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By published 9 May 22
What’s really happening, and what may come next.
Is the NFT crash happening? Data released in the last week shown NFT transactions have slowed, and even decreased 92% from this time last year. The rise of popularity of NFTs does appear to be in decline, but is this really the end or a new beginning for non-fungible tokens.
Despite the news of a decline, it’s not dampening the excitement of some tech and video games companies to plan for what’s to come next. Game developer and publisher Square Enix has sold off major franchises to focus on NFT gaming while Meta has announced it will integrate blockchains Ethereum, Polygon, Solana and Flow into Instagram – and users won’t be charged.
Non-fungible tokens are digital files stored on a blockchain that create rarity. You can read more in our guide, What are NFTs? or read our NFT tips for beginners for an understanding of staying safe in NFTs. The ‘crash’ making headlines has also been predicted, take a look at our guide to NFT trends for this year to see how non-fungible tokens will develop new uses.
So, that NFT crash news? The downturn as reported by crypto data site NonFungible shows a transaction volume decrease of 47% in Q1 of this year compared to the previous quarter. Sorry to bore you with figures, but this is ultimately a sign that reality is bearing down on a tech and market that has been heavy on hype and short of use for some time.
But the idea that NFTs are over is likely an overstated belief. For example, the Moonbirds NFT project added $500 million worth of trading volume, while the Solana blockchain saw a 91% month-on-month increase, recording nearly $300 million in NFT trading.
The recent launch of Yuga Labs’ new Otherdeeds NFT, a virtual land sale for a forthcoming video game, crashed the Ethereum blockchain as it was in such high demand, even though the floor price was $5,500 / £5,000. The pull of ‘blue chip’ NFT brands remains high and people are prepared to spend big to get a piece of what could come next.
Yet overall NFT trading is slowing at a macro level, and for many artists invested in the NFT space this can’t come soon enough – read our interview with VFX supervisor Bilali Mack who believes NFTs need a reset so new uses, experimentation and entrepreneurial ideas can bring better value and true democratisation to this digital tech.
NFTs are at the end of one curve and the start of another
For many NFTs are approaching a similar bubble-burst moment to the dot.com collapse in the late 90s. NFTs are at the end of one curve and the start of another, as it moves from PFP (profile picture NFTs) to NFTs with use; and this new boom could be the one that really sees the tech emerge as something interesting.
The new future of NFTs should see the tech break free of cryptocurrency ups and downs and enable more people used to using fiat currency to engage. We should see more utility in NFTs – ones that have genuine uses as well as artistic merit – (see how NFT tips guide to more) and likely a divergence from Ethereum to more stable, environmental and economic blockchains such as Solana, Wax and Flow. Take a look at our guide to NFT crypto to see how these all differ.
Some in the NFT space dispute the claims of a downturn. Tom Schmidt, a cryptocurrency investor, has downplayed the data found on nonfungible that sparked the current news. He points to more accurate on-chain data at Dune Analytics that shows NFT transactions have barely dropped since the new year highs in January.
come on, man pic.twitter.com/CTJFldAHNkMay 3, 2022
A crash is expected, however, it maybe here now or it could be a year away, and it’s not the first time we’ve asked are NFTs over? But what comes next could really define what NFTs are and how they are used, especially by artists and creators. The hype looks like it’s coming to an end, and many in the NFT space should welcome it, as what’s next could be genuinely interesting.
Disclaimer: The opinions expressed in the article are for general informational purposes only and are not intended to provide specific financial or investment advice or recommendations for any individual for any investment product. The article is only intended to provide general information and opinions about NFTs. The views reflected in this article are subject to change at any time without notice.
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Ian Dean is Art and Design Channel Editor at Creative Bloq. Ian is the former editor of many leading magazines, including digital art focused ImagineFX magazine and leading video game title Official PlayStation Magazine. With over 25 years’ experience in both print and online journalism, Ian has worked on many leading video game and digital art brands. With a passion for video games and art, Ian combines his loves to bring the latest news on NFTs, video game art and tech, and more to Creative Bloq. In his spare time he doodles in Corel Painter, ArtRage, and Rebelle while finding time to play Xbox and PS5.
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