Source: Sipa Asia / Shutterstock
Source: Sipa Asia / Shutterstock
The prices of digital collections, such as the arts and sports memorabilia, are slipping, turning their attention to the fact that the birthplace for so-called non-fungible chips is more than a passing craze.
Average prices for NFTs – essentially tradable digital certificates that use blockchain technology to prove ownership and provenance of online assets – fell nearly 70 percent from a peak in February to about $ 1,400, according to Nonfungible.com, which tracks a variety of NFT markets.
An explosion of interest in NFTs peaked last month when a digital work by Beeple sold for an astonishing price $ 69.3 million. For some, this amount showed that NFTs were in control of the excess of investors in a world full of incentives and destined to fade. Others studying technology argue that using the blockchain to create the rarity of digital collections is a sustainable innovation rather than a pricey fashion.
“It’s not significant to characterize a concept as a financial balloon,” he said Chris Wilmer, a University of Pittsburgh academician who co-edits a blockchain research journal. “NFTs are no more in a bubble than” cryptocurrency “is a bubble. There will be mania and irrational exuberance, but cryptocurrency is clearly here to stay with us in the long run and NFTs probably are too. ”
pervaded
NFT boom drops as prices cool from February peak
Source: Nonfungible.com
Sales of blockchain-based digital assets were already underway in 2018, when 10 collectors paid $ 1 million for a digital image of a rose. Today, tweets, baseball clips and even comic digital characters are also traded as NFTs.
Read more: Crypto Investor moves to Picasso after $ 69.3 million NFT Miss
Read more: Digital Art Mania Subsidides after the month of sales that broke out
Companies are looking to expand their technology applications. While digital art is “frothy,” music and film can deliver viable NFT projects, said Kathleen Breitman, co-founder of the Tezos blockchain platform. There have even been questions about loans against NFTs.
Researchers have also begun analyzing whether NFTs have low correlations with other investments, including cryptocurrencies such as Bitcoin, suggesting a potential, if very controversial role in portfolio diversification.
At the same time, NFTs are far from risk-free, either due to further price declines, the so-called laundering trading – where transactions that seem genuine are actually made by small groups to create an illusion of high demand – or simple fraud.
“Scammers”
“While the cryptography that fuels NFT art makes it easier to authenticate the source, it’s still easy to be fooled by counterfeits if you’re a non-expert user who doesn’t know how to securely authenticate the artwork on their own,” said Wilmer of the University of Pittsburgh. . “Wait to see a lot of scammers taking advantage of this.”
While trading volumes and average prices are much lower than recent highs, other data show that many NFTs are still in substantial gains for 2021. In the first quarter, the market value of 38 NFTs tracked by CoinMarketCap rose by more than eight times up to $ 22.5 billion.
Time will tell if the NFT boom is deflating or if volatility is part of a new market that is going through a period of price discovery. From a perspective, the pandemic and the blockages that followed accelerated the last process.
“The interest in building a person – and owning things – in the digital world has grown for years,” he said. Berna Bershay, an analyst at Empire Financial Research. “With so much time spent online in the last year, the desire to own digital assets was probably drawn a few years before the Covid-19 crisis.”
– With the assistance of Sunil Jagtiani