The crash of the NFT market

These days one does not hear many breathless reports of new NFTs (non-fungible tokens) being sold for huge amounts and being touted by celebrities. There is a reason for this. This site has examined the state of the NFT market and found that they have crashed in value with most of them now worth nothing.

The hype around NFTs peaked in the 2021/22 bull run that saw nearly $2.8 billion in monthly trading volume recorded in August 2021. From this, NFTs captured the collective imagination worldwide with multiple news reports of million-dollar deals for sales of certain NFT assets.

People were excited about this new type of online asset and something of a goldrush appeared to start. Fast forward to today… and the NFT market is starkly different.

Data from the Block reveals a weekly traded value of around $80 million in July 2023, just 3% of its peak back in August 2021.
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Using data provided by NFT Scan, we have compiled a comprehensive analysis of over 73 thousand NFT collections (73,257, to be exact) in order to identify key trends, assess the health of the market, determine the factors contributing to successful projects, and hopefully gain insights into the potential future trajectory of the NFT ecosystem.

The results were shocking, to say the least.

Of the 73,257 NFT collections we identified, an eye-watering 69,795 of them have a market cap of 0 Ether (ETH).

This statistic effectively means that 95% of people holding NFT collections are currently holding onto worthless investments. Having looked into those figures, we would estimate that 95% to include over 23 million people who’s investments are now worthless.

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The NFT racket

I was skeptical about cryptocurrency and was utterly baffled by the appeal of NFTs. The former seemed risky and the latter felt very much like a speculative bubble driven by hype in which the underlying entity being bought and sold had no intrinsic value. So I was not surprised by the collapse of various cryptocurrency endeavors like FTX and even less surprised by the recent lawsuit filed against Sotheby’s auction house, accusing them of fraud in inflating the value of the ugly Bored Ape BFT and using celebrities to hype it.
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Great moments in NFT investing

I have expressed my puzzlement with the idea of buying so-called NFTs (Non-Fungible Tokens) and have made several posts about the whole concept. And yet people are spending huge amounts of money on them. NFTs seem like collectibles except that while most collectibles are tangible objects with limited numbers of them, NFTs are digital constructs that can be easily reproduced by pretty much anyone. The value of an NFT seemed (to me at least) far more speculative than other forms of collectibles and thus liable to wild price fluctuations.

So it did not surprise me to read about someone who bought an NFT for $2.9 million in March 2021 but when he tried to resell it for $48 million yesterday, the highest offer he got was $6,800.
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NFTs are a playground for crooks and grifters

NFT’s (Non-Fungible Tokens) are the new rage, riding the wave of the fascination with blockchain and cryptocurrency, two other things that do not seem to deter people from getting on the bandwagon even though they may have just the haziest idea of what they are. Naturally this leads to crooks moving in, selling NFTs of items that do not even belong to them.

When Lois van Baarle, a Dutch artist, scoured the biggest NFT marketplace for her name late last year, she found more than 100 pieces of her art for sale. None of them had been put up by her.

Van Baarle is a popular digital artist, with millions of followers on social media. She’s one of a growing number of artists who have had online images of their art stolen, minted as unique digital assets on a blockchain, and offered up to trade in cryptocurrency on the NFT platform OpenSea.
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The NFT bubble keeps growing

I wrote a little while ago about the new thing called NFTs and my bafflement that anyone would buy one. But we are seeing them being hyped by celebrities and to my mind, it has all the hallmarks of a bubble, where something of little or no intrinsic value is talked up by famous people as a great new investment. Luke Savage points to a segment in which Paris Hilton and talk show host Jimmy Fallon give what seems like an informercial for NFTs, both having bought two slightly different versions of the same NFT featuring (I kid you not) a cartoon ape wearing dark glasses and a yachting cap.

Celebrities and social media influencers can’t shut up about them. From Serena Williams and Logan Paul to Matt Damon and William Shatner, the NFT craze quickly transcended generations and swept up an eclectic cavalcade of the rich and famous in its wake. (Jimmy Fallon, incidentally, spent more than $200,000 on the Bored Ape NFT that now graces his Twitter profile.) Beeple, name-dropped by Paris Hilton in her Fallon segment, fetched more than $3.5 million in an NFT auction.

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NFTs (not) explained

In a recent post, I tried to explain what NFTs (Non-Fungible Tokens) were. This is another of crazes that arise (and sometimes disappear) so rapidly in the internet age. Reader David sent me a link to this (non) explanation by Julie Nolke that I found pretty funny. I wonder how many people try to bluff their way into looking like they know what they are talking about when it comes to NFTs.

I was impressed with how she played both roles and then spliced the footage. It is not easy to do reaction shots that look genuine. She must be a professional actor that I have not heard of before.

What NFTs are and how they work

I have been casually following the story about non-fungible tokens (NFTs) but had little idea what they were other than that an NFT was some form of digital work that one could own. The radio program On the Media had an entire show where they talked about it and that rekindled my interest and gave me some idea about this new world of speculation.

Host Brooke Gladstone discussed NFTs with Anil Dash, one of the people who in 2014 developed the idea that led to NFTs. Dash says that he and an artist friend Kevin McCoy did this as a blockchain-backed means for artists to assert ownership over their digital work. Dash now says that that initial goal of creating ownership rights for artists seems to be in danger of falling by the wayside, to be replaced by the kinds of speculative behavior that we have seen before with bubbles.
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Are we living in an Age of Unreason?

I have been thinking about how future historians will characterize the period through which we are living and the label ‘The Age of Unreason’ popped into my mind as a suitable one (at least for the US). The reason is that I marvel at the kinds of things that people currently believe and are doing that seem so detached from reality and untethered to reason. Here is a short list of things that immediately came to mind and I am sure that there are others.

Anti-vax: Vaccines are some of the greatest inventions in medicine, saving countless lives all over the world. The rapid development of the vaccines for covid-19 was a stupendous achievement. And yet, we have people refusing to take it because they think that Covid-19 was an intentionally planned outbreak and part of some plot and are willing to trust completely untested and sometimes dangerous alternatives. Some of these people are even giving up on Trump because he does not buy in to all their claims.
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The myth of the rich genius

I have written many times before about the strange tendency of people to ascribe qualities of cleverness and depth, even genius, to very wealthy people. This makes the media pay undue attention to the utterances of such people, even on topics that they know nothing about. The examples are too numerous to list. The deference given to them. by the media and the constant presence of acolytes who feed their egos in this way, seem to result in them actually buying into the myth themselves.

Calder McHugh writes about this tendency but be warned that his essay contains spoilers for Glass Onion. The following passage is free from them.

In reality, rich people are no smarter than everyone else; their plans and even downfalls are simple. Peter Thiel is funding artists in New York City and politicians in Arizona because he thinks they’ll influence culture and politics toward his vision of a new right. Neither is going well for him. FTX founder and large political donor Sam Bankman-Fried at some point bought the boy-genius myth that he was selling to everyone else, lost a lot of money and landed himself in court. Musk made an offer for Twitter because he was addicted to the platform and thought it would be good to have an even bigger megaphone and now, his companies and his own brand seem to be in freefall. Donald Trump ran for president so that he could watch himself on cable television more, stumbled backwards into the job, tweeted through it and is now hawking NFTs while he tries to dodge prosecutions. Ye, better known as Kanye West, embraced shocking behavior until it lost him lucrative business deals and, reportedly, billionaire status.

At some point, all of these men accrued enough capital that they found themselves surrounded by people who fanned their egos in the hopes of a kickback. But as they settled into these carefully constructed worlds that were built to reinforce their supposed genius, any creative spark or understanding of business or American culture that helped them in their journey to the top is bound to dim.

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Is 2024 going to be a rerun of 2016?

In the US, there is no such thing as an election season. General elections nominally occur every even year but that is only mostly true for races for national office. State and local elections often occur in odd years as well. Campaigning for the next election begins immediately after one election has ended but that is only open campaigning. Preparations for the subsequent election are usually being laid before any election ends.

So it is unsurprising that there are already many discussions about the 2024 presidential election, even though the predictions that are made just after a mid-term election are usually completely off the mark as to who will actually make it to the finish line two years later. But that does not stop the punditocracy from engaging in endless speculations. This time though, there is actually something concrete to talk about because Donald Trump has already announced that he will run and that has to be taken seriously because he did win in 2016.
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