Headlines predicting the death of Bitcoin are nothing new. Over the past decade, we’ve seen every permutation of why “Bitcoin is dead” imaginable, yet the current crypto winter has brought very few of these dire proclamations.
It seems a little different this time. Maybe it’s hard to pen such a eulogy with Bitcoin (BTC) hovering around $28,000, and a spot Bitcoin ETF on the horizon. Doesn’t seem like Ethereum’s dead either.
But the blockchain industry and its commentators still need a corpse to poke at, and that’s what they’ve found with the putrid cadaver that is the nonfungible token market
NFTs are dead. Deceased. Lifeless. NFTs are the “Norwegian Blue” from Monty Python’s Dead Parrot Sketch. And the grave dancing has commenced; to quote a recent Rolling Stone headline, “Your NFTs are actually — finally — totally worthless.”
Rolling Stone is right — most NFTs are indeed utterly worthless.
Yet that should not be surprising to anyone who’s been in crypto for a few cycles. Most of the ICO tokens from the 2017 bull market vintage were dead by the 2018/19 winter. Likewise, the countless DeFi protocol tokens post-DeFi-summer of 2020.
Today, more than 1.8 million tokens have an aggregate market cap of a little more than $1 trillion. But the top 10 largest protocols and tokens account for over 93% of the total.
Do the math. That’s a long, long tail of worthless zombie coins. The vast majority of all tokens die. So why should NFTs be any different?
The barrier to entry to create an NFT project in the hope of striking it rich was (and remains) low. Anyone can, and seemingly did, create an NFT collection in a few minutes with a few keystrokes.
So what happened when a frenzy of trading activity and money flooded into this new corner of the crypto market in mid-2021? The free market responded exactly how it was supposed to: it provided supply. And supply ≠ quality, especially in this industry.
We’ve seen the same cycle again and again, this just happens to be the first real NFT winter.
A-listers have quietly taken their NFT Twitter avatars down. Jimmy Fallon isn’t shilling apes with Paris Hilton on late-night TV. Ashton Kutcher’s Stoner Cats has settled with the Securities and Exchange Commission (SEC). A collective sense of embarrassment abounds.
NFT trading volumes have collapsed, from around $1 billion a week in mid-2021 to early-2022, to sub-$100 million today.
