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The (not-so) tragic downfall of NFTs

There was a time when artistic ability was infused with cutting your ears and being a little schizophrenic. That is a low price paid for what we call good art. But what do we have now? Pictures of monkeys, bored apes mostly, with their arrogant smirks feigning a mocking of my little human IQ, infuriating me. 

If you are playing with cash like a proper citizen, you may have yet to hear of or even concern yourself with digital currency-affiliated creative works. Haven't wallowed in the servers of the internet forums? Pat yourself on the back, buddy. You did well. 

Now, since you are here, let me interest you with what I have rambled on about till now. Which isn't about monkeys, sadly, but rather about other furry mammals with not-so-interesting teats called humans and their beautiful creation: NFTs. 

NFTs are non-fungible tokens containing a unique digital asset that is identifiable on the blockchain and used to certify ownership and authenticity of a specified item such as a piece of art, music video, or a collectible. Those were big words. Please acquire an adult if needed. If you can't, here is a shorter version: NFTs are glorified receipts. Some would say a reasonable way to spend a quarter of a million because, yuh-uh.

Despite the mockery I have conveyed of NFTs, rightfully so, I will give them grace because they were not associated with get-rich-quick scams and rug pulls like they are now. Initially, they were simply digital asset ownership and exchange forums. From the first known NFT sold in 2014, the market was more about creating a community, supporting artists, or an art that you liked. Or maybe an obvious indication of why you should go outside and touch grass. Nothing more, nothing less.

The market gained popularity in 2017 after the game CryptoKitties, an early successful blockchain online game where players adopt and trade virtual cats, started trending. The market continued in a reasonable price range, even after it gained recognition, that is, until 2020, which marked the rise in investment in NFTs. A growing crypto market fueled this surge. There are different speculations on why people jumped into this sphere at this speed, especially from 2020 to 2021. In that period, trade increased from US$82 million in 2020 to US$17 billion in 2021. 

Apart from the boom in cryptocurrency prices, my guess about the specific timing would be, as cliché as it sounds, the pandemic. People were very isolated. A lot of us were convinced that this would be our whole life, confined between the four walls of a room, high-fiving ourselves to sleep. (Which, in the presence of a spouse, is not a terrible experience, or so I have heard).

So, rather than developing alcoholism and going through menopause like the rest of us did, the wealthy had other predicaments. The predicament of having $69 million to spare, which, ironically, is the amount spent on one NFT art by Beeple. The rich were faced with the surplus amount of money they had. Arguably, having unspendable money would be a nightmare. (I would know; I am poor.)

As the market started gaining more popularity, more well-known figures started flooding in, further increasing the price range of NFTs. Even celebrities like Donald Trump (aka Mr. President himself) announced a line of NFTs featuring images of him like the true Chad he is, for $99 each. Which begs the question: do the buyers not own a TV? Couldn't they ask a toddler to draw a sketch of an orange poodle and just print that? These monumental questions will go on unanswered, sadly.

Outside the common realms of digital arts and games, the use of NFTs has expanded into other platforms as well, like movies and the music industry. They have even extended into the medical field, which was not widely accepted and was deemed unethical, as they were turning patient data into NFTs. Congratulations, you now have a blockchain hyperlink to your herpes! There's nothing better than being reminded of your burning thighs every time a financial compensation is made whenever your data is being sold.

The insane amount of money printed for people on crypto and crypto-adjacent schemes drove a lot of people into the craze: scammers, speculators who drove up the prices to later abandon the art, and even gamblers. Which unfortunately caused the NFT market to collapse in 2022. In May 2022, the estimate was that the number of sales was down over 90 percent compared to 2021. By September 2023, one report claimed that over 95 percent of NFT collections had zero monetary value. 

Well, most of the characteristics of NFTs which were the drawing points for the market started to become the drawbacks of it. For example, there was indisputable proof of ownership for the digital assets. While this remained to be true, the anonymity associated with NFTs and the ease with which they can be forged made it easier for plagiarism and fraud. So even if you owned and were certified for the specified art, what good would it be if it could easily be copied and distributed?

This and other similar cases in the community started to get NFTs more negative feedback. Its comparison to money laundering schemes, economic bubbles, wash trading, and Ponzi schemes further pushed people out of the market and discouraged new buyers and investors as well. The lack of regulation, difficulty in pursuing legal action against any offense in the system, and a general absence of legal structures also decreased the attraction towards the sector significantly. 

The industry has fallen immensely, but it has not died yet. It is getting back to its roots, which was more about community and less about profit. Artists are still creating them, so the marketplace is continuing, just not at the same pace.

And dear reader, if the ape collection ever makes a comeback, spare your millions (which you don't have) and pay a quick visit to a nearby zoo instead. Please and thank you! 

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