DIGI-CRUNCH TIME

Published date11 June 2022
Almost overnight, billions of dollars were wiped off the value of thousands of cryptocurrencies, including “mainstream” ones such as Bitcoin and Ethereum. The proud owners of digital cartoon-style pets and pop-culture avatars, bought mainly with Ethereum (ETH), were left sobbing into their virtually empty digi-vaults after realising their non-fungible tokens (NFTs) weren’t worth the blockchain they were written on

Headlines screamed “Crypto crash” and “Wall Street giant issues stark NFT prediction” as conservative financial advisers who had previously warned against wild speculation and “pyramid schemes” worked hard to keep the I-told-you-so smirks off their faces.

But still they invested, fuelled by celebrities jumping on the NFT blockchain including socialite Paris Hilton, Madonna, actor Reese Witherspoon, singer Katy Perry and rap artist Snoop Dogg. Someone paid US$450,000 to buy an NFT of a plot of land next to Snoop’s metaverse residence, Nike created a virtual sneaker NFT, and brands like Gucci got on board.

If you’re still stuck trying to work out what an NFT actually is, it’s just a collection of digital data, whose ownership can be recorded using what is known as blockchain technology, allowing it to be bought and traded. That data could be just about anything digital — an image, a video or a sound file, for example. Many popular NFTs take the form of digital art, like the Bored Ape collection of cartoon-style images of monkeys. Depending who you ask, NFTs are either the future of the art market, or a very efficient way of throwing away your money.

The reasons behind the crash were many — suggestions include inflation, the war in Ukraine, the pandemic, an over-saturated market, and increased regulatory scrutiny of crypto. Some even blame billionaire Elon Musk for mocking NFTs on Twitter.

Whatever the reason, what investors want to know is what happens now? Will the millions of crypto crazies who forked out good money for pet rock gifs and marginal cartoon characters have done their dough? The answer, it seems, is yes and no.

Those who invested in quirky NFTs that were little more than a picture or a dodgy cartoon should probably have put their money in the bank at 2 per cent interest. But others who are deeply immersed in the digi-world say NFTs with blue-chip pedigree will survive the gold-rush mentality. Although prices fell by as much as 50 per cent, they’re still worth thousands of dollars.

They talk (for hours) about the metaverse, of (digital) communities, decentralisation and the authenticity of the blockchain. They believe NFTs with good pedigree — think Bored Ape Yacht Club, Doodles, World of Women, CloneX (owned by Nike)...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT