After the cryptocurrency and stablecoin market shock, the NFT market saw a sharp decline in volumes between February and April.
Temporary depression or bursting of a bubble? The Certified Digital Objects (“NFT”) market, booming since last year’s blowout, has just come to a sudden halt and now needs to improve to attract the general public and last, according to specialists.
Decrease in spending volume by 75% between February and mid-April
After generating $44.2 billion in 2021, “NFTs” (“Non-Fungible Tokens” or “non-fungible tokens” in French), these unique digital assets verified on the blockchain (or “blockchain”) – the technology that underpins cryptocurrencies like bitcoin in particular – recorded a 75% drop in spending volume between February and mid-April, according to the firm Chainalysis.
Symbol of the mini-crash: the NFT of the very first tweet in history, bought in 2021 for almost $3 million and auctioned again on April 7. The owner expects $ 48 million, but for now the best offer is barely above $ 20,000.
However, sales of virtual land in “Otherside”, the “metaverse” (digital universe) of the “Bored Ape Yacht Club”, the most famous club of “NFT” holders, reached several hundred million dollars in 24 hours in early May. .
According to Molly White, founder of a specialized site that identifies scams in the world of cryptocurrencies.
So, aside from the fashion effect, what basis can we rely on to define a “fair” price that everyone can understand?
Rather than “usefulness,” it’s the “status” conferred by owning an “NFT” that seems to determine its value, continues Molly White. The “NFT” that are available in a few versions, such as the “Bored Apes”, allow access to very closed groups and are therefore the most expensive.
The crypto artist “Louis16art” offers to rely on the author’s fame, the identity of the previous owners of the “NFT”, the quality of the work and the technique used, some of which are more demanding than others. others.
Other specialists argue in particular for the creation, in the image of what exists in traditional art, of a database intended for novice buyers and supplied by specialists in digital art.
Problem: These assets are usually sold on “Opensea”, a deregulated marketplace. “But as soon as you have a new technology, you immediately have fraudsters on the lookout,” emphasizes Eric Barbry, a specialist lawyer associated with the Racine firm, to AFP.
For example, in January, the platform revealed that 80% of the free “NFT” transformed images on its network were fake or stolen. “Opensea is a huge project, we don’t know what we’re buying there,” says Olivier Lerner, co-editor of the book “NFT Mine d’or” with Sophie Lanoë.
For Molly White, the market will not be able to attract the general public without stronger “regulation” and “consumer protection”, even though increased scrutiny threatens to diminish the interest of this market, which has hitherto been based on a strong attraction to profit.
“It’s the Wild West,” summarizes Sophie Lanoë, for whom the bubble’s explosion, however, is an opportunity to start over “on a sound footing”. “As long as we don’t have a specific law, we have to adapt the ‘normal’ law to NFTs,” warns Eric Barbry, for whom an evolution of regulation will take place “as the industry matures and develops.”
Apart from the security flaws and persistent legal “holes”, which can deter the acquisition of “NFTs”, how can they simplify their purchase, which is still difficult for a non-tech-savvy audience to understand? “No one understands anything about it, but everyone loves it,” Olivier Lerner wants to believe.
To help this market, “it is enough that the platforms become easily accessible”, for example by not asking for a specific portfolio for each type of digital asset.