The decline in non-fungible token sales that began in early May appears to continue into June.
Finance Magnates previously reported that the one-week period around the peak of the NFT market in early May saw a transaction volume of $ 170 million, according to data from NonFungible.com. By the end of the month, that number had collapsed to just $ 19.4 million in NFT sales, a decrease of about 90%.
The decline has continued, according to a new report from CNBC. On June 15, the average seven-day NFT transaction volume had dropped to $ 8.7 million. Compared to the market high at the beginning of May, the new number means a decline of almost 95 percent.
Is this the end of the non-fungible tokens?
The Boom and Bankruptcy of Non-Fungible Tokens in 2021: A Brief History
While this isn’t the end of NFTs, it certainly is the end of an era. In the tailwind of the largest crypto bull market in history, non-fungible tokens caused a sensation when they entered the mainstream in March 2021. At this point, NFTs had been around for several years.
However, they had never before so excited the public imagination. Investors and speculators saw a new opportunity to make big profits in a rather novel financial market; Artists and creators saw a new way to monetize their work in the digital world.
For some, the opportunity was worth it – big time. Graphic designer Mike Winkelmann, also known as “Beeple”, sold an NFT at a Christie’s auction in March for a record $ 69 million. Around the same time, Twitter CEO Jack Dorsey sold a tokenized version of his first tweet for $ 2.9 million that month. Grimes, Eminem, 3LAU, Lindsay Lohan and many other celebrities also benefited from the trend.
It didn’t take long, however, for the cracks to show up in the walls of the NFT room. Critics of non-fungible tokens criticized the minting practice and pointed out the possibility of a strong carbon footprint. Many minor creators who first entered the room quickly discovered that someone else had already stolen and tokened their work, much to the chagrin of the collectors who bought the fraudulent tokens.
Additionally, reports of non-fungible tokens “disappearing” made headlines when questions about what it really meant to own a non-fungible token went unanswered. Because the material an NFT is linked to is not stored in a Web 3 environment, it suffers from the same problems as any centralized media: If an NFT linked photo disappears from the web, well, bad luck.
Now that the hype is over, what’s next?
At first, the criticism of non-fungible tokens didn’t seem to affect the room much. However, when the cryptocurrency markets were hit by bearish forces in mid-May, the markets for non-fungible tokens were decimated. Analysts operating outside the cryptocurrency space have written off the whole saga as just another crypto fad – novel, exciting, and perhaps interesting, but essentially dull and hype-driven.
However, Gauthier Zuppinger, Chief Operating Officer of Nonfungible, told CNBC that NFT market moves over the past few weeks have been intimately linked: “The thing is, every time you see such a rapid surge in every trend, you become one see relative decline, which essentially represents market stabilization, ”he told CNBC.
Indeed, data from Nonfungible.com shows that after that 95% decline from the NFT market peak in early May, NFT sales are essentially continuing the slow and steady growth trend seen in recent years.
“High-profile NFTs that have sold for millions of dollars were a sure sign that the market was treating them as speculative assets,” said Nadya Ivanova, L’Atelier’s chief operating officer, speaking to CNBC. “And by definition, speculative asset markets are unstable and can dry up.”
“The bigger question for NFTs is their long-term value, which we think is likely to be significant,” she continued.
In other words, now that the hype is over, non-fungible tokens can continue on their path of technological discovery.
New CFDs now available for SuperForex customersGo to article >>
NFTs in Virtual Reality and Beyond
While the best-known use cases of non-fungible token technology surround the concepts of digital authenticity and ownership on the Internet as we know it, some innovators are exploring an entirely new environment for NFTs: virtual reality.
Forbes recently reported that Space Force has partnered with digital artist firms WorldwideXR and VueXR to release their own NFTs with augmented reality capabilities. According to the report, the NFTs are accessible to their owners through the VueXR app, which is available for both iOS and Android.
“As augmented and virtual reality technology matures, normal people will spend more and more of their time – and therefore their money – in virtual environments,” Nadya Ivanova told CNBC.
Non-fungible tokens have already caused a sensation in the gaming world as a technology that could make decentralized ownership of in-game assets a reality. However, as gaming increasingly moves towards virtual reality, NFTs could take digital ownership to the next level.
“World builders in VR are looking for ways to make world building much more profitable, but there are few companies willing to spend money on a virtual world,” said Dale Deacon, an expert in developing immersive storytelling in VR & AR. He spoke to VRScout.
NFTs could provide a path to real monetization in virtual economies. “Monetizing the job of a VR world builder will be part of the monetization of the role of a world builder.”
Now that the hype is being washed out of the non-fungible token space, it is possible for VR innovators to investigate their use cases more seriously. “I’m interested in AR and VR rooms as NFTs [because] they have practical value, “said Dale, adding that” the hype about NFTs “made them a little” myopic “.
While NFTs may not be the number one priority for VR world builders and other creative industries, they could be part of an important shift that enables creators to gain access to new types of economic tools.
“The brilliant thing NFTs are right now is not the end goal of all this decentralized financing – where standard banks for once have real competition,” explained Deacon.
Now that the hype is over, the real innovation continues
In addition to virtual reality, non-fungible tokens are also finding new use cases in the music world and beyond.
“We only saw a tiny fraction of where this is going,” Geoff Osler, CEO and co-founder of the NFT app S! NG, told CNBC. “Cryptocurrency is here to stay – and NFTs mean there is something to buy now. It’s the other side of the equation. And that will go far beyond digital art. We think music is next. “
Other use cases for non-fungible tokens have been identified in identity, travel, live entertainment, medical, supply chain, and many more industries. Still, many more innovations are likely to be required before the technology can meaningfully establish itself in an industry.
Now that the NFT hype seems to be over, companies and innovators who have worked to improve non-fungible token technology will keep building for the future. Watch this room.