Raphael Thys
Photo: Bored Ape (Edited by author)
Over a year ago, the landscape of the online world was altered forever when Beeple’s ‘Everydays — The First 5000 Days’ digital artwork sold at a first-of-its-kind auction for $69,346,250.
While digital art wasn’t a new concept, the medium had struggled to establish itself because the ease of duplication (right-click, copy) made it near-impossible to assign ownership and value. But the arrival of NFTs and blockchain technology finally enabled collectors and artists to verify the rightful owner and authenticity of digital artworks. In other words, no matter how many people choose to copy the digital item, there is only one true owner.
Beeple’s extraordinary sale was the ultimate test case — people would pay, and pay lots, for purely digital items — and it opened the floodgates to a whole new market, sparking an NFT frenzy. The biggest craze was JPEG images that could be used as social profile pictures. One of the more successful ventures was the Bored Ape Yacht Club, which tied its tokens to an exclusive membership club in an effort to make it more than just expensive pictures (some Apes have sold for over $3 million). Other projects, like Crypto Punks, have been equally successful, with the highest sale price over $20 million. The rest… well… most aren’t worth the words. Celebrities soon joined the fun, with many promoting (or trying to inflate the price of) NFTs they owned on late-night chat shows. Serial entrepreneurs like Gary Vaynerchuck promptly joined the party, with all the same talk of community and the same outcome of money, money, money.
Alongside the NFT boom was its counterpart, the Metaverse, which many believed (read: prayed) would be the digital playground to use these NFTs, whether through avatar skins, items, or interacting in exclusive online communities. Mark Zuckerberg saw an opportunity to lead the way, rebranded Facebook into Meta, and declared that “[the Metaverse] is just going to be a big part of the next chapter for the way that the internet evolves after the mobile internet.” In a recent earnings report, Meta revealed that the company had already blown $10 billion to pursue this dystopian dream and expected to burn through plenty more. Like Beeple, Meta put the Metaverse terminology into the public eye, and companies were eager to jump in. McDonalds filed patents for a virtual restaurant. Google is picking up it’s DOA Glass project to reposition it for some form of Metaverse. Nike wants to be the social signal of wealth for your Metaverse avatar. The list goes on, and on.
The boom is on the verge of a bust
But 12 months in, the new digital future hasn’t quite played out as planned. Since the end of January 2022, interest in both projects has rapidly declined, with all signs pointing to a crash. Worse, it could be the bursting of the digital-only bubble.
With NFTs, monthly buyers dipped below 800,000 for the first time since its peak in January. The average NFT price fell from $6800 in January to $2000. Secondary sales (all subsequent resales of the work after the first purchase) dropped to 7,900 per day, down from a January peak of 38,000 per day, down from an all-time high of 103,765 per day last September. The effects of the drop have been felt across the entire NFT market: data from Coin Market Cap shows the market cap has dropped from a high of $23 billion to around $10 billion, losing over half its value. A quick look on Google Trends compounds the fall, with global keyword search volume for the term ‘NFT’ done 60–70% since January 2022.
NFT Google Trend data
Metaverse search data follows a similar pattern.
It rose out of obscurity and spiked on the back of Facebook’s rebrand (those skeptical of the company would point to this being the desired outcome, shifting attention away from the shitshow that was Facebook). It has since tumbled down in an identical fashion.
Metaverse Google Trend data
It’s little more than a money-making opportunity
As to the cause of the drop, external factors are at play. Most notably, the ongoing war between Russia and Ukraine and the resulting humanitarian crisis has turned attention and resources elsewhere, limiting the airtime and media buzz that drove the initial hype and changing investors’ priorities.
But the data shows the lowering interest was already underway.
Recently, the whole category has come under increased regulatory scrutiny, with governments concerned about money laundering, tax evasion and more, and regulatory action is looming. Then there’s the steady stream of scams and frauds that have infested the community and the lack of protection an individual has when they lose out. Every month, a new NFT rug pull occurs (scammer drives up the price, sells, then tokens head to zero), like the “Evolved Apes” project that netted the founder nearly $3 million and left everyone else with nothing but a JPEG. They are so common that Gizmodo is now keeping a monthly track of NFT scams.
But most of all, companies and creators touting NFTs and the Metaverse are yet to find worthwhile use-cases for them, and the public is starting to see through the self-fulfilling hype. NFT creators promise games and clubs and communities that never materialize because…reasons. JP Morgan became the first Metaverse bank, hoping to broker mortgages and loans for virtual property within a virtual world because… reasons. Brands like Pepsi and Taco Bell offer NFT tokens to customers because… reasons. Twitter allowed users to verify their NFT, and it turned their profile picture into a hexagon shape because… reasons. Zuckerberg promised to revolutionize work and play and has so far given us a sub-par Nintendo Wii avatar without the legs, and a remote work experience will have everyone running back to the office. Oh, there was that one cool party, though, right? You be the judge.
And so, it poses a question that may have lasting consequences on the future of the internet and the digitally connected world. Is this merely a Bitcoin-esque blip on the path to these new technologies establishing themselves, or is this the bubble bursting already? Of course, these technologies will stick around and might one day establish themselves and become the building blocks of the new ‘decentralized’ internet they champion so hard. But at present, they are a pointless, expensive, resource-sucking result of capitalism gone mad. The words of Amanda Yeo, from a Mashable article published just before Beeple’s sale that started it all, hit the digital nail on the digital head:
“We don’t need NFTs. We don’t benefit from NFTs. The only anemic value gained upon purchasing an NFT is the ability to truthfully say, “I own this NFT” — a sentence with so little significance it’s laughable.’
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