A cryptocurrency minute often feels like a lot less than that. Before you can say “rug pull” the floor beneath a new development in the cryptocurrency space may already have come out from under you.
Last summer it was decentralized finance, which continues to brew, this spring it looks like it’s NFTs or non-fungible tokens.
But after a mad month of sales, volumes have all but collapsed, from an estimated US$19.3 million a day to just over US$3 million.
And while some are saying that the digital art market had nowhere to go but down, there are those who also see that the decline in the initial euphoria is warranted so that the longer term development work can continue.
To be sure, general interest in the NFT market has fallen just as the hammer fell on Beeple’s US$69.3 sale of digital art at Christie’s, leaving those who remain invested in the market wondering if the pause is momentary or if they’re not holding on to worthless tokens, non-fungibility notwithstanding.
But like every other bubble and bust in the cryptocurrency sphere, short-term speculators who had been hoping to make a quick buck from the NFT craze are now wondering if they’re holding the can after everyone else has left the party.
And fractionalized digital art tokens that allow investors to “own” a portion of digital artworks have collapsed in value.
Yet the fundamentals behind some of the developments in the NFT space are not all hype.
The struggle among artists is well documented and NFTs have unlocked the potential for them to now gain a fairer share of the value of their works.
Fractionalization has also made art more accessible to more people than ever before, even if that art is digital.
More importantly, greater awareness about the value of NFTs to not just promote the development of digital art, but a wide variety of works including prose, poetry and music, that could shake up the creative field for decades to come.
NFTs have allowed artists to not only gain from selling their works to a wider audience, but also to take a small share for every transaction that takes place thereafter.
And while it’s easy to dismiss NFTs as just another cryptocurrency-fueled bubble, it may really just be going through a phase of price discovery, with novelty something very hard to appraise.