The tokens before have taken the art world earlier this year. NFT is a type of digital asset designed to have anyone who has unique virtual elements, such as photos, videos and sports commerce cards.
In March, graphic designer Beeple, based in South Carolina, sold NFT for $ 69 million in Christie’s auction. Twitter CEO, Jack Dorsey sold the first tweet for a stunning $ 2.9 million later that month. More recently, a rare digital avatar known as a cryptographic punk sold for more than $ 11.7 million at Sotheby’s. NFT sales have reached $ 2 billion in the first trimester of this year as per a website that tracks the market. However, the new data indicate that the exaggeration of NFT is fading. A downward trend has been noticed with sales dropping from the record 7 day peak of $ 176 million in May to a mere $ 8.7 million in June, similar to how they were at the start of this year.
At the same time, the prices of the main NFTs appear to be declining. CryptoPunks is one of the most popular NFT projects, dropping from a weekly average of $ 99,720 in early May to $ 50,840 in early June. In a similar span of time, the median price of the SuperRare digital artwork fell from a record $ 31,778 to $ 5,342.
According to Gauthier Zuppinger, COO of Nonfungible, one of the main reasons for the sharp decline in the NFT market is the sudden rise and fall in sales of a new crypto collectible called MeeBits made by the creator of CryptoPunks.
“The problem is that every time you notice a rapid increase in any trend, you will see a relative decrease, which basically represents the stability of the market,” he told CNBC.
Geoff Osler, CEO and co-founder of NFT application S! NG stated that the craze for digital collectibles may have been driven by the repressed demand for the wealth accumulated by rising cryptocurrency prices. With the downturn of the cryptocurrency market, the market now seems to be calming down.
Bitcoin has fallen from an all-time high of nearly $65,000 in April to just over $39,000 on Monday.
What’s next for NFT?
Proponents of NFT do not think that the recent slowdown is the end of the road for the market.
High-priced NFTs sell for millions of dollars. This is a clear sign that the market sees them as speculative assets. And, by definition, speculative asset markets are unstable and easy to dry up. The biggest problem with NFTs is their long-term value, which we think may be important. As augmented reality and virtual reality technologies mature, ordinary people will spend more and more time in virtual environments and therefore will also spend money. This is something that Nadya Ivanova, chief operating officer of L`Atelier, a research company under BNP Paribas believes.
For years, people have been talking about the take-off of virtual reality and augmented reality technology in the technology industry, and companies from Facebook to Microsoft have made big bets in this area. But the technology has not been widely adopted.
Despite this, some people in the encryption field still believe that NFTs can play a role in the development of immersive virtual worlds.
According to S!NG’s Osler, we can hear more about another potential use of NFT in music in the coming months. For example, artists such as Kings of Leon and Steve Aoki have plunged themselves into the NFT frenzy.
“We have only seen the tiniest part of where this is going,” Osler told CNBC. “Cryptocurrency is here to stay — and NFTs mean there is now something to buy. It’s the other side of the equation. And this is going to go a long way past digital art. We think music is next.”
However, the NFT phenomenon still has some problems to be solved before it can be compared with other common methods of original content ownership. Copyright is very important. Many artists and content creators complain that their work has been stolen and sold online as NFTs.
Osler said it’s important that legal protections are added “directly into the NFTs themselves,” and that consumers “have legal recourse if something goes wrong.”
Zuppinger predicts that there will be more and more promising projects in the coming months and years.
“We are reached out every day by promising projects, large companies, banking groups all around the world that are gradually entering the NFT space, so we’re pretty confident that the NFT space is not ‘dead’,” he told CNBC.