What were NFTs? An understandable internet fad, and the next one is just around the corner

With last week’s report that 95% of them are now worthless, I think it’s just about safe to say that the NFT moment is finally over. Phew. There really was a six-week period at the start of last year when I thought I was going to have to attach my digital soul for ever to a really bad picture of a monkey with a tentacle coming out of its nose and mouth. I kept practising saying, “No, it’s actually quite cool! It’s good. And it only cost me about as much as a car!” in the mirror a lot, with a ghoulish rictus grin.

NFT, as was probably explained to you hundreds of times in the period from January 2021 to about May 2022, stands for “non-fungible token”, and essentially means that you can buy a code that says you own a digital asset, which is then stored on the blockchain, a sort of centralised public transaction ledger. There was a lot of hyped future uses for this technology, but for the most part it was used to buy jpegs of monkeys, or maybe sometimes a lion.

Before the boom, there were whispers that the NFT community would transform the way people viewed and bought and thought about art and collectibles, and there were some technological advancements pushed during that time that will have a positive impact on whatever the next iteration of the internet will be. But what the short, sharp NFT hype cycle will mainly be remembered for will be: insanely bad art, hyper-inflated prices, digital hucksterism, $17bn (£14bn) of sales in 2021 and a 90% sales drop in 2022, John Terry, and that one mate everyone has who spent £10,000 on one and now goes really quiet whenever the subject of NFTs comes up in conversation.

A collage, Everydays: The First 5000 Days, by Beeple, which sold for $69m at auction on 10 March, 2021.

So why did that NFT moment happen? I have some guesses. A few things occurred during the pandemic that set the groundwork for it – a boom in cryptocurrency prices reminded everyone how rich they would have been had they just bought a few dollars worth of bitcoin in 2011; the GameStop “short squeeze” in January 2021 genuinely did function as a get-rich-quick scheme for those who were savvy enough to the early rumblings of it. People were too online because they were too inside, they were watching the internet print money for people who were on the ground floor of various crypto and crypto-adjacent schemes, and, crucially, they were isolated from their real-life friendships because of the aforementioned “too inside” thing.

I think when trying to understand what really happened with NFTs and trying to look back with something at least approaching empathy at a moment when a lot of people lost a lot of money it’s hard to discount the idea that isolation could have played a role in it. Every NFT project promised something beyond just a really, really just terrible, ugly picture of a monkey in a spacesuit: they all offered some glittering future use for every NFT you bought, that you’d be able to transfer them into the metaverse or into your favourite video game, that they’d become the digital calling card for which you’d be known, that they’d build an island community just for people with crypto, and that would be fun, somehow.

And almost every NFT purchase came with access to a Discord community full of other people with the same bad aesthetic taste as you, and that was appealing: not only can you buy this cool picture, use it as your profile picture, then sell it for massive profit years down the line, but you also get a load of new friends as well. Over the past few years, online community spaces have descended to a state in which they are, well, not very communal: Twitter is just bad-faith readings and unrelated trending topics, Facebook is just neighbours getting angry about where the bins were left and a cousin you forgot you had getting engaged. Having a space online to actually go and talk to people, even if you have to pose as an ape wearing 3D glasses to do so, was a huge lure.

Add the thrill of people in the space getting insanely wealthy in a couple of clicks – a sentence that haunts me like an ancient curse: “Beeple sold an NFT for $69 million” – and you can see how people got suckered. NFTs as we know them might be over for now, but the foundational reasons for hyped-up NFT trading – social isolation, too-online loneliness, the desire for both digital wealth and a better internet – are still lingering over all corners of the internet. The question isn’t: what was the deal with that six-month period when everyone went wild for NFTs?. The questions now are: what will the next NFT be? When will it drop? How much money will normal people end up spending on it? And also can it please, please just look a little bit less crap than last time, please?

  • Joel Golby is a writer for the Guardian and Vice, and the author of Brilliant, Brilliant, Brilliant Brilliant Brilliant

Oh hi there 👋
It’s nice to meet you.

Sign up to receive awesome content in your inbox, everyday.

We don’t spam! Read our [link]privacy policy[/link] for more info.