95 per cent of NFTs are “dead”, new report reveals
Only a decade on from the creation of the first-ever non-fungible token back in 2014, a new report provides a glimpse at how far the market for NFTs has fallen in recent years. According to the study, 95 per cent of NFTs are, at this point, considered “dead”. In other words, their relevance and monetary value has plummeted rapidly, with owners experiencing a 44.5 per cent loss on their initial investment, on average.
Although NFTs have been around since the mid-2010s, their relevance exploded during the covid pandemic, particularly during 2020 and 2021. Thanks to the emergence of specific NFT projects like Bored Ape Yacht Club, the digital tokens became a source of fascination for many online communities, and owning an NFT became a strange kind of status symbol for internet users.
In general, purchasing NFTs was seen as an investment, akin to purchasing a painting or a classic car, but the new report from NFTevening suggests their days are over. However, in both of those aforementioned cases, investors have a physical (or fungible) item to represent their investments. Conversely, in the case of NFTs, the only reward users got for investing millions of dollars was a hastily thrown-together cartoon of a monkey, which they could use as a profile picture and hope that nobody else on the internet downloaded that same image.
Expectedly, therefore, the NFT craze did not last very long. During the start of 2021, thanks largely to the endorsement of various high-profile celebrities, NFTs were raking in millions of dollars, and the market was valued at $250 million. By 2022, however, the value of NFTs had plummeted, as had their relevance in the art world. Now, as supported by this recent NFTevening report, the vast majority of NFTs are virtually worthless.
Examining 5000 NFT collections and five million transactions via data infrastructure NFTScan, the report does note that some NFT collections are still profitable. For instance, it claims that owners of the Azuki collection of NFTs – based around anime characters – can still expect to see a not insignificant return on their investments. However, those who invested in lower-profile tokens, such as Pudgy Penguins – as the name implies, cartoons of chubby penguins – have suffered up to a 97 per cent loss on their initial investments.
Ultimately, the report seems to confirm what most internet users have known for a while: NFTs were a flash-in-the-pan phenomenon that got out of hand and then died out as quickly as it was introduced. Concluding their report, NFTevening wrote, “The data paints a clear picture: the NFT market, previously praised as the future of digital ownership and investment, is encountering significant difficulties.”
Continuing, the damning report shared, “The high unprofitability rate among holders, the stark contrast between successful and failing collections, and the short lifespan of NFTs all suggest that the market may not be the golden goose many had hoped for.”
What exactly is an NFT?
An NFT, or ‘non-fungible token’, is essentially a digital asset that you buy the unique rights to. For instance, an NFT might be a digital artwork, and if you purchase it, you own that artwork in the same way that you would own a physical painting – except you cannot hang a digital NFT on your wall.
These digital assets are recorded on what is called a ‘blockchain’, which, put simply, is a database of digital transactions. During the early days of NFTs, numerous artists started selling digital renderings of their work. However, these were soon overshadowed by the prevalence of NFTs like Bored Apes.
Contrary to what many might assume, NFTs, as an art form, are incredibly damaging to the environment. The creation, sale, and ownership of NFTs requires a colossal amount of energy, which then has real-world effects on greenhouse gases and climate change.
