What is NFT. Why did everyone talk about them before, but now no one remembers?

In the huge information flow today, many ideas, events and phenomena appear and disappear. It is curious that when almost no one knew about some trend a year ago, six months ago they talked about it from all irons, and now no one remembers it at all.

Something similar happened to the NFT in 12 months. An interesting and unusual technology shot out last year, and since the beginning of this year, interest in it has been rapidly declining.

It seemed that everything related to cryptocurrencies and blockchain would remain popular for a long time to come, but strange pictures are rapidly disappearing from news feeds and headlines as quickly as they appeared there. Investors who have invested in technology will not soon be able to get a profit.

Now let’s try to understand the reasons for the success and the rapid decline in demand for NFTs.

What is NFT and how did it appear

NFTs (non fungible token) is a non-interchangeable or unique digital unit of account for some unique object. Such a token can be assigned to a picture, video, photo, song, tweet, or any digital object.

From a certain point on, such digital records began to be of a certain value, emphasizing the fact of owning some kind of content.

NFT differs from ordinary ownership in its cryptographic component. The token is stored on the blockchain, making it virtually impossible to steal or counterfeit. All data about the purchase, sale and all owners of NFTs will be stored securely on the network.

Experiments with encrypted NFT tokens began back in 2012. In the fall of 2015, a game project was launched Etheriawho proposed to secure ownership of one of the special hexagonal slabs using NFT.

Later, there were other projects that allowed entire images to be stored on the blockchain and resold via NFT.

For several years, the technology was just an accompanying option in the cryptocurrency market and did not arouse much interest among traders.

Things started to change in 2020, when the cost of all existing NFTs skyrocketed to about $250 million. In the first three months of 2021, users spent another over $200 million for operations with tokens.

Why NFT became popular

The period from the beginning of 2021 to the beginning of this year is considered the peak of NFT popularity. Then the process of transferring material values ​​to the digital environment began with the further assignment of NFT tokens to them.

The fashion for this was brought by the famous British street art artist Banksy. He painted a picture Morons (White), created a digital copy of it, and then burned the original live. Later, the NFT, confirming the ownership of a digital copy of the painting, was sold for $95 thousand.

At the beginning of last year on the platform Foundation for unpretentious animation Nyan cat managed to help out $590 thousand.

The owner of the famous meme decided to put up for sale NFT in honor of the 10th anniversary of the GIF.

Later famous auction Christie’s for the first time put up for auction a digital lot, which was a picture-collage The First 5000 Days (Every day: first 5000 days). It was created by an American artist from 5,000 of his own sketches and works, which he has recorded daily since 2007.

Such a 14-year work (or rather, his NFT) was purchased for $69.3 million. Trades started from $100. At the moment, the NFT token of this lot is considered the most expensive.

To the point: 10 Pictures Sold as NFTs for Hundreds of Millions of Dollars

A series of events has brought a lot of attention to the NFT market. Initially, it was considered exclusively in digital artwhen digitally created works were sold on different platforms.

There were examples of the so-called procedural art, when computer algorithms and neural networks were used to create paintings.

Then NFT started actively apply in the gaming industry. Some projects have used tokens to secure ownership of certain content. It was possible to purchase an NFT for a powerful sword, an armor-piercing machine gun, or a high-speed car.

Some games even built the whole process around the generation of NFTs with their further resale. Users received an NFT token of the right to own a gaming site, a virtual pet, or a specific location.

Fortunately, major gaming platforms have managed without the introduction of NFTs. Company valve banned the introduction of technology in distributed through Steam projects, Ubisoft first announced the introduction of NFT in some of its own games, but after the tap of a negative response from users, removed all mention of it.

Later interview major studios and game development companies showed that more 70% see no point in implementing NFT and do not want to intertwine the gameplay with the blockchain.

NFT means nothing in the real world

If in the digital environment the possession of an NFT means anything, then in reality it does not provide any advantages or privileges. The NFT token has nothing to do with intellectual property copyright at all.

Outside the boundaries of the used blockchain platform, the owner of the NFT does not have any rights to the used object. NFT does not protect the object associated with it from being copied or used.

The same gif Nyan cat can be easily placed on the site, saved, copied or set as a screen saver on your smartphone. NFT owner worth $590 thousand can only confirm the fact of ownership of the token.

Why is NFT less and less remembered

In the wake of popularity, many tried to make money on NFTs. The token of the first ever tweet was sold, Elon Musk recorded a song about NFT and wanted to sell its token, Quentin Tarantino issued tokens for short scenes that were not included in the final cut of the tape “Crime novel”.

Many began to massively play simple applications to receive NFTs in the hope of selling the token for big money. Hundreds of instructions and manuals have appeared on the network for creating your own tokens and placing them on exchanges.

Thousands of schoolchildren began to draw pictures in Paintto sell them for cryptocurrency.

The developers of social networks and popular applications did not lag behind. They decided to implement NFT on Instagram, the ability to create and sell tokens appeared on VKontakte, Twitter allowed the use of NFT avatars for users.

Token storage wallets have been added to some browsers and other popular apps.

Along with this, all the problems and shortcomings of the technology began to surface.

Firstlywhen creating an NFT for some digital content no real ownership check on him. This allowed fraudsters to create and sell protected content tokens without actually owning it.

The authors of drawings, animations and videos could be surprised to find that NFTs of their works are being sold without their knowledge.

SecondlyNFT tokens have very strange pricing. If the world of art has generally accepted criteria for evaluating objects, then in the NFT market everything is very opaque and unstable. To sell a token for a large amount, someone must advertise it, create a stir around it or a planned advertising campaign.

A well-known figure or public figure will sell NFT without any problems, but an ordinary artist is unlikely to get a lot of money for him, no matter how talented he may be.

ThirdlyNFT often has no real value and has weight only in the blockchain that contains it. The token can give any advantages to its owner in the virtual world or some metaverse.

Fourthtechnology has been criticized for high energy costs and the strong carbon footprint that accompanies NFT transactions. This is not to the liking of both environmentalists and energy business owners.

Criticized NFT is not the last person in the world of technology Bill Gates.


Request dynamics “NFT” in Google Trends

At the beginning of 2022, interest in NFTs began to plummet. Average price for tokens decreased from $1400 to $400-450. The related commissions on the network have also decreased Ethereum.

On all major NFT trading platforms, trading activity decreased by about 70-75%. Significantly reduced the number of profile queries in all search engines.

Ordinary users seem to have played enough of creating their own pictures or reselling others, and investors do not see the potential in a niche that is no longer the most popular.

It seems that NFT needs to find a more useful application or come up with an updated concept of earning on tokens. Without this, interest will soon fade away altogether, burying a curious, but not yet the most useful idea.

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