Non-fungible tokens (NFTs) are coming back to life after a great year, with Enjin Coin up over 70% this month and the NFT market rare (RARI) and flowing.
January's strength in NFTs is not a sign of a comeback.
The idea is that NFTs were collectible art. Great, you have a ten-second Tom Brady sound bite and you paid $100,000 to have it lost on your laptop or stuck on a flash drive in your home office drawer. Meanwhile, retail investors have just jumped in, hoping gamers will spend crazy money to buy fake swords and cute characters to play in Axie Infinity.
"You can make money by buying and selling NFTs, but they should not be viewed as an investment tool," said Sagi Maman, CEO of Tel Aviv-based blockchain game development platform Xternity. "NFTs don't have the same characteristics as traditional investments like stocks or real estate, which can appreciate over time."
Also, NFTs don't have the same features as big blockchain players like Bitcoin or Ethereum.
"To me, you buy an NFT because it has aesthetic or rarity appeal and it gives you a certain status," Ma says. "That's not the way to get long-term economic returns."
The biggest stumbling block of NFTs
According to data compiled by Online Casino Canada, NFT sales fell 83% year over year between January 2022 and January 2023.
The NFT space reached an all-time high in January 2022 when monthly sales reached $2.8 billion, but that figure has fallen to $492 million in January 2023, Canadian news and information portal Online Players reported on January 16.
All NFT coins - game, art and collectibles - are affected
The following describes the Canadian casino industry buying NFTs in abundance. (I got $1000 for 0 and $2000 for double zero! Get the ball rolling baby!)
Some in the crypto space argue that NFT issuers should work together. In a Q&A emailed to some handicappers they listed the following pros and cons for some hurdle NFT buyers:
• Limited use cases: Most NFTs are still used for digital art and collections, but have the potential to spread across multiple industries. Expanding the use cases of NFTs and demonstrating their potential to a larger audience is key to widespread adoption. (Think that the notorious NFTs are nothing more than a playground for crypto fraudsters who make money worthless and damage the entire industry).
• Fake listings: NFT marketplace Magic Eden said this month that an unresolved issue in the marketplace allowed fake NFTs to be posted and sold as part of genuine collections.
• High transaction costs : The high transaction fees associated with NFTs, especially on Ethereum, have been a barrier to adoption, especially for small transactions. There are more NFTs on the Layer 2 blockchain, but they have zero visibility.
• Lack of interoperability: NFTs are scattered across multiple blockchains and isolated from each other, making it difficult to trade or use them across different blockchain platforms. Further adoption of NFTs requires cross-platform interoperability.
• Regulatory Uncertainty: Lack of clear regulations regarding NFTs creates uncertainty and risk for buyers and sellers. For example, if an NFT is actually an investment in a token associated with GameFi, why wouldn't that count as an investment?
"The NFT space has made great strides in tackling issues like theft, counterfeiting and spam," said Shaban Shamay, CEO of Walkweli, a Geneva-based infrastructure protocol that allows users to buy and trust real NFTs. They have ownership rights.
NFT markets and platforms have started implementing measures like whitelisting and manual consent to prevent fraud. Recently, automated plagiarism detection system ("copymint") was introduced to help restore trust in the ecosystem. "However, more needs to be done to increase the credibility and trustworthiness of NFTs," says Chamet
NFT: Beyond the Bored Monkey
The initial coin offering was the only crypto story that blew up and disappeared. The excitement has subsided, although new coins are constantly coming to market. NFTs have skyrocketed and become quite boring since 2021, then crashed to the ground in 2022. Whenever this happens in the crypto industry – whether it's decentralized finance or the new blockchain fad – investors go silent and the industry debate continues. Performance
NFTs will not disappear in 2023.
Market players say there is still room for new NFTs, and all agree the big brands will lead the way.
For example, Starbucks
People who raise (and lose) money are investors. For investors and developers, it was probably more attractive than for consumers.
Bored Ape Yacht Club (BAYC) is a leading venture capital investor in Coral Gables. The play was released last year. This year it is down 9.6%. This is probably NFT's most famous digital art project.
Owned by NBA great Shaquille O'Neal. It was singer Post Malone. He and DJ Khaled used to have a picture of Bored Ape on their social media pages, but no more.
"The pesky monkey using NFTs is digital flexibility. It shows that you know and have money," said Jaroslav Shakula, CEO of Yard Hub in Barcelona. "Share benefits. Some NFTs have access to exclusive online and offline events and communities where you can build a really good network. What seems like an overrepresentation of monkeys is actually the key to some real benefits.
Bored Ape's six-figure payout for some NFTs and associated full-loss coins is currently another NFT headache for mainstream investors. The rich come first, paying hundreds of thousands of dollars for a whimsical look that can be printed on fabric and hung over a crib. Or, again, lost on a flash drive in a home office drawer. But since it includes access to BAYC's online platform, perhaps this membership has advantages.
"Until now, cartoons are the main type of tokenized asset. Bored Ape is a tokenized cartoon. Tokens also have some benefits, like being able to join exclusive parties. An NFT's intrinsic value is only as strong as its value. The asset backing the token," said Asif Kamal, founder of ArtFi. , a Dubai-based technology company that enables people to invest in industries using blockchain. More than a complete lack of understanding of what is happening on the tokenized chain. The success of the Ethereum NFT naming service is an example of this.
The Ethereum investment naming service makes it easy to find collections of NFTs. While Domain Name Service is designed to resolve domain names to IP addresses like Forbes.com, ENS does the same for long cryptocurrency addresses. For example, an Ethereum blockchain address with a set of letters and numbers that only an AI robot can remember could become a bored ape yotis in Los Angeles.
"Like all parts of cryptography, real gems are often mixed up by scammers whose only goal is to scare people away," said Alexi Kulevets, CEO of Lisbon-based gamify startup Walken. "The good thing about NFTs is that once the hype is over, the real value of the company and the token will be known. We're seeing a lot of examples of that despite all this nonsense," Kulevec said.
Sales in the NFT industry have been declining over the past year. According to EnLigne Casino, digital art NFTs will increase from 36,000 sales in January 2022 to 18,000 in January 2023.
Sales are also down. According to the data, sales in the NFT industry fell the most, falling 87% year over year.
Everyone in crypto had a great time last year. On Thursday, JP Morgan CEO Jamie Dimon called Bitcoin a "bloated fraud."
* The author invests in Enjin Coin and Bitcoin.