Critics of non-fungible tokens say they are symptomatic of an unsustainable digital gold rush. The global market for non-fungible tokens reached $ 22 billion (£ 16,5 billion) this year, while the craze for collections like Bored Ape Yacht Club and Matrix avatars has turned digital imagery into important investment assets.
NFTs have drawn warnings from veteran investors similar to those issued about cryptocurrencies: that they are symptomatic of an unsustainable digital gold rush. NFTs bestow ownership of a unique digital object - be it a virtual piece of art by Damien Hirst or a jacket to wear in the metaverse - to someone, even if that object can be easily copied. Ownership is recorded on a digital and decentralized ledger known as a blockchain.
69,3 million dollars for an NFT!
Data from DappRadar, a company that tracks sales, showed that NFT trades hit $ 22 billion in 2021 and that the floor market cap of the first 100 NFTs ever issued - a measure of their collective value - was of $ 16,7 billion.
The highest-value NFT sale this year was The First 5000 Days, a digital collage by Beeple, the name used by American digital artist Mike Winkelmann, which sold at auction for $ 69,3 million in March. , making it one of the most valuable pieces of art ever sold by a living artist. Another Beeple NFT, Human One, was sold for $ 29 million.
Other multi-million dollar NFTs include the Bored Ape Yacht Club, a collection of 10.000 NFTs represented as cartoon primates that are used as profile photos on their owners' social media accounts and which raised $ 26,2 million. BAYC celebrity owners include talk show host Jimmy Fallon and rapper Post Malone.
DappRadar said a key factor in increasing NFT trade has been the fact that mainstream companies have entered the fray.
Popular brands in this craze too
Coca-Cola raised more than $ 575.000 from selling items like a custom jacket to wear in the metaverse world of Decentraland, while Matrix star Keanu Reeves failed to keep a straight face when told by an interviewer that the his Matrix movie series now had NFTs attached to it.
“Hollywood, sports celebrities and big brands like Coca-Cola, Gucci, Nike and Adidas have entered the space, providing NFTs with a new level of exclusivity. The attractiveness of these famous names has profoundly influenced NFTs and the blockchain industry in general, ”said DappRadar.
Football fans have been targeted with NFT marketing - even with NFTs backed by John Terry and Wayne Rooney - and have been warned by experts that they are risky, unregulated assets in the UK. It will take years for NFTs to behave like a conventional marketplace, said George Monaghan, an analyst at research firm GlobalData.
“NFT activity in 2021 was hectic. This will ease over the next few years and NFTs will stabilize into something more akin to today's modern art market, where the consensus on value is more solid. That said, it will take years for any cryptocurrency market, let alone NFTs, to look like something conventional markets would call stable. I wouldn't throw your rainy day fund into any NFT meme just yet, ”he said.
