Since reaching its peak late last summer, the market for non-fungible tokens (NFTs) has cratered.
Images that were worth (supposedly) thousands or even millions of dollars are now being pushed for a tiny fraction of that with no buyers. It seems that NFTs, at least in their current use applications, are mostly a bust.
Much like the Beanie Babies craze of the mid-1990s, NFTs were hot for a brief moment, but already seem to be on their last legs. It turns out that nobody wants to shell out hefty amounts of cash for pictures of rocks, for instance.
Last August, a report from crypto-collectible Ether Rocks was going for upwards of $300,000 a pop. All they were was clipart that someone could draw in Microsoft Paint in about three minutes.
Today, those same Ether Rocks are basically worthless – or rather, they always were worthless, even if people were paying astronomical prices for them at the time.
"Investors are justifying the value by arguing that these are Non-Fungible (as in, one of a kind that cannot be duplicated)," reports Zero Hedge.
"The irony is that this is exactly the same argument investors in Beanie Babies made stating that their toy was going to be one of a kind that others will buy for a fortune down the line."
"It's the classic case of the greater fool theory where you are buying an overpriced asset in the hope that someone will be willing to pay even more for it later on."
Could NFTs potentially be used to back digital assets?
It is not just NFTs that have no intrinsic value. For the most part, the entire crypto world is backed by digital 1s and 0s, and many popular coins have plummeted in recent weeks to multi-year lows.
Sure, Federal Reserve Notes, also known as "U.S. dollars," are just as inherently worthless, if not more so. But many of these crypto scams seem to be even worse, which would almost not seem possible.
And as far as NFTs go, the overall market for them is in freefall as the excitement of the next big thing has died down, losing more than 87 percent of sales volume since about a year ago.
"Even if you consider the dollar value in sales every day, other than a single big spike in May '22, the sales are 80-90 percent down when compared to the Aug '21 period," Zero Hedge explains.
"The most concerning metric of them all is the number of unique buyers and sellers in the market. After all, for a marketplace to work, you need both active buyers and sellers. Both the number of buyers as well as the number of sellers in the NFT space have seen an ~80 percent drop in the past 6 months. Similar to the sales metrics, these figures have also been continuously dropping with no sign of a bounce back."
Given, there is so much more potential that NFTs have beyond just digital images that anyone can take a screenshot of and save to their devices for free. The question is: will NFTs ever reach that potential, or will they go the way of Beanie Babies?
"What crypto needs is a strong, trusted market maker to tie it to a physical good so that some sense of value can be established," suggested a Zero Hedge commenter. "They tried this with 'tether' or whatever nonsense which failed because people suspected a scam and they were right."
"Bitcoin is another form of NFT," wrote another. "Make-believe coins made with a software program that limits how many are made."
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