Twenty three million investors now own NFTs of no use or value.
So… NFTs are pretty much dead. New research has revealed why you probably haven’t seen anyone trying to flog pictures of cartoon apes on the internet recently – because NFTs, or non-fungible tokens – are now pretty much worthless.
NFTs started to gain mainstream traction in 2017, but really started taking off in 2021-2022. Justin Bieber dropped $1.3 million (£1.02m) in January 2022 for a Bored Ape Yacht Club artwork, that was reportedly worth less than $60,000 by July 2023.
DappGambl, a community of experts in finance and blockchain technology, have now released a report claiming the nail is now in the NFT coffin, fittingly titled “Dead NFTs: The Evolving Landscape of the NFT Market”.
Having analysed 73,257 NFT collections, the authors found that 69,795 have a market cap of zero Ether (ETH), the second most-popular cryptocurrency behind Bitcoin. Rolling Stone reported, in practical terms, that meant 95% of NFTs wouldn’t fetch a single penny today. Amid a frenzied market in 2021, the assets were worth $17 billion.
The dappGambl study estimates that some 23 million investors own tokens of no use or value. The report further highlighted that 21% of the collections could claim full ownership, meaning around four out of every five collections remains unsold.
“Projects that lack clear use cases, compelling narratives, or genuine artistic value are finding it increasingly difficult to attract attention and sales,” the report said.
While at the height of the NFT spectacle, some works sold for the equivalent of millions of dollars in crypto, almost none are so exorbitantly priced today. Less than 1% are listed at more than $6,000, and the bulk of the most expensive collections are priced between $5 and $100.
Almost a fifth of the “top” collections have a floor price of zero. Even among the more expensive NFTs, the report notes, such prices may be set “without any bearing on tangible, real demand” – so, they may just reflect the wishful thinking of investors.
But it isn’t all bad news in the NFT market. The report noted that while the boom of 2021-2022 might not return, the assets may evolve to avoid becoming universally worthless.
While NFTs looked to, initially, be revolutionising the art market, they were controversial due to their environmental impact. NFTs are minted on the blockchain, a process that requires energy, and bought and sold in marketplaces that run on cryptocurrencies “mined” with computer rigs that have a significant carbon footprint, Rolling Stone explained.
Minting tokens alone carries a cost. The “Dead NFTs” report observes that the nearly 200,000 NFT collections “with no apparent owners or market share” identified by the study caused carbon emissions equivalent to the annual output from 2,048 houses, or 3,531 cars.