is only present during the "Mint". During this period, members will do what is called in the industry " shillings" . In the dictionary of people, it means over-promoting a product for personal gain.
Once the sale takes place... No one is there to talk about the project... Then, the community slowly disintegrates, resembling a ghost army of disillusioned followers.
Here, go see the most popular NFT projects… Go see what they’ve become. Most of the followers remain silent and have completely deserted the project…
L'social engagement is decisive in the future price of an NFT. A project with a strong community (and a good marketing strategy) has a greater chance of success than an interesting project without a community. Sellers can sublimate a shitcoin and make you believe that it is a masterpiece.
Rotten projects and broken promises
We could distinguish between NFTs created by artists and those created by entrepreneurs with a mercantile spirit. When we talk about the decline of NFTs, we echo this second category, of course.
For this type of NFT, people who want to invest do not do it for the love of art or technology. Clearly. Most see it as a formidable investment opportunity. Become a millionaire in just a few clicks. This is how many NFTs have been sold: the promise of getting rich. This is what attracted many beginner investors.
Even though some have gotten rich, it is certainly "luck" that they have to thank. The terrible truth is that there are no rules in this type of investment. It is total chaos when you try to analyze projects. Consider the best investment criteria and you will mess up. You are more likely to succeed if you follow your instinct: Your degenerate instinct.
However, this is not the worst story…I could tell you others. However, it is time to get to the heart of the problem. Let’s see, without further ado, the price manipulation techniques…
Market manipulation
This is perhaps the element that contributes the most to making the world of NFTs increasingly unhealthy. As in all crypto assets, there are what are called " whales ». These are investors who own large amounts of a given asset. In NFTs, this also exists.
Basically, these are investors who own several NFTs from the same collection. Due to their “weight”, they are able to manipulate the market. They can do it quantitatively and qualitatively. This is what makes the manipulation of the NFT market so powerful. I will briefly explain what it consists of.
👉 From a qualitative point of view, large NFT collectors are offered NFTs for free. Some are also paid to promote these NFTs. They don't mind accepting, believe me. Thus, they will create hype on projects simply for selfish enrichment objectives. Novices will follow their investments with their eyes closed. 😩 It creates value ex nihilo which is not sustainable.
👉 From a quantitative perspective, some whales will repurchase NFTs above the floor price to virtually increase the value of an asset. From the outside, it is believed that the project is gaining interest for a concrete reason. In reality, he is a whale who wants to deceive others and plays bluff. It is often the founders of the project who will carry out this type of transaction.
Between useful sabotage and necessary market renewal
There are many disappointed investors today. The hype is over, you understand. We can relate the sale of Porsche NFTs which turned out to be a real commercial flop. Companies are beginning to understand that the goose that lays the golden eggs is no longer laying eggs. (Read about it BFM article » Porsche’s failed NFT collection »). There are several reasons for this failure but it is mainly due to the fact that there is no longer demand for this type of product. This is also what explains the decline of P2P games also…
Now, investors know that the value of an NFT does not only depend on the brand that issues it. They no longer want to buy NFTs for the sake of buying NFTs.
Today, the criterion of utility is sought. By collecting digital images, even if they are certified by major brands, the investor no longer knows what to do with them...What is he doing with these NFTs today? Even the fashion of putting an NFT as an avatar guide on social networks is already over…
The NFT market appears to be in the maturity phase. Some are working on a new form of NFT like with the protocol Ordinals For example. After experiencing glory, chaos and decline, the market will gradually become structured and serve the best projects. That's not what's missing. Remember that NFTs can serve as a support for buying a house (RealT), represent diplomas and various legal documents. Again, there is no shortage of “good” use cases.
What is missing is education, knowledge and a touch of common sense.
Source:
- https://www.cnews.fr/vie-numerique/2022-01-17/wikipedia-ne-reconnait-pas-les-nft-comme-des-oeuvres-dart-1171908
- https://www.nytimes.com/2021/03/11/arts/design/nft-auction-christies-beeple.html
- https://www.dexerto.es/pokemon/el-juego-nft-pixelmon-inspirado-en-pokemon-sorprende-con-su-horrible-aspecto-1456378/
Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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