Source: Sipa Asia / Shutterstock
Source: Sipa Asia / Shutterstock
Prices for digital collectibles such as art and sports memorabilia are falling, prompting a return to whether the emerging market for so-called non-fungal signs is more than a fleeting mania.
Average prices for NFTs – essentially tradable digital certificates that use blockchain technology to prove ownership and origin of online assets – have dropped to around $ 1400 by almost 70%, according to a February high. Nonfungible.com, which monitors a variety of NFT markets.
An outburst of interest in NFTs peaked last month when a digital artwork from Beeple sold for a staggering price $ 69.3 million. For some, the amount has shown that the NFTs are in the grip of the surplus of investors in a world full of stimulus and destined to fizel. Others studying the technology argue that the use of blockchain to create scarcity for digital collectibles is a lasting innovation rather than a price craze.
“It does not make sense to characterize a concept as a financial bubble,” he said. Chris Wilmer, an academic from the University of Pittsburgh who co-edited a blockchain research journal. ” NFTs’ are no longer in a bubble as’ cryptocurrency ‘is a bubble. There will be mania and irrational exuberance, but the cryptocurrency is clearly here to stay with us for the long term, and NFTs probably are too. ‘
Stabbed
The NFT boom soared as prices cooled from a peak in February
Source: Nonfungible.com
Blockchain-based digital asset sales were already underway in 2018, when 10 collectors $ 1 million paid for a digital picture of a rose. Today, tweets, baseball beats and even comic digital characters are also traded as NFTs.
Read more: Crypto Investor moves to Picasso afterwards $ 69.3 million NFT Mej
Read more: Digital Art Mania Declines After Month of Sales
Companies want to expand applications of the technology. While digital art is “frothy,” music and film can provide viable NFT ventures, said Kathleen Breitman, co-founder of blockchain platform Tezos. There are even questions about loans against NFTs, she said.
Researchers also started to see if NFTs have a low correlation with other investments, including cryptocurrencies like Bitcoin, suggesting that it has a potential, if very controversial, role in diversifying portfolios.
At the same time, NFTs are far from risk-free, either due to further price declines, so-called laundry trade – where offers that seem genuine are actually done by small groups to create the illusion of high demand or common fraud.
‘Scammers’
“Although the cryptography that facilitates NFT art makes it easy to verify origin, it’s still easy to be misled by counterfeits if you’re a non-expert user who does not know how to verify the artworks themselves securely. , “said Wilmer, University of Pittsburgh. . “Expect many scammers to take advantage of this.”
Although trading volumes and average prices are much lower than recent peaks, other data show that many NFTs still have significant gains for 2021. In the first quarter, the market value of 38 NFTs tracked by CoinMarketCap more than quadrupled to $ 22.5 billion.
Time will tell whether the NFT boom is slowing, and whether volatility is part of a new market going through a period of price development. In one respect, the pandemic and subsequent closures accelerated the latter process.
“The interest in building a persona – and owning things – in the digital world has been bubbling up for years,” he said. Berna Bershay, an analyst at Empire Financial Research. “With so much time spent online over the past year, the desire to own digital assets has probably been dragged forward by the Covid-19 crisis a few years ahead.”
– Assisted by Sunil Jagtiani