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The last decade saw virtual currencies gain popularity all across the world and become a legal tender for a few companies. Moreover, leading global firms adopted cryptocurrencies as a mode of payment that acted as a cherry on top for the nascent crypto segment and blockchain technology.

Taking cue from the popularity of digital coins, tech entrepreneurs around the world began to introduce alternate blockchain-enabled products to stay aboard the hype train. Initially, fresh digital currencies came into being to rival popular Bitcoin and Etherium.

In addition, virtual tech investment options sprung up at a rapid pace as businesses rushed to exploit an area that had low competition. Within a short time, new products such as metaverse, virtual real estate, internet of things and non-fungible tokens (NFTs) were introduced.

NFT are cryptographic assets, similar to cryptocurrencies, are based on blockchain technology. They are stored in crypto wallets hence they were termed a “safe investment”.

While NFTs gained massive popularity over past few years and emerged a leading competitor to cryptocurrencies – they are largely dead today. In 2021, the market capitalisation of NFTs hit an all-time high of $3 trillion.

Today, it is down 99.8% to $5.04 billion.

Once called a successor to cryptocurrencies and next phase of blockchain-enabled technology, the worth of most NFTs is nil right now.

Marketplace suspends most NFT sales, citing ‘rampant’ fakes and plagiarism

When the trend of NFTs gripped the public, it offered to convert almost every digital asset including songs, paintings, artwork, social media posts, emails, pictures and avatars into it to be sold. Subsequently, tweets, social media posts, music and other digital assets were sold as NFTs.

NFTs were presented to the public as a collectable that could be showcased in “digital museums” to earn money. Subsequently, well known celebrities also purchased them to keep up with the hype.

The prime reason behind the plunge in popularity and market cap of NFTs in the cryptocurrency price rout. While competitors, digital currencies and NFTs complimented each other. In fact, NFTs are sold and valued in digital currencies.

The art market bounces back from its Covid-19 downturn

A crash in global cryptocurrencies shattered investor confidence in NFTs. As more and more people bade farewell to the cryptocurrency segment from 2021 to 2023, the NFT space saw fall in audience as well.

Furthermore, the lax progress on Meta’s promising Metaverse aided the doom in NFT market as well. The market capitalization of NFTs hit all-time high on the back of Meta Chairman Mark Zuckerberg’s announcement of Metaverse. Two years on, this new technology is no where near completion or launch. Lack of development in initial months following the announcement of Metaverse shattered the interest of tech-savvy public on NFTs and cryptocurrencies.

Moreover, people had been skeptical about NFTs from the beginning. Owing an asset for the purpose of collection and one that doesn’t exist physically raised doubts among the public from the beginning.

In addition, exorbitant prices of NFTs acted as a discouraging factor for people. Some NFTs were even priced at over $1 million which encouraged prospective investors to opt for a physical and more lucrative investment avenues.

Cryptoverse: NFT bubble gets that shrinking feeling

The hype around web3, a decentralised internet ecosystem, also lent support to the rally seen in NFT market. The nullification of this hype among the masses struck the NFT market and dented it.

Finally, the current buzz word in technology ecosystem is artificial intelligence and it has dampened the hype for all other tech products. People are jumping on the AI hype train and interest in blockchain, cryptocurrencies and NFTs has reduced considerably.

The world of technology evolves every few months and the introduction of any new technology also attracts temporary hype. In the case of NFTs, this temporary hype seems to have occupied a larger share of audience.

Collectors of digital NFTs see a ‘Wild West’ market worth the risk

The article does not necessarily reflect the opinion of Business Recorder or its owners

Hameed Iqbal

The writer is a freelance contributor

Comments

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Ash Chak Oct 17, 2023 03:18am
Iranian-born crypto entrepreneur Sina Estavi bought Twitter founder Jack Dorsey’s first-ever tweet as an NFT for $2.9 million in 2021. Currently, the top bid for the NFT is 1 ETH, or equivalent to $1,895. He had expected it to be worth $48 million by now.
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