In 2021, NFTs, or non-fungible tokens, caused mass hysteria. Linked to digital works of art, these tokens have been the talk of the town in recent months, not least because of their sometimes spectacular value. However, a recent study by cryptocurrency experts reveals that these digital assets are already worthless.
In parallel with the record democratization of crypto-currencies, a phenomenon has recently hit the headlines in the field: non-fungible tokens, or NFTs. These digital assets, valid as certificates of authenticity, were attached to digital works of art, sometimes with no real artistic value. Indeed, some NFTs were linked to rather absurd "virtual works", such as an image of the famous "nyan cat" (a popular internet meme from 2011 to 2013), a segment of a photograph of a Salvador Dali painting, a garbage can captured by an American artist and retouched in PhotoShop, the famous Disaster Girl meme (photograph of a little girl in front of a burning house), whose model herself sold her NFT for 450,000 euros, or a symphony made of flatulence... In 2021, some NFTs were acquired for record sums at virtual auctions.
In the eyes of some experts, this trend represented the future of the field, even a revolution in the art market. Others, however, saw the phenomenon as particularly absurd and had already predicted its swift conclusion. Nicholas Weaver, professor of computer science at UC Berkeley, was one of them. Interviewed by Business Insider in March 2021, the expert assured us that NFTs were "pure speculative madness" and "a bubble ready to burst". "It's totally a classic tulipomania [editor's note: a sudden craze for tulips in the 17th century that led to a sharp rise, followed by a total collapse in tulip prices], but where the tulips are recorded on a different medium," he explained to the media outlet. Unfortunately for the millions of Internet users who have acquired NFTs in the last two years, Professor Nicholas Weaver was right.
95% of NFT works are worthless
In September 2023, the collective of cryptocurrency experts Dapp Gambl conducted a study on NFTs and the evolution of their value since 2021. According to them, of the more than 73,000 non-fungible token collections on the market today, almost 70,000 of them have a market capitalization of 0 ETH, or zero Etherum. This figure reveals that 95% of those currently owning NFT collections are, in fact, holding investments with no value whatsoever. According to Dapp Gambl, this statistic corresponds to almost 23 million NFT owners worldwide. In the study report, the experts explain that "this discouraging reality should make us forget the euphoria that has often surrounded the NFT market. In the midst of stories of digital artworks selling for millions of euros and overnight success stories, it's easy to forget that the market is fraught with pitfalls and potential losses".
However, Dapp Gambl's study has delved deeper into the subject and revealed other equally surprising statistics. Indeed, the report also reveals that only 21% of these NFT collections are fully sold. In other words, 79% of today's non-fungible chip collections remain unsold. This impressive imbalance demonstrates that the supply of NFTs is, in fact, too great for the actual demand on today's market. Indeed, buyers have obviously become more demanding and discerning when it comes to purchasing these digital works. As a result, NFT projects lacking a clear narrative, real artistic value or clear use cases are being passed over by investors and are unlikely to attract buyers. Like the previous one, this statistic is a reminder that the market for non-fungible tokens remains highly volatile and speculative, despite its revolutionary and innovative nature.
A harmful effervescence for the planet
The sharp fall in the NFT market obviously represents a major loss for the 23 million or so holders of these digital assets worldwide. However, Dapp Gambl believes that NFTs could survive by transforming themselves. "NFTs need to become historically relevant (like first-edition Pokémon cards), be genuine art or provide real utility." However, this would not solve the major problem with NFTs: their environmental impact. The study points out that the creation of these digital assets would have required energy comparable to 27,789,258 kWh, or the emission of over 15 tonnes of CO2. To give a more precise scale, the Dapp Gambl experts detailed that this pollution is equivalent to that of 2048 homes, 3531 cars or 4061 air travellers between London, England, and Wellington, New Zealand. Despite its innovative and revolutionary aspect, the NFT trend has had a considerable impact on the planet. So the impressive loss of value of NFTs today should also warn us of the ephemeral nature of digital phenomena and their catastrophic effects on our environment.
In addition to the sluggishness of the market, scandals are on the rise. In the U.S., Yuga Labs, the company behind the famous collection of monkey vignettes, is facing two class-action lawsuits from investors who have seen the value of their works considerably reduced. The Securities and Exchange Commission (SEC), the U.S. federal agency that regulates and monitors financial markets, recently condemned actress Mila Kunis and her NFT project "Stoner Cat", which was supposed to finance a TV series, on the grounds that it violated financial asset rules. In France, an investigation revealed the suspicious role of actor Kev Adams in a similar project, causing losses in excess of a million euros for those who bought the NFTs associated with this project.
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