• Wed. Jun 22nd, 2022

Cryptocurrencies are crashing and some fear NFTs are next

ByHazel R. Lang

May 28, 2022

PARIS (AFP) – A host of celebrity endorsers have helped inflate a multi-billion dollar bubble around digital tokens over the past year, but cryptocurrencies are collapsing and some fear that tokens are not fungible (NFT) are the following.

NFTs are tokens tied to digital images, “collectible” items, avatars in games or goods, and objects in the burgeoning virtual world of the metaverse.

The likes of Paris Hilton, Gwyneth Paltrow and Serena Williams have bragged about owning NFTs, and many under 30s have been enticed to gamble for the chance to make a quick buck.

But the whole industry is currently suffering a rout, with all major cryptocurrencies falling in value, and the signs for NFTs are mixed at best.

The number of NFTs traded in the first quarter of this year fell nearly 50% from the previous quarter, according to analyst firm NonFungible.

He felt the market was digesting the large amount of NFTs created last year, with the resale market just starting to take off.

Monitoring firm CryptoSlam reported a dramatic drop this month, with just US$31 million (S$42.5 million) spent on art and collectibles in the week to May 15, the figure the lowest of the whole year.

A symbol of the struggle is the desperate attempt to resell an NFT of Twitter founder Jack Dorsey’s first tweet.

Mr Dorsey managed to sell the NFT for nearly $3 million last year, but the new owner can’t find anyone willing to pay more than $20,000.

Ms. Molly White, a prominent crypto-sphere critic, told Agence France-Presse that there were many possible reasons for the slowdown. “It could be a general decrease in hype, it could be fear of scams after so many high profile scams, or it could be people tightening their belts,” she said.

The reputation of the industry has been hammered for much of the year.

The leading exchange, OpenSea, admitted in January that more than 80% of NFTs created with its free tool were fraudulent – ​​many of which were copies of other NFTs or famous works of art reproduced without permission.

“There’s a bit of everything on OpenSea,” said Mr. Olivier Lerner, co-author of the book NFT Mine d’Or (NFT Gold Mine).

“It’s a huge site and it’s unorganized so you really have no idea what you’re buying.”

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