The fall of NFTs

NFTs, or Non-Fungible Tokens, are unique crypto assets that offer official ownership status. They are often associated with images or videos and recorded on a decentralised ledger (Culture et al., 2023). This article explores the appeal and potential economic drawbacks of NFTs, how they have been influenced by celebrity culture, and raises questions about their future outside the celebrity world

Despite the initial hype around NFTs, the market has experienced a significant downturn. Dapp Radrs' data revealed an 89% drop in transaction volume and a drastic revenue decline from $12.6 billion in Q1 2022 to $1.39 billion in Q3 2023 (Tidy, 2022). Dubbed "Floptober," October witnessed NFTs struggling. Whilst NFTs are not technically a type of cryptocurrency they share many characteristics and their performances are typically similar and susceptible to the same shocks for that reason. The crypto industry's volatility is not new, and can be seen in previous "crypto winters," for example the prolonged low prices from late 2017 to December 2020. Forbe’s predictions have warned of another crypto winter in November 2022, this was validated when Bitcoin's value plummeted to under $16,000 from a previous high of $69,000 in November (Powell, 2022; Howcroft, 2022). These sudden changes are often attributed to inflation surges in the US economy, which affect the cryptocurrency space and turn it into an unpredictable market. As a result, investors tend to sell off crypto assets to mitigate risk exposure (Culture et al, 2023). While some cryptocurrencies are recovering, like Bitcoin, which sits at $34,000, distant from its peak, NFTs are yet to face a rebound. Possibly due to the unpredictable culture when investing in emerging technology. As investor focus shifts to generative AI hype, doubts linger about NFTs' future trajectory, necessitating efforts to restore their market value.

The supposed allure of an NFT lies in the uniqueness of owning one-of-a-kind assets. Yet, the primary driver of NFT sales often hinges on the associated ‘clout’, essentially the influence associated with owning an exclusive asset. For instance, the Bored Ape Yacht Club leverages exclusivity, offering a complimentary club membership with NFT purchases. Members include celebrities like Post Malone, who bought Bored Ape Yacht Club #9039 for $154007.25, and Neymar JR, who bought Bored Ape Yacht Club #5269 for $569531 (Kris,2023). Celebrities are also creating NFTs as a form of digital merchandise marketed as an investment; notable examples include Snoop Dog, Paris Hilton, and Donald Trump. Trump's collection of 45,000 NFTs, priced at $99 each, sold out in under 5 hours, indicating the pull of celebrity association (BBC, 2022). However, it is questionable if the token investment drove sales or if it was the offer that if you own more than 47 digital trading cards, you get a ticket to a dinner with the president (BBC, 2022). In a similar vein to other celebrity NFTs, the appeal isn't with owning the artwork but becoming closer to the celebrity and supporting them. The recent drop in NFT values, exemplified by Neymar's Bored Ape Yacht Club NFT now being valued at $121992 (Kris,2023), raises questions about the longevity of celebrity-endorsed NFTs as a trend and the potential consequences of taking it too far.

American influencer Logan Paul has made waves in the crypto world and is an example of a celebrity endorsement creating a district in NFTs. Starting initially with collecting expensive and influential NFTs, Paul moved on to getting his name tied up with the meme coin dink doink.He created a "pump and dump" scheme in which Paul and those around him promoted the coin to his audience only to sell his share and allow the coin to crash. Soon after, he started promoting his own NFT project, CryptoZoo, a game where users could purchase NFT eggs and hatch hybrid animals; from there, users could breed their hybrids with others to produce increasingly rare NFTs. However, despite claiming to have invested $1 million into the game and selling an initial 10,000 NFTs, the project was never completed (Chow, 2023). They were valued at $5,249 at their peak and are now under $100. Paul's involvement in CryptoZoo led followers like Reiben Tauk to invest substantial sums, reflecting the risks and disillusionment within the unpredictable and easily manipulated NFT market. This further eroded trust in NFT investments.

The popularity and subsequent economic downturn of Non-Fungible Tokens (NFTs) has been a rollercoaster ride. Initially celebrated for their novelty as one-of-a-kind digital assets, NFTs were soon influenced by celebrity involvement , adding complexity to their appeal. It is now evident that NFTs are unlikely to reemerge as traditional investments, given the scepticism they face. However, they could be helpful outside the digital art space, particularly in shared immersive worlds and the Metaverse, where they can play a pivotal role in authenticating digital ownership. As virtual spaces evolve into more realistic and populous societies, a functional economy that can verify ownership becomes imperative. NFTs can provide decentralised verification thanks to the cryptographic key that secures each NFT (Duggan,2022). Although NFTs are still in their crypto winter, seeing their comeback in the world of virtual reality ventures may be possible.