Crypto-winter is here. What about NFTs?
NFT funerals as a brand activation
The Internet is full of these kinds of headlines. Some companies even tried to make a marketing campaign out of it. On Monday the crowd walked down the SoHo street in Manhattan carrying signs reading “God Hates NFTs,” “Crypto Is A Sin” and other anti-crypto slogans and yelling “NFT? Not for me!”. It turned out to be a marketing effort of the clothing brand, but changing the perspectives on NFTs and the crypto-market overall is obvious.
According to bitcoin obituaries stats, we are still quite far from the bottom. In 2022, bitcoin was “dead” only 15 times (for comparison: 47 times last year, 93 in 2018, and 124 in 2017 when the price went down from the peak near $20K to $12 K).
Of course, altcoins and NFTs follow bitcoin – it is a non-breakable tradition in this industry.
Crypto cycle recap
Let’s try to understand what is going on though. Is this the end of the NFT era? I don’t think so.
1) This current crypto cycle started with DeFi summer of 2020, and it emerged with the slogan “we have invented new crypto-economic primitives. According to the innovative idea sold to the investors, deposit voting, yVaults, Balancer, Uniswap are the main financial innovations of the 21st century. Which is not far from the truth though. There are innovations there.
But it’s not innovation that’s for sale, it’s greed. We saw a flood of “crypto grub” — sushi, PICKLE pickles, cream, kimchi, spaghetti, shrimp — that essentially invented a new kind of Ponzi scheme, which is now called liquidity mining. This is when a farm token is encountered, which is poured into users for buying and staking shields. Such a token can easily promise 50, 100, and even 900%But the farm token has no function other than to merge it on the market by design.
2) The market was super friendly for wannabe-crypto-entrepreneurs – to issue and list a token now costs less than $5 and15 minutes. Thanks to the large number of DEXs, no listing or approval is needed anymore, and it makes the Wild West of crypto even wilder.
More than that, big names such as Binance, Gate.io, and Bitfinex have larger instances in the form of launchpads.
3) NFT – mania. I have no doubt that the product/market fit for NFT in the gaming, film, music, copyright, and art markets, but during the last year, this segment has dominated poor quality products using the same Ponzi scheme.
For most of the collections, the demand was generated by unrealistic buyers, all sorts of “private whitelisters”, whose motivation was to buy a token on the sale and then resell it on OpenSea at a higher price. Today, a lot of people are left with hundreds and thousands of jpeg, which can never be sold even at the purchase price.
As in the future, the challenges of NFT paleontological wand growth are when future expectations overshadow momentary usefulness and, as a result, phenomena in the market are observed.
What’s next?
No panic! This industry is still quite young, and it has all the growing pains.
These things had to burst. Like ICOs (which have not disappeared, but became much better since 2017). The world doesn’t need “ferret” NFT drops, farm tokens on liquidity pools, launchpads, and marketing agencies specializing in JPEG NFTs. The world understood this in an evolutionary and painful way. And now the industry can focus on the cool prospects of crypto which relay matter, beyond the momentary sale of the token.
Just like in the 2000s the world was obsessed with dotcoms, it was obsessed with NFTs and liquidity pools lately. But at the end of the day, dotcoms just become the new normal – an integral part of our everyday life. The same will likely happen to NFTs. It is just a new form of ownership and copyright which will be an integral part of the new world of web3, metaverse, decentralized identity, and programmable finance/art.
Featured image: by @tezos via unsplash.com