The sudden and dramatic crash in the value of non-fungible tokens (NFTs) has many critics feeling vindicated, but technologists and digital-art enthusiasts say they still believe in the promise of the blockchain-based virtual objects.
The buzz around NFTs seemed unrelenting in 2021, as the technology that allows for the authentication of digital products became part of the popular lexicon. NFT was the Collins Dictionary’s word of 2021 – a year that saw use of the abbreviation rise 11,000 per cent.
NFTs are basically an original digital asset, like art, music, photograph, video or anything that can be sold. Who owns an NFT is kept track of by a blockchain, which is basically a decentralized digital ledger.
The frenzy is widely considered to have kicked off in March of that year, when fine arts auction house Christie’s sold a digital work called “Everydays: The First 5000 days” by a digital artist named Beeple for more than US$69-million. Since then the technology has been used to sell ownership of digital content –ranging from sports highlight reel moments to videogame avatars to “Bored Apes” – with sales in the hundreds of thousands or even millions of dollars.
The market for NFTs experienced a sudden downturn in early 2022, along with cryptocurrency and stock markets. In the first week of May, sales of NFTs dropped 92 per cent compared with their September peak, and the overall market capitalization plummeted from a high of US$23-billion in December to slightly more than US$12-billion today, wiping away more than US$10-billion worth of investor capital in a matter of months.
“I’ve struggled to wrap my head around the levels of excitement of others,” says Paddy Cosgrave, co-founder of Web Summit, which hosted its latest tech event, Collision, in Toronto in late June. Despite providing a venue for NFT enthusiasts to share their stories, Mr. Cosgrave remains skeptical of the technology. “I’m either not smart enough to figure it out, or there is nothing to figure out.”
Mr. Cosgrave says he believes confusion helped drive the NFT craze in the first place. He explains that many who bought into the frenzy cited the enthusiasm of smart technologists as a reason to invest in it.
“You’re like, ‘wow, this is the future, it’s so complicated I can’t understand it, but people are making lots of money, so it must be legit.’” At the same time, Mr. Cosgrave says he has written off similarly hyped technologies in the past, only to see them gradually live up to that hype.
“Organizing a tech conference for more than a decade, the one thing I’ve learned is that I’m more wrong than I am right, and that I’m usually proven wrong quite quickly,” he says. “I’m happy to be proven wrong [about NFTs] too.”
Jennifer Wong says if you look past the hype, you’ll find a game-changing technology that will forever alter the world of art. In late 2021, she opened the world’s first museum dedicated to displaying NFTs in Seattle to help dispel some of the myths and misconceptions about the technology, and to support the work of both local and international artists.
“What we wanted to do is showcase a lot of different art that are using NFTs as a way of ownership and authentication,” says Ms. Wong, who was a presenter at Collision. “We’ve [featured] photographers, we’ve had 3D digital artists, we’ve had animators, and we had some PFP (profile picture) projects as well, but we just wanted to show the diversity of the NFT art out there.”
Ms. Wong explains that she opened the Seattle NFT Museum to demonstrate the less-speculative side of the technology and she has been surprised by what she calls an “overwhelmingly positive” reception from visitors. She says visual artists, especially photographers, have traditionally struggled with issues related to ownership and authentication such as copyright infringement and counterfeiting. Despite the recent speculation bubble, she adds NFTs can actually enhance credibility in the arts.
“The perception of blockchain [after the latest crash] is creating a barrier for people to actually see it as a useful technology; maybe blockchain needs rebranding,” suggests Aleeza Jahan, a student at the Knowledge Society, a Toronto-based educational program that helps teens utilize advance technologies to solve major challenges.
“This technology is revolutionary, and it’s not a matter of whether you support NFTs or you don’t support NFTs; it is fundamentally different to approach things as decentralized,” adds classmate and colleague Anya Singh.
On the final day of Collision the two teenagers created an NFT live on stage and explained why they are bullish. Later that day the pair explained why they believe the decentralized technology will fundamentally change how we interact with both the digital and physical worlds – whether or not the average user takes notice.
“For the average person it’s hard to understand what’s actually happening on the back end, and how things are more decentralized, because the front end will look the same,” Ms. Jahan says.
“Is it worth paying attention to it? That’s like asking if the Internet was worth paying attention to,” Ms. Singh adds.