After a record-breaking sale of US$69 million by artist Beeple earlier this year, suddenly the whole world was abuzz with Non-Fungible Tokens (NFTs). Artists were scrambling to create them and collectors/investors wanted their hands on them. A few weeks since then, things seem to have gone south. In mid-February, sales of NFTs averaged around $4000. At the beginning of April, sales dipped to $1400 on average, an almost 70% decline in value. Is this a sign of worse things to come or just a perfectly normal stabilization of prices?
Here’s a refresher on what NFTs are. Non-Fungible Tokens, or NFTs, are essentially data stored on a digital ledger using blockchain technology. There’s a lot of technology speak behind this, but for art, it’s become a way of owning a piece of digital art, something that’s notoriously difficult to “own” before. With NFTs, though the art itself is still duplicable, the owner is not.
This aspect of NFT made many people understandably excited. Everyone was jumping on the scene, with some people making ridiculous amounts of money from selling their digital properties as NFTs. Yes, even a tweet is fair game. Jack Dorsey sold his first-ever tweet for $3 million. The New York Times is selling one of their articles as NFT. If it’s digital, it can be sold as NFT.
That’s where the downfall began. It’s a commonly known rule of the economy that when the market is saturated, the price will drop. Everyone was making and selling NFTs and the buyers couldn’t keep up. The excitement of NFTs has died down, as many expected, but was the NFT craze just a one-time thing, or is it a sustainable future for digital collecting?
Most experts seem to agree that the steep drop in sales doesn’t mean NFTs are going away anytime soon. NFT’s popularity can be boiled down to one factor: the desire to own digital properties. At one point or another people, especially creators, have expressed their frustration at the loss of ownership once something is on the internet. The past year made this desire even more prominent. “With so much time spent online in the past year, the desire to own digital assets was probably dragged several years forward by the Covid-19 crisis,” said analyst Berna Bershay. Melissa Gilmour, the founder of London-based NFT agency Lily & Piper, states that “digital ownership of assets is a certain outcome."
While it’s hard to predict the future, it’s safe to say that NFT is the next step in collecting. For the artists, it gives them a way to prove ownership of their art and make a living from making non-traditional art. For collectors, it’s exciting to be able to own something like this, not to mention the possible return of investments later down the line.
As for making it accessible to the masses, that’s another story.