The NFT industry made a strong comeback in 2021 and early this year. In November last year, a company paid $2.4 million for a parcel of virtual land in Decentraland. In the same month, another user spent $4.3 million buying a piece of land in the Sandbox. Recently, however, it appears like NFTs are dying a slow death.
A non-fungible token is a piece of digital asset that is backed by and secured by the blockchain. A good example of an NFT is a photo that you take with your phone. That photo has a unique metadata that cannot be replicated.
NFTs make it possible for artists to mint unique NFTs and then sell them digitally. For example, it is well-known that Jack Dorsey sold his first tweet as an NFT for $2.9 million. That tweet was unique because of the special role that Twitter has in the world today.
NFTs are seen to be disrupting the art market that has existed for years. Instead of buying a physical piece of art, collectors can buy a real NFT version of it.
NFTs have had a lot of success in the past few months. In total, NFT sales have generated billions of dollars in revenue. They have also been embraced by all types of developers. For example, game developers use NFTs to monetize their apps.
Similarly, companies in the Decentralized Finance (DeFi) industry like Uniswap and PancakeSwap have incorporated DeFi in their operations.
Find out more about what are NFTs.
Therefore, with cryptocurrencies crashing, a common question is whether NFTs are dead. The answer is that NFTs are not dead yet. For one, data compiled by CryptoSlam shows that NFT sales in November rose to over $534 million despite the FTX drama. Similarly, NFT volume in December has increased to $281 million. If the trend continues, it means that sales will total $562 billion.
However, a closer look at these numbers show that NFTs may be dying. While the $534 million is an encouraging figure, data shows that NFT volume for the same month in 2021 was $2.8 billion. In January this year, NFT volumes totalled over $4.7 billion.
Find out more interesting facts about NFTs.
Additional data shows that the number of NFT buyers and sellers has dropped. Active buyers peaked at over $1.1 million in January and have dropped to 288k. Sellers have dropped to 420k. Most importantly, the total number of NFT transactions has been falling.
Therefore, these numbers don’t inspire confidence about the industry. While NFTs will always be there, I believe that the industry will exist at a smaller scale than its peak.
