According to the study, once-hyped NFTs are now largely worthless (Cryptocurrency: ETH-USD)

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Everything related to blockchain reached a euphoric state in 2021. Against this backdrop, certain non-fungible tokens (NFTs) raked in millions of dollars from buyers. But after a painful market downturn, the vast majority of these digital collectibles aren’t even available for a penny.

In fact, a recent study by dappGambl, a community of cryptocurrency researchers, found that 69,795 or 95% of the 73,257 NFT collections analyzed have a market cap of zero Ethereum (ETH-USD), the world’s most popular altcoin. It is estimated that around 23 million investors own these worthless tokens.

To be clear, NFTs are digital assets such as artwork, GIFs, and music that are stored on the blockchain and cannot be replicated. The tokens are transferred from one owner to another using blockchain technology, creating a digital trail from seller to buyer that verifies the transaction. Like other speculative assets, investors buy NFTs in the hope that their value will increase and they can be sold for a profit.

“This discouraging reality should serve as sobering evidence of the euphoria that often surrounds the NFT space,” the report said. “Amid stories of digital artwork selling for millions and overnight success stories, it’s easy to overlook that the market is fraught with pitfalls and potential losses.”

Lack of demand

dappGambl also found, using data provided by NFT Scan, that there is not enough NFT demand to absorb supply, as 29% of the collections included in the study remained unsold. “As a result, projects that lack clear use cases, compelling narratives or real artistic value will find it increasingly difficult to attract attention and sales.”

At the height of the NFT boom, it was common for headlines to focus on tokens selling for millions of dollars. For example, in March 2021, a Beeple artwork NFT sold for $69.3 million and former Twitter CEO Jack Dorsey sold his first tweet for over $2.9 million.

Now that we’ve filtered out the less significant collections in the study, less than 1% of NFTs are priced above $6,000, and most of the most expensive projects cost between $5 and $100.

What does the future hold for NFTs?

While many assume that NFTs are effectively dead after the hectic 2021-2022 bull market, dappGambl believes there is still a place for them and stands by its view that “once the dust settles, we will see development NFTs will experience.”

The researchers argued that collectibles like the famous Bored Ape Yacht Club “could lose relevance if they serve only as a profile picture or as a ‘flex’ for the have-nots as to how much one is willing to spend on one.” Instead, NFTs should have historical relevance have or be real art or provide a concrete benefit (i.e. a specific function or use case) to achieve lasting value, they demanded.

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