After Bitcoin’s initial millionaire-making boom, NFTs promised to be the next digital goldmine and suddenly people were paying stupid amounts of money for digital images of a monkey.
The hype around these valuable screenshots got so bad that in 2021, an Iranian crypto investor paid $2,9 million for Jack Dorsey’s first Twitter tweet. This alpha tweet is worth an estimated $4 today (which may also be what Twitter will be worth once Elon is done with it).
The Iranian owner of the prime tweet likely didn’t feel the loss, but there were plenty of people who saw NFTs as the new Bitcoin and threw money at the monkey that they shouldn’t. Were talking hundreds of thousands of dollars. Now, a new report from industry researchers found that 95% of the once-hyped crypto assets have hit rock-bottom valuations.
For those who don’t know, NFTs (non-fungible tokens) are a blockchain-based means to claim unique “ownership” of digital assets. “Non-fungible” means unique, as opposed to a “fungible” item such as an R200 note, which is the same as every other R200 note.
But, just because an item is unique does not make it valuable. Because digital images are easily replicated, an NFT is effectively a receipt indicating that you paid for something that others can obtain for nothing. This is a shaky investment, to say the least. Some people have learned this truth the hard way, like Sergei Sergienko.
“I’ve spent close to $500 000 (R9,2 million) on NFTs. The current value is close to $5 000 (R91 000).
Other NFT fans who spoke to Vice reportedly spent big money on digital images and meme coins, losing amounts that would make you cry if you operate in ZAR.
Despite these losses, several optimists believe NFTs will make a comeback. One group of Bored Ape investors is even suing several celebrities whom they believe ‘falsely marketed’ these ‘artworks’ to intentionally inflate prices. For most people who saw the NFT gold rush as a get-rich-quick scheme, a lawsuit won’t help recover their pensions.
Sotheby’s, the legendary auction house founded in 1744, also hopped on the NFT bandwagon. In September 2021, Sotheby’s sold 101 Bored Ape NFTs for more than US$20 million (R36 million). The unhappy buyer has now also filed a lawsuit against the auction house.
The prices of Bored Ape NFTs are today down by 90% from their peak. The CryptoPunks have also dropped by 80%. The huge drops in the price of Bitcoin and other cryptocurrencies, as well as the failure of the FTX exchange and the rise of scammers, have all contributed to the decline in NFT value.
NFTs might not completely disappear, but the initial boom is well and truly over. But as every Bitcoin owner would tell you: Next year might just be the year that monkeys may make millionaires. Or makes monkeys out of millionaires.