Temporary fall or burst of a bubble? The market for certified digital objects, the NFTwhich has been on the rise since its inception last year, has just suffered a sudden drop and now needs to be restructured if it is to attract the general public and last, according to experts.
NFT, Non-Fungible Token or Non-Fungible Token, in Portuguese, is a digital format that allows you to associate any virtual object, be it an image, a photo, an animation, a video or music, with a certificate of authenticity. registered in the blockchain, the technology that underpins cryptocurrencies like bitcoin.
After generating $ 44.2 billion in 2021, NFTs saw a 75% drop in spending volume between February and mid-April, according to Chainalysis. The drop in NFT value from Twitter co-founder Jack Dorsey’s first tweet is one of the symbols of this mini-accident.
The first NFT tweet, bought for nearly $ 3 million in March 2021, was auctioned in April. Its owner expects to sell it for $ 48 million, but for now, the highest bidder exceeds $ 20,000.
In contrast, the sale of virtual land to “The Otherside”, a metavers platform (digital universe) of “Bored Ape Yacht Club”, the most famous club of NTF owners, reached several hundred million dollars in 24 hours in early May. .
For the general public, it is difficult to understand this volatile market at the hands of a few heavyweights, called “whales,” who drive NTFs using their influence, says Molly White, founder of a specialized website that lists scams around the world. of cryptocurrencies. Aside from the fashion effect, what basis should be used to set a “fair” price that everyone can understand?
More than “utility,” it’s the “status” conferred by the ownership of an NFT that seems to establish its value, says Molly White. The NFTs available in a few versions, such as “Bored Apes”, give access to very closed groups, being therefore the most expensive.
The cryptographic artist “Louis16art” proposes to trust the reputation of the author, the identity of the previous owners of NFT, the quality of the work and the technique used. Other experts advocate creating a database for first-time buyers, similar to the one used for traditional art, and maintained by digital art experts.
The problem is that most of these assets are sold in “Opensea”, an unregulated market. “And when new technology comes along, scammers are immediately on the lookout,” said Eric Barbry, Racine’s attorney.
The platform revealed in January that 80% of images freely converted to NFT on its network were fake or stolen. For Molly White, the market will not be able to attract the general public unless “regulation” and “consumer protection” are strengthened.
“It’s like the wild west,” sums up Sophie Lanoë, for whom the bursting of the bubble is an opportunity to start again “with a solid foundation.” Aside from the persistent security imperfections and legal “gaps” that can prevent people from buying NFT, how do you simplify the purchase, which is still complex for a non-technophile audience? “No one understands anything, but everyone wants to,” says Olivier Lerner, co-author of the book NTF Gold Mine. “The only thing missing is that the platforms are more accessible,” he said.