A lot of people don’t understand that NFT adoption ≠ trading, the same way selling a single NFT for a few million ≠ a rise in adoption.
This Cryptopunk Hoodie Ape sold for $4.3 million this week but it signals that NFTs are dying, not the opposite.
I mean, it can’t be just a coincidence that within 48 hours of an analyst report about trading volumes falling through the floor that this trade took place, right?
Trading volumes in nonfungible tokens — digital art and collectables recorded on blockchains — have tumbled 97% from a record high in January this year. They slid to just $466 million in September from $17 billion at the start of 2022, according to data from Dune Analytics. The fading NFT mania is part of a wider, $2 trillion wipeout in the crypto sector as rapidly tightening monetary policy starves speculative assets of investment flows.
And this is the big change in web3 that’s coming. The huge 90+% drop in NFT trading from the start of the year to now shows that the quick and dirty speculation is over.
Those huge single trade values are attempts to raise the floor for projects that have no further interest to the market or to the original degens. They’re changing hands between inner circles to wash money under a bear market to keep the home fires burning and get their money out.
And even if fewer people are making profits off of NFTs, users continue to see major hacks of their accounts. Jason Falovitch, a former sports manager turned crypto shill who peddles NFT projects on behalf of Mark Cuban, said he had four NFTs stolen from his wallet Sunday, with the hacker apparently making a $150,000 profit. Falovitch later tweeted that over $1 million had been hacked in ETH and NFTs.
Those first-gen NFTs are dead, they’re already being slain by their creators letting third parties trample all over the IP rights they conferred to the owners at the start.
They’re already being overtaken by the new generation of NFTs that are tied to existing web2 business models like Starbucks that hold no upfront or speculative value for investors but retain value for the brands and their customers.
And it’ll be the same for play-to-earn type tokenomics or virtual land purchases in the metaverse too. Worthless.
What’s changing isn’t anything to do with “utility” in the way you think. It’s the owner who is now defining the utility they want and the value they perceive from NFTs not how creators intended.
Future NFTs may well be defined by the community first before release, not after the fact or following the now ubiquitous and shallow “whitepaper”.
NFTs are dead. Long live NFTs.
This article was first published here.