Whatever Happened To NFTs And Why?
State of the NFTs
INTRO: Not too long ago, NFTs were the hottest commodity on the market. We saw singers, athletes,YouTubers, and even comedians buy into the craze.These guys were dropping hundreds of thousands if not millions of dollars on these non-fungible tokens. And while non fungible tokens might sound like some sort of fancy investment, in the end, it's really just a digital picture. In fact, unless you told someone, they wouldn't even know whether you paid for the picture or not.
But, with that being said, at least these celebrities could afford it. Usually, these guys are worth tens of millions if not hundreds of millions, so losing a few hundred thousand or even a few million wouldn't drastically change their lives.But, these guys weren't the only ones that were buying into the craze. Loads of retail traders were sinking their life savings into dozens of jpegs hoping that at least one of them would become the next crypto punk or bored ape. But, as the entire market started to crash, it didn't take long for NFTs to follow.
For example, in April, bored apes were selling for $400 to $500,000, but now, they're selling for just over $100,000.Similarly, Crypto Punks have also crashed from over $400,000 to under $100,000.
And these are the most prominent and notable NFTs.Many of the NFTs that everyday people were buying are down over 90% from their all time highs which is not that surprising given that NFT sales have crashed 92% from the peak.But how did this entire craze even start and will NFTs ever recover?
HISTORY OF NFTS:Well, taking a look back, the idea of NFTs has actually been around for quite some time dating all the way back to 2012. At the time, a man named Meni Rosenfield published a white paper called Colored Coins. The paper described a method in which real world assets could be represented and accounted for in the digital world.The idea was to create tokens that were similar to bitcoins in that transactions would be accounted for on the blockchain.But, the difference was that each token would be unique and distinguishable unlike bitcoins.
While this was a rather interesting idea to many crypto enthusiasts, the idea couldn't really be implemented due to the limitations with Bitcoin at the time.
This didn't stop enthusiasts from trying to make colored coins a reality though, and that brings us to an artist named Kevin McCoy.In 2014, Kevin Created a piece of digital art called Quantum. Quantum was a rather simple piece, it was basically just an octagon that was pulsating in different colors. But, what made it unique was Kevins efforts to make it into an NFT.
Since he couldn't leverage Bitcoin, he launched Quantum on secondary blockchain called Namecoin which made Quantum the worlds first NFT. I don't think you'd be surprised to hear that Quantum was sold for well over a million dollars at the peak. Anyway, after the release of Quantum, we saw a lot more buzz in the crypto community surrounding NFTs.There was a lot of hype surrounding native support for NFTs from Bitcoin, but this never really happened.
Even today, the Bitcoin blockchain does not natively support NFTs.
The problem was thatBitcoin wasn't built with real assets in mind, so trying to inject this new idea into Bitcoin was rather difficult. And this is where Ethereum comes in. Ethereum wasn't launched till mid 2015, so the development team had quite a bit of time to study the shortfalls of Bitcoin and address them. The Ethereum team didn't support NFTs directly per se, but they built a robust system of smart contracts which made creating, minting, and distributingNFTs easier than ever before. And this ease caught the attention of two software developers named John Watkinson and Matt Hall who decided to create their own set of NFTs.
They launched this experimental NFT project with 10,000 pieces that were inspired by Londons punk culture, and they decided to call them CryptoPunks. Initially, they actually handed out CryptoPunks for free to anyone with an Ethereum wallet.This is quite ironic given that each of these would eventually be worth over $400,000.
Anyway, since then, CryptoPunks have become an OG within the crypto space, and we've seen thousands of projects try to replicate their success, but only a few have even come close such as the Bored Apes.In the meantime, crypto exchanges were also hard at work trying to make it as easy as possible for everyday people to buy and trade NFTs and that brings us into the insanity that we saw last year.
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USE CASES:Hearing the history of NFTs probably didn't convince most of you guys that NFTs are useful by any means. After all, it's basically just a couple of art collections gong viral with the help of blockchain technology.
But, digital art is just one use case for NFTs, and it's actually the most overrated use case. NFTs have several other use cases such as proof of ownership.You see, NFTs aren't limited to just the proving ownership of digital art.
They can be used to prove the ownership of anything and a great example is real estate. Imagine if you go tan NFT based deed when you bought a house. You could essentially create a record of the homes occupancy and ownership on the blockchain. And when you're ready to sell the house, you could easily show potential buyers the entire history oft he home from the day it was built. Combine this with smart contracts and you can eliminate much of the paperwork and tediousness associated with real estate transactions.
This same principle applies to anything with substantial value.What if you got an NFT along with car purchases, stock investments, bond investments, and so on and so forth. NFTs aren't just limited to high value items either. NFTs could also be implemented into everyday items like groceries and food.
In this scenario, NFTs would have less to do with proving ownership and more to do with keeping track of the supply chain.
After all, I don't think the average person cares about have a digital certificate that proves that they own the milk in their fridge.However, if milk came with an NFT, people could track down what farm it came from. While this is a cool idea, I bet the average person would probably get over it within a week.Where this really makes sense is large companies with complex supply chains. Companies like Apple and Tesla can leverage NFTs to maintain a detailed log of the origins of their steel and lithium and aluminum and so on.
And with all of the supply chain problems we've been facing, the need for such a system is more evident than ever. Putting the business world aside, NFTs also prove quite valuable when it comes records and credentials.What if birth certificates, medical records, passports, and drivers licenses were all securely stored on the blockchain. You wouldn't have to worry about keeping all these documents safe or lugging them around to hospitals and the DMV.A similar case could be made for credentials as well.
When you graduate college you could get anNFT that goes along with your diploma. This would make it way easier for companies to verify your academic background. Similar NFTs could be handed out electricians and plumbers and carpenters.This way, when you hire a contractor, you could ensure that they actually know what they're doing. All of these use cases are just scratching the surface of NFTs.
They could be used to validate tickets and patents and voting and so much more. So, don't be fooled by the apparently useless jpegs that are being circulated around social media. The real applications of NFTs are far greater than apes and flexing. THE NEEDED COLLAPSE:While NFTs do have quite a bit of potential, the current crash that were experiencing is well warranted and way overdue. As Elon Musk put it, its been raining money on fools for too long, and this is whats given NFTs such a terrible reputation in the first place.
When people think of NFTs, they don't think about how it could revolutionize proof of ownership or how it could help create digital records and certifications. Rather, they think about lavish celebrities dumping obscene amounts of money into pictures that you can screenshot off of Google. And as long as people are making millions flipping jpegs, this will be the overwhelming narrative surrounding NFTs. Not to mention, there's the whole scamming side of it as well. We've seen hundreds of fake NFT websites that try to replicate legitimate NFT marketplaces.
And people end up spending tens of thousands on these fake websites that don't even get the real NFT. We've also seen the rise of a new breed of CryptoBots.
These guys are now not only an expert attrading, but they're also experts at picking out the next big NFT. But, more than all this, likely the most obvious sign of a massive bubble was influencers creating their own NFTs and cashing out millions by shilling it to their audience. And, the only way to cleanse all this garbage is for the entire sector to get obliterateda and for people to get bored and leave.
After that, we can finally start to see true innovation once again and unique applications that are actually beneficial. Now, you might be saying that theNFT market has already gotten crushed given that prices are down 80% across the board, but this is just the beginning.
You see, while overhyped NFT shave crashed in value relative to the dollar, they haven't crashed in value relative to crypto.Take CryptoPunks for example. Each CryptoPunk still costs 60 to 70 Ether just like it did in March and April.
So, the entire crash so far is solely due to crypto itself falling.70 Ether used to be worth over $300,000 ,but now it's worth less than $100,000. Now, popular NFTs like CryptoPunks and Bored Apes may actually hold onto their value in relation to crypto decently well. But, the vast majority of NFTs are likely headed towards 0, and as the crypto bear market continues, it just becomes more and more likely that these NFTs start to lose value against crypto as well. And while this will no doubt be a painful journey for NFT hodlers, I think it's exactly what the market needs before it moves on to the next phase of growth and adoption.
THE FUTURE OF NFTS:In the end, we live an extremely technology driven world, but even now, parts of our daily lives that have yet to be digitalized. We still go through mountains of paperwork when we transfer ownership and basic IDs like drivers licenses have yet to be digitalized. Fortunately, it seems likeNFTs are just what we need to digitalize these last remaining portions of our lives. With that being said though, NFTs don't have the best of reputations amongst everyday people and it's easy to understand why. Everywhere on social media, were constantly being exposed to degenerates who are gambling on random jpegs.
And while some of them are making money, the whole situation doesn't exactly give you confidence and trust in the market. Ideally, people would just put all this behind us and focus on the positive attributes of NFTs, but this is never how it works out. With every revolution, we see a bunch of garbage enter the space and a massive bubble forming before a massive crash wipes out nearly everything.
We saw it with internet companies in the late 2000s, and we saw it with EVs, NFTs, 3D printing and who knows what else over the past few years. And now, we're seeing all these sectors getting destroyed and no one knows when exactly the pain will end.
But, eventually, we will make it to the other side and we will see true innovation and growth. Maybe governments will start issuing NFT based IDs and universities will start handing out NFT based diplomas. Who knows? Only time will tell, but in the meantime, if you're wondering what happened to NFTs? The answer is nothing other than the cleansing that it so desperately needed.
Do you guys own an NFT? Comment that down below.Also, drop a like if this video made you look atNFTs differently. And of course, consider joining our discord community to suggest future video ideas and consider subscribing to see more questions logically answered.
