Earlier this year, NFTs were everywhere.
For those who aren’t familiar, NFTs (non-fungible tokens) are based on the Ethereum blockchain, designed to create unique digital content by embedding specific information that makes a digital object distinct and uncopiable in future iterations.
The musician Grimes sold an NFT-embedded music video for $390,000. The digital artist Beeple auctioned off one of his NFT pieces at Christie’s for $69 million. And rock band Kings of Leon released its latest album in the form of an NFT. If this were a celebrity biopic, March would have been the second-act montage showing non-fungible tokens at the height of their success.
These days, however, NFTs seem to have veered into the third-act, downward spiral part of those movies. As Gizmodo reported on Thursday (June 3), sales of NFTs have recently fallen 90 percent, from $170 million at their peak to $19.4 million in the last week.
“NFTs were always about speculation, and interest in both the big-ticket art items and the cheaper collectibles is fading rapidly,” noted the report. “Sales are plummeting. The NFT bubble has popped. Whether another NFT bubble rebounds in its place may depend in part on whether the above applications sound more to you like gem mint comic books or Pokémon cards (which retain value thanks to their rarity and their association with legendary brands and nostalgia) or… Beanie Babies and Franklin Mint medallions.”
The continuing bitcoin crash and the increased attention on the environmental impact of crypto and NFT — both huge electricity consumers — haven’t helped matters, McKay said.
And even if NFTs recover, there are also some tax-related issues connected to the currency. As PYMNTS reported in April, the IRS has said that the U.S. fails to collect about a trillion in taxes each year because of cryptocurrencies — and now, NFTs.