Many collections containing the blockchain-based tokens known as NFTs (non-fungible tokens) now have a market capitalisation of close to zero, said a report published by the crypto gambling site dappGambl.
The platform looked at 73,257 NFT collections, which can range from images of zombified-monkeys to cute pixelated avatars and everything in between. However, dappGambl concluded that the “vast majority of NFTs are worthless” and that 69,795 of the collections it studied had a market cap of close to zero Ether (a top ten cryptocurrency).
“This statistic effectively means that 95% of people holding NFT collections are currently holding onto worthless investments. Having looked into those figures, we would estimate that 95% to include over 23 million people who’s investments are now worthless,” said dappGambl in its report.
The main appeal of NFTs was that, unlike cryptocurrencies such as Bitcoin and Ether, the tokens were uniquely original so the trader who bought one had a digital asset whose exclusive ownership could be proved. Many NFT makers predicted this would be a game changer for art, fan merchandise, music, gaming, and other fields. Tokens can be traded multiple times, for bids that can go into the millions of dollars.
(For top technology news of the day, subscribe to our tech newsletter Today’s Cache)
NFTs enjoyed a bull run in 2021, and one of the most expensive NFTs ever sold was a vividly coloured collage of around 5,000 images called ‘Everydays: The First 5000 Days’ by Beeple. It was sold for $69.3 million in 2021.
The NFT craze was not restricted to the crypto industry, as social media companies such as Meta tried to popularise the non-fungible tokens it called “digital collectibles” across its platforms while payment provider giant Visa also bought a “CryptoPunk” NFT for $150,000 in order to better understand the technology and its userbase. Hollywood celebrities have launched NFT collections of their own or promoted them publicly.
“This daunting reality should serve as a sobering check on the euphoria that has often surrounded the NFT space. Amid stories of digital art pieces selling for millions and overnight success stories, it is easy to overlook the fact that the market is fraught with pitfalls and potential losses,” said dappGambl in its report.
However, ultra popular NFT collections such as the ‘Bored Ape Yacht Club’ and ‘Mutant Ape Yacht Club’ – which revolve around stylised monkey heads – still boast of market caps worth over $100 million, according to CoinMarketCap.