Was NFT just a buzzword in the end?

In 2018, when I was speaking on the stages of crypto and blockchain conferences all around the world, with a frequency of almost every couple of days, I grew tired of seeing scam after scam being presented as the next big tech revolution.

That scepticism made me numb to some of the innovation that was actually happening behind the scenes. In my mind, most projects were launched to make a quick buck, and at times I failed to see the actual value that was being built.

Before I took a long break from the international crypto stages, I dedicated the last few keynote presentations presenting the concept of what I called a Non-Tradable Utility Token, or NTUT. In my idea, that could have been a way to finally accelerate blockchain adoption.

However, I was very well aware that as long as the token carried only a utility function, the masses might have struggled to see an actual value in it.

Not surprisingly the NTUT never happened.

What happened in reality, was a concept that combined my definition of NTUT with a classically traded token. The innovation was the encapsulation of a work of art in each individual token.

The result was a Non-Fungible Token, or in short: NFT.

NFT was seen as a revolutionary innovation that would have freed artists from the predation of intellectual property theft. Throughout 2021, we have seen the concept of NFT blooming, and the price of some of the art sold via NFT marketplaces literally going “to the moon”.

Conscious that my NTUT could not fly without the possibility to be traded, I watched the NFT community getting hyped in what at the beginning seemed to be a “greater fool scheme”.

All sorts of pictures, including avatars resembling “bored apes” were sold for hundreds of thousands of dollars. Similar to any other speculative bubbles, the first buyers managed to sell to someone with a greater risk appetite, but soon the cycle stopped, and many were left with a relatively useless piece of digital art that once was worth hundreds of Ethereum.

Before the readers jump into the conclusion that I do not support NFT, allow me to clarify the I see great potential in the technical solution that NFT provides for many problems in the current economy.

The idea of encapsulating a proof of ownership into an immutable “receipt” in a distributed ledger is very exciting.

Especially in combination with the endless opportunities that the various metaverses are offering in terms of ownership of digital assets.

However, the market seems to have hit a hard stop when Terra / Luna collapsed.

While the market remained relatively hot from February to May, despite the conflict in Ukraine, many pointed out that the average $2.5 billion monthly was almost half of what we were used to see in a much shorter past horizon, as short as January 2022. But the shocking news was the report of a mere $600 million in June. Nearly $2 billion were sucked up from the market all of a sudden.

According to Google Trends, the search results for NFT dropped by 86% in June, indicating that the market has cashed out to “stop the bleed” or to divest from what was seen as a non performing asset.