Remember the craze just a few years ago over Non-Fungible Tokens (NFTs)? People were paying millions of dollars to purchase various images, with one series known as the Bored Ape Yacht Club being particularly hyped.
The NFT hype benefited from the crypto craze because people seemed impressed with the blockchain process used to certify ‘ownership’ of this asset even if they did not understand it. It made absolutely no sense to me right from the get-go that cartoons and other images that can be copied freely could have any value but many people seemed to think that they did and rushed to ‘purchase’ them even though it was not clear what ‘ownership’ entitled them to.
The ownership of an NFT as defined by the blockchain has no inherent legal meaning and does not necessarily grant copyright, intellectual property rights, or other legal rights over its associated digital file. An NFT does not restrict the sharing or copying of its associated digital file and does not prevent the creation of NFTs that reference identical files.
This phenomenon had all the markings of a bubble and sure enough, the bubble popped.
According to a new report by dappGambl that reviewed data from NFT Scan and CoinMarketCap, 69,795 out of 73,257 NFT collections have a market cap of 0 Ether, leaving 95% of those holding NFT collections – or 23 million people – with worthless investments.
NFTs, or non-fungible tokens, are a form of crypto asset that is used to certify ownership and authenticity of a digital file including an image, video or text.
…The report revealed that 79% of all NFT collections have remained unsold, as there is not enough demand to keep up with the supply in what researchers have described as a “highly speculative and volatile market”.
To analyze the current state of top NFT assets, dappGambl researchers looked at the top 8,850 NFT collections according to CoinMarketCap.
They found that 18% of these top collections had a floor price of zero, essentially being worthless. Forty-one per cent of the top collections had been priced between $5 and $100, which may indicate a lack of perceived value attached to these assets, the report revealed. Moreover, less than 1% of the collections were worth more than $6,000, a stark shift from the million-dollar deals that dominated a $22bn market in 2021.
…In addition, the report revealed that the number of dead NFTs could even be higher.
“MacContract on Ethereum has a floor price of $13,234,204.2, but its all-time sales is only $18,” the report said, adding: “This stark discrepancy between listed floor prices and actual sales data exposes a significant issue in the NFT market – inflated valuations that don’t reflect genuine buyer interest or real-world transactions.
“It becomes clear that a significant portion of the NFT market is characterized by speculative and hopeful pricing strategies that are far removed from the actual trading history of these assets,” it said.
This article discusses some of the reasons for the sharp drop in value. But do we really need any deep analyses of this? What surprises me is that any NFT still has any value at all.
The problem is that this was not just a harmless fad that resulted in some people with too much money and not enough sense buying junk. There are real costs to society because of the energy used to power this process.
The study also analyzed the costly environmental impact surrounding the minting process of NFTs. Researchers identified 195,699 NFT collections with no apparent owners or market share and found that the energy required to mint the NFTs was comparable to 27,789,258 kWh, resulting in an emission of approximately 16,243 metric tons of CO2.
To put the staggering number into context, the report revealed that 16,243 metric tons of CO2 is equivalent to the yearly emissions of 2,048 homes. It is also equivalent to the yearly emissions of 3,531 cars or the carbon footprint of 4,061 passengers flying from London to Wellington, New Zealand.
This is the kind of thing that happens in a society where a few people have a lot of money to fritter away on fads.
Bored Apes reached a peak floor price of 128 Etherium in May 2022, equivalent to about $354,000 USD at the time. The most expensive Bored Ape ever sold was in an auction by Sotheby’s in September 2021 for over $24 million. By May 2024, their floor price had declined to 13.395 Etherium, or around $40,000 in 2024 USD, an approximately 90% loss in value. Two Bored Ape NFTs purchased by Justin Bieber in 2021 for the equivalent of $1.3 million and by Eminem in 2022 for the equivalent of $460,000, had their highest bids in early 2026 of around $2,800, representing an almost total wipeout of value.
Like all the bubbles of the past, there is a cycle. Things that were worthless at the start and end up worthless at the end.
The problem is that other people who are not rich can get sucked into investing in these things because of the hype and the FOMO effect (Fear OF Missing Out), thinking that they can make a quick buck by jumping on the bandwagon and, unlike people like Bieber and Eminem, can end up losing money that they can ill afford.
NFTs got so hyped up because the crypto companies needed desperately to have real money invested into them, but the crypto companies had nothing to sell. So, they invented NFTs.
And now for something completely the same, we have AI.
The energy (physical and psychosocial) wasted on all this epitomizes the spinning-in-circles of the 21st century economy (so far).
We may find a slight silver lining in that the evaporated billions present a (minor) counter-inflationary effect.
I’d like to know how to come up with the energy required because that comes up to 142kWh per NFT collection. While I understand that the servers used for these are quite power hungry, I don’t see how the generation of NFTs would require hours of computing. It’s not as if this is an ongoing process; you have minting the coin and then each transaction.
I still like the description somebody made of NFTs as being ‘content-free DRM’.
Because, yeah, essentially all you’re buying is a theoretically un-forgeable receipt, not the object that it’s supposedly a receipt for.
@Jenora Feuer #4: At least with physical art, there’s usually far more substance than just the certificate of ownership. Forged unique works can’t be quickly copied, and forged artist imitations can’t be mass-produced -- or at least couldn’t have been in the past, who knows about the future. And such fakes often have some significant value of their own, just not on the level that’s being claimed by the forger. None of that holds true for the cheaply-produced, easily mass-copied digital art attached to the vast majority of NFTs. Because, as you implied, the NFT isn’t really the art itself, but the digital ownership receipts.
I think there’s an interesting concept buried in all this about tangible and intangible value.
Tangible value is easy. You get something. You can do things with it. Maybe useful things, maybe frivolous but either way it’s easy to define your interactions with it because you’re interacting with a physical thing.
Intangible value is much more difficult to define. Is there any value in seeing the house a historical figure lived in? Does being sealed in the original box add value to a toy from decades ago versus an identical toy where the seal was broken? Realistically the answer is no, they do not have any particular value. But I think their value is in being pointers to something else. The unsealed toy is a reminder to some that children had such toys while a sealed one is pointing toward a child getting that toy and the time when it would have been new and had the most value to the child. Seeing the house of a historical figure lets you learn something about the environment they operated in but it also prompts you to learn and think about what they did and different aspects of their life.
An NFT doesn’t really point to anything. Sure, they seem to be used to point to a piece of art. But the art itself is just there. The NFT doesn’t really have anything to do with it. At best they seem to be a convoluted way to tip artists but there are more efficient methods of doing that.
Let me give an example. The Chicago Field Museum has a complete tyrannosaurus rex skeleton known as SUE. Let’s leave aside what an expert would get out of it and focus on the experience of your average museum patron. It’s a prompt and pointer towards an age before humans existed. We experience it by way of seeing this enormous thing right in front of us and knowing it used to be alive. An NFT is a bit like me going home after seeing SUE and making a digital sign that has a big arrow and says something like “Tyrannosaurus Rex exhibit ahead. Meet SUE!” I never bother printing the sign and it certainly has nothing to do with the museum or the dinosaur skeleton. And that’s why it has no real value.
The whole premise of NFTs is one of nostalgia. Originally it took time and even skill to duplicate pictures, songs or ideas. But since digitisation, duplication has become practically effortless. This has caused all sorts of problems to capitalism with its concept of “copyright” in instances where the copy has value indistinguishable from that of the original.
In a truly communist society this wouldn’t be an issue. Unfortunately communism has its own problems: people aren’t fungible*.
NFTs was a doomed experiment to try to give these fungible items non-fungibility. It was worth a try for the merchant class.
*Meaning equivalently replaceable. Your lost child cannot be replaced with someone else’s. Although perhaps it’s just the people that you know that aren’t fungible. To the 1%, the rest of us are fungible.
I have to disagree on this point. NFTs were a straight-up scam. The ideas that they were somehow about conferring ownership or guaranteeing uniqueness were just part of the marketing for the scam. They did no such thing, and could not possibly do any such thing.
@file thirteen, #7: What makes you think people not being fungible is a problem for communism?
Crypto is as worthless -- But still priced at 81k USD for 1 Bit Coin -- this probably says something about us humans.
@bluerizlagirl #9:
I think of true communism as being an ideal society where everyone is equal and shares everything equally. In order to construct such a society, the non-fungible nature of people is a problem that needs to be dealt with. You can frame the problem as people not being equal, but I think even if we were all the same, the issue of people not being fungible would remain.
@Deepak Shetty #10:
Neither USD nor BitCoin are worthless. Both have no intrinsic value, agreed -- no money does. But both have a perceived value, and a “validity” that stems from them being able to be connected back to their minting, USD by the transaction history back to its creation by the treasury, BitCoin via transaction history (blockchain) to whichever computer generated it. USD has nothing that BitCoin doesn’t.
(nb. 3rd comment, no more from me)