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The Decline of NFTs: Why Most Non-Fungible Tokens Are Worthless

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Introduction

Non-fungible tokens (NFTs), once hailed as a groundbreaking innovation in crypto and digital art, have seen a dramatic decline in value and popularity. In a recent report titled “Dead NFTs: The Evolving Landscape of the NFT Market,” researchers from dappGambl, a community of finance and blockchain experts, have analyzed over 73,000 NFT collections and found that the majority of them are now virtually worthless.

The Dismal State of NFTs

The study reveals that out of the analyzed collections, approximately 95 percent have a market cap of zero Ether (ETH), the second most popular cryptocurrency after Bitcoin. This means that these NFTs would not fetch any value if sold today. Considering the NFT frenzy that drove a trading volume of $17 billion during the bullish market of 2021, it is estimated that these tokens of no practical use or value are owned by around 23 million investors.

Additionally, the report highlights that the supply of NFTs has far exceeded the demand. Only 21 percent of the collections can claim full ownership, indicating that four out of five collections remain unsold. Buyers have become more selective, and projects lacking clear use cases, compelling narratives, or genuine artistic value struggle to attract attention and sales.

The Collapse in NFT Prices

While some individual NFTs were once sold for millions of dollars in crypto, the current market shows a significant decline in prices. Less than one percent of the NFT collections are listed at values exceeding $6,000, and the majority of the most expensive collections are priced between $5 and $100. Surprisingly, nearly 20 percent of the “top” collections have a floor price of zero. The report suggests that these inflated prices do not reflect real demand, mainly fueled by wishful thinking from sellers and potentially distorting investors’ perception of NFTs’ true value.

The Future of NFTs

Despite the collapse of NFTs’ value and popularity, the report suggests that these assets may survive by evolving and finding specific functions. For instance, they could be utilized as passes for special event access or virtual items to be traded within video games. However, one significant concern that this solution does not address is the environmental impact of NFTs. Minting NFTs requires substantial energy consumption and contributes to the carbon emissions associated with cryptocurrency mining. The study identifies almost 200,000 NFT collections with no apparent owners or market share, causing carbon emissions equivalent to the annual output of 2,048 houses or 3,531 cars.

How AI legalese decoder Can Help

In this situation, AI legalese decoder can play a crucial role. By utilizing natural language processing algorithms, AI legalese decoder can analyze and decode complex legal contracts and agreements commonly associated with NFTs. It can help individuals, investors, and artists better understand the terms and conditions of NFT purchases, ensuring transparency and avoiding potential legal pitfalls. Additionally, AI legalese decoder can provide insights into the ownership rights and possible resale restrictions of NFTs, enabling users to make informed decisions in this volatile market. With the rapidly changing landscape of NFTs, AI legalese decoder offers an indispensable tool for navigating the complexities and emerging legal issues in the world of digital assets.