NFTs: Between Disillusionment and Enlightenment
Future Predictions: The Next Phase for NFTs
Recent headlines proclaiming the 'death of NFTs' have swept over X and the internet once more. Sensationalism like this isn't new; the media has habitually declared the demise of nearly anything crypto-related. Leading this charge is an article from The Rolling Stone titled, "Your NFTs Are Actually - Finally - Totally Worthless." Ironically, it is a diluted take on a far more insightful piece by dappGambl: Dead NFTs: The Evolving Landscape of the NFT Market.
The Rolling Stone, historically a beacon of counterculture, now echoes the sentiment of an elder scoffing at the aspirations of the youth. For those genuinely interested in understanding the NFT landscape, I'd recommend dappGambl's piece as a primary source. For everyone else, here's a concise summary:
The trading volume during the 21/22 bull run soared to nearly $2.8 billion per month. By July 2023, it dropped to approximately $80 million, a mere 3% of its peak. A staggering 95% of NFT projects, predominantly owned by steadfast HODLers, have plummeted to zero. The market now grapples with an overabundant supply and dwindling demand as buyers become more cautious. And, of course, the argument about the environment must be included in an article about crypto, claiming the CO2 emissions of hundreds of thousands of these vacant NFT projects are equivalent to that produced by the astronomical number of 2048 homes in a year. Such arguments, however, often overlook the one-off nature of these emissions during the NFT minting phase. Admittedly, every industry impacts the environment, a nuance seemingly lost on The Rolling Stone.
This sharp decline might signify an endgame for many. But it also mirrors the classic "Gartner hype cycle", an illustrative, admittedly unscientific model of public perception and adoption of disruptive technologies.
Jeremykemp at English Wikipedia, CC BY-SA 3.0, via Wikimedia Commons
The hype cycle's five stages:
"Innovation Trigger" - A nascent technology emerges.
"Peak of Inflated Expectations" - Enthusiasm reaches a fever pitch.
"Trough of Disillusionment" - Initial excitement wanes due to challenges.
"Slope of Enlightenment" - Real-world applications become evident.
"Plateau of Productivity" - The technology finds stable adoption and proves its utility.
Following this graph, we are currently wading through the Trough of Disillusionment, but soon, there will be light. Will we see a high similar to 21/22? Probably not! But it will get better again.
For digital assets to thrive in the future, the crypto community needs to reflect on its foundational ideals. What made crypto resonate with so many initially was the promise of digital ownership, an alternative currency beyond the reach of governmental control, and, with the rise of AI technologies, secure identity verification. Succeeding in the upcoming years means building on or integrating these core aspects.
Some (very vocal) people still like to spout that the only use case for crypto was and will always be money and gambling. Saying that if you cannot "ape in", there is no reason for a crypto project. These people are stuck in 2022. And for what it is worth, they can stay there.
Everyone else can focus on the future.