It’s not looking good for NFTs and crypto.
In September 2021, 225,000 NFTs sold every single day. Today that’s more like 19,000, according to NonFungible data shared by the Wall Street Journal. In November Ethereum, the currency that drives much of NFT purchasing as well as smart contracts, reached a high of over $4,500. Now it’s at $2,800. Bitcoin reached over $65,000; now it’s at $39,000.
At the same time OpenSea, one of the largest NFT marketplaces, has seen daily app downloads plummet 94% from a spike that reached 180,000/day in January to around 20,000, according to Apptopia. And app installs for Veve Collectibles, another NFT marketplace, are down a shocking 99% from a high of close to 18,000/day in November 2021.
It’s not just a lack of new users, either.
In-app revenue on Veve is down 90%, Apptopia says.
What it all means is that right now, crypto and NFTs are slowing down. The top 50 crypto apps are down 64% in global downloads, according to Apptopia’s data, and monthly active users are down as well. There is a bright side, however. While monthly active users of the top 50 crypto apps are down, they’re down just 6.5%, which suggests those apps are keeping their users … even if they’re just doomscrolling dropping crypto prices and unmet minimum bids on NFT portfolio items.
This was always going to happen.
Value in collectibles is driven by rarity, and true rarity is … rare. This is by design. But when Beeple and groups like the Bored Ape Yacht Club started raking in multi-millions from JPEGs and GIFs, everyone and her dog piled into the NFT market.
The result is a glut: too many pieces of digital “art” chasing too few digital coins and too few “greater fools.”
None of this means that NFTs are doomed forever or that cryptocurrency is a failure. There is a scenario under which — after the boom, and after the bust — digital means of owning, managing, and transacting property become long-term meaningful.
As I wrote recently after interviewing Rarible (yet another NFT marketplace) chief product officer Alex Salnikov, digital living incorporates digital property which requires digital currency:
Because the reality is that increasingly, reality is virtual. Or at least digital. We consume digital entertainment via Netflix, digital music via Spotify; we engage in digital battles on Fortnite; we win virtual wars on our smartphones; we meet others digitally via Zoom; we work digitally on laptops in homes with Google Docs on virtual hard drives; we outsource our memories to search engines. Even when we work out our bodies in the physical meatspace world, digital trainers urge us to drop and give them 25, or push just a little harder, or stretch just a little more. In short, almost everything we do, we do digitally, or augmented by digital realities.
As this evolving metaverse grows up around us and our reality becomes even more digital, there is an increasing need to represent rights of access, rights of ownership, and rights of use. What can I use? What can I allow others to use? What do I own? What do others own? Importantly: how can I express all of those things digitally, programmatically, and contractually?
NFTs might still be the answer to those questions.
If so, however, we’ll have to pass through this trough of disillusionment and rebuild the space based on real value, not random algorithmically-generated art that Tech Dude #3 hopes will fund his tropical retirement.