Are NFTS (Nonfungible Tokens) Dead?
Updated: Aug 22
NFTs exploded onto the scene in 2021 and, in the past year, have taken off in a way that few expected.
With the support of a stable crypto ecosystem, in 2021, confident sentiment in NFTs increased trading by over $17 billion and was on track to continue in 2022.
Despite receiving endorsements from a range of mainstream celebrities, the NFT market first started showing signs of ill health in May and would continue to worsen in June.
Many have pointed to this overall depreciation as the beginning of the end for the short-lived NFT market, but is this the case?
Could this be the death of NFTs, or is this just the beginning of the greatest comeback story in the history of crypto?
Below you will find everything you need to know about what the future has in store for Nonfungible Tokens.
The crypto crash
To understand the current state of NFTs, we need to look at the crypto market as a whole. After reaching an impressive high in 2021, Bitcoin suffered one of its worst crashes yet.
As of August 2022, one BTC is valued at around 24,000 USD -- less than half of what it was worth around the same time last year. It's no coincidence that troubles for the NFT market started to appear around this same time.
Markets are ultimately affected by human emotions, and although crypto and NFTs are distinct, they are linked through the Blockchain.
If people don't feel good about the economy, then they are less likely to invest in markets that are viewed as risky.
There have been slight improvements in the market since, but overall, Bitcoin and other cryptocurrencies like Ether have struggled to reach their former peaks.
This has caused major damage to investor confidence in what was once seen as a promising investment option, and the ripple effects from this damage are being felt across all Blockchain sectors.
The Pendulum effect
As I stated previously, the erratic nature of the NFT market is linked to the overall health of crypto and the global economy.
It's no secret that economies around the globe have been having a hard time recently, with many analysts speculating that the U.S. could be heading towards another recession soon.
It helps to think of the economy as a pendulum: when the market swings in one direction, it will eventually swing in the other. What's important is that we understand who controls the momentum.
Nfts are here to stay
Despite the crypto market's current woes, many industry leaders and entrepreneurs still seem optimistic about the future of NFTs.
Paying attention to what the industry's biggest players are doing can indicate what direction the market will swing to next. In the case of NFTs, it's information technology giants like Meta who have the most influence.
Meta recently announced that they would begin supporting NFTs on their platforms, and a spokesperson for the company confirmed that the rollout would be gradual and would have cross-posting features for creators on Facebook and Instagram.
Additionally, crypto entrepreneur giants like Changpeng "CZ" Zao are working with governments to explore how NFTs can be used to ID citizens and prove digital residency.
There's no way to know for certain what the future has in store for NFTs. Depending on how the market responds, this current dip could be nothing more than a bad chapter in the ongoing NFT saga.
If anything is certain, it's that the technology behind NFTs possesses too much potential to simply be abandoned.
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