Headlines predicting the death of bitcoin are nothing new. Over the last decade, we have seen every imaginable permutation of why “bitcoin is dead,” yet the current crypto winter has brought very few of these dire proclamations.
This time it seems a little different. It is perhaps difficult to write such praise with bitcoin (btc) hovering around $28,000 and a spot bitcoin ETF on the horizon. It doesn’t look like ethereum is dead either.
But the blockchain industry and its commentators still need a corpse to poke around, and that’s what they’ve found with the putrid corpse that is the non-fungible token (nft) market.
Related: The Economy Is Booming, Which Means It Might Be Time to Start Buying bitcoin
NFTs are dead. Deceased. Lifeless. NFTs are the “Norwegian blue” of Monty Python’s Dead Parrot Sketch. And the grave dance has begun; To quote a recent Rolling Stone headline, “Your NFTs Are Actually, Finally, Totally Useless.”
Rolling Stone is right: most NFTs are completely useless.
However, that shouldn’t surprise anyone who has been in the cryptocurrency world for a few cycles. Most ICO tokens from the 2017 bull market crop were dead by winter 2018/19. Likewise, the countless DeFi protocol tokens following the DeFi summer of 2020.
Today, over 1.8 million tokens have an aggregate market capitalization of just over $1 trillion. But the 10 largest protocols and tokens account for more than 93% of the total.
Do the math. It’s a very, very long line of worthless zombie coins. The vast majority of all tokens die. So why should NFTs be any different?
The barrier to entry for creating an nft project in the hopes of striking it rich was (and still is) low. Anyone can, and apparently did, create an nft collection in a few minutes with just a few keystrokes.
Related: bitcoin ETF: A $600 Billion Inflection Point for crypto
So what happened when a flurry of trading activity and money flooded into this new corner of the cryptocurrency market in mid-2021? The free market responded exactly as it was supposed to: it provided supply. And supply ≠ quality, especially in this industry.
We’ve seen the same cycle over and over again, and it turns out this is the first true nft winter.
Celebrities have quietly deleted their nft avatars on Twitter. Jimmy Fallon isn’t monkeying around with Paris Hilton on late-night TV. Ashton Kutcher’s Stoner Cats has reached a settlement with the Securities and Exchange Commission (SEC). A collective sense of shame abounds.
nft trading volumes have plummeted, from around $1 billion per week in mid-2021 and early 2022, to less than $100 million today.
It’s gloomy. But, as I said in October 2021 about NFTs, “peaks and valleys are nothing new, what emerges from them is what’s worth paying attention to.”
For those curious and open-minded enough to look beyond the surface of the “NFTs are dead” generalization that prevails today, there are signs of life among the rubble.
In September, news emerged that PayPal filed a patent application around an nft purchasing and transferring system in March.
Pudgy Penguins continues to expand into physical toys, first selling on Amazon in March and recently expanding to 2,000 Walmart stores across the US (Disclaimer: I have a fat penguin jpeg).
Doodles has collaborated with casual footwear brand Crocs in a similar effort to merge physical and digital, with an equally similar collaboration between Gary Vee’s Veefriends and Reebok.
At a concert over the summer, Harry Styles fans were able to download an app with a self-custody digital wallet for future nft rewards. Meanwhile, Justin Bieber is collaborating with a blockchain music platform to turn a song into an nft with royalty streams for nft holders.
Major auction houses continue to bring mainstream artists into the nft world, Keith Haring with Christies, for example, and Sotheby’s partnering with Ledger to offer a co-branded Ledger Nano
If you keep looking, you will find more and more signs of life, because NFTs are not “dead.”
The fundamental technological primitive of what NFTs are and what they offer will not “die,” nor will the blockchain “die.” They will simply continue to evolve as weak hands, weak teams, scams, copycats, and fast money fade into history, another footnote to another crypto cycle.
As we move from this nft winter into a new season, let’s hope to see nft projects that are more sophisticated and commercially viable, enriching the ecosystem in new and meaningful ways.
Tama Church is the COO of Cumberland Labs, an early-stage Web3 incubator, and founder of Digitali, a community-driven nft Wiki that serves as a comprehensive database for nft collections.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
