When Homer Simpson comes up with a plan to get rich quick, it usually ends badly.
In a recent episode of the cartoon “The Simpsons”, the family man turns his son Bart, and then himself, into NFTs to make millions.
Everything goes wrong when Homer discovers from a floating cat with a pizza body that “the NFT craze is over.”
But is the cat with the pizza body right and are NFTs really dead?
Data shows that this market has fallen to its lowest level in recent months.
But some think there is still hope.
What are NFTs and the market decline
NFT is the English acronym for non-fungible token. These are digital tokens of ownership, usually purchased with cryptocurrency.
They are often linked to images or videos, but owning an NFT typically does not mean the buyer obtains copyright to the image.
Anyone can view it online and even copy and save it, but only the buyer has the status of official owner of their token. The proof is recorded in the blockchain’s non-editable record — a kind of “giant spreadsheet” of transactions published online.
According to researchers at Dapp Radar, the value of NFT transactions has reached its lowest point since the high.
Business volume has fallen 89% since the beginning of 2022. In the first quarter of that year, there were US$12.6 billion (R$62 billion) in transactions and now, in the third quarter of 2023, it was reduced to US$1 .39 billion.
And the sector is shrinking. In October, the company Yuga Labs —creator of the famous bored monkey NFTs— announced layoffs, without disclosing specific numbers of employees laid off.
The Bored Ape Yacht Club is one of his most famous series. The series saw NFTs sell for millions of dollars, fueled by celebrity buyers including talk show host Jimmy Fallon and socialite Paris Hilton.
Paris Hilton has not posted on X (formerly Twitter) about NFTs since October 2022, despite almost daily tweets in January and February 2022 to promote her collections.
According to the NFT Price Floor website, the minimum price for Bored Monkey NFTs (the value of the cheapest items in the collection) peaked in early May 2022, then costing around US$268,000 (R$1, 3 million).
Now, that value has dropped to US$56,000. US collector and artist Taylor Whitley felt forced to sell six of his seven Bored Monkey NFTs as the offers he was receiving were getting worse and worse.
“I really didn’t want to sell, but the market is really bad, so it’s the smart thing to do. I think the NFT market could even go down further,” he told the BBC.
Last month, Taylor sold his most prized Bored Monkey for $212,000, after turning down much higher offers for it in the past.
He could have gotten at least 10x more for his NFTs if he had sold at their highest.
For every bored monkey NFT, there are millions of other smaller brands and artists that make up the industry.
Angie Taylor, from Scotland, once sold her NFT art for up to $8,000 per item, but now she receives around $600.
She had to return to her pre-NFT job as a part-time tutor.
“I’m still selling a few things here and there, but I also have to work a regular job. I can’t make a living from this anymore without anything else,” he says.
But she always thought the bubble would burst.
“I kind of planned my budget for when that happened, because I thought, this is a boom and bust kind of situation,” she says.
It’s clearly buyers’ time, and there are plenty of happy shoppers out there, making the most of the price drop.
Adam (known online as Little Fish) recently purchased an NFT of a cryptopunk artwork for US$663,000 (R$3.2 million).
The full-time cryptocurrency investor recognizes it’s a large sum of money, but thinks he got a bargain for his CryptoPunk #3609.
After all, a year ago the seller rejected an offer of US$1.18 million (R$5.8 million).
“It was exactly because of the crisis that I bought it. People are desperate. In winter, you can buy cheap summer clothes,” he says.
Adam believes summer will return for NFTs and he “will enjoy it” when it does.
His analogy with the changing seasons parallels the current state of the cryptocurrency market.
Digital currencies like Bitcoin and Ethereum (ETH) have not recovered from several steep drops in 2021, which caused the value of these assets to plummet and then stagnate in what many call “crypto winter.”
There are recent signs of improvement, with Bitcoin rising to $34,000 per coin, but the advance has stalled and is nowhere near the $70,000 of late 2022.
Although NFTs are a different product, they are based on the same blockchain technology as cryptocurrencies, and the wealth of many of the biggest NFT buyers is tied to cryptocurrencies.
When crypto assets are worth more, they have more money to spend on NFTs.
The biggest NFT investor of all time is Vignesh Sundaresan — known as MetaKovan.
His record spend of US$69 million (R$340 million) on an NFT by American artist Beeple was one of the big catalysts that sent the market soaring in March 2021.
“There’s still a long way to go before we can look back and see whether it was a good purchase or not,” says Sundaresan. “It was definitely a lot of money, but it wasn’t a significant amount of my wealth.”
Sundaresan still believes NFTs have a bright future as collectible art items, but thinks the boom days are over.
“Everything in crypto happens very quickly and I think the next phase of NFTs will not be about price. People who are speculating are taking a huge risk because it’s not like the supply is finite,” he says.
Sundaresan criticizes the sector that capitalized on speculative mania and left many people without money.
“I haven’t seen any good sustainable business around NFTs,” he says.
One NFT business that appears to be bucking the trend is Pudgy Penguins — a brand that recently started selling plush toys based on its NFT characters.
Each toy sold generates royalties to the holder of the corresponding Pudgy Penguin NFT.
Allowing NFT owners to earn money through intellectual property appears to be a trend that is potentially reviving interest in the products.
The Pudgy Penguins have maintained a floor price similar to their peak in January 2023, according to the NFT Floor Price website.
Another new way to offer incentives to buyers is through joining exclusive events, physical versions of NFTs, and sharing artist royalties.
The British NFT entrepreneur known as Pranksy believes experimentation is the key to the market’s revival.
“I predict that a small number of innovative individuals and brands will be able to lead adoption among everyday people,” he says.
He assesses that the market will appreciate again, but admits that it is unlikely to reach the levels of “pandemonium” seen previously.
Additional reporting by Liv McMahon