It was a reflective moment for many Nigerian Non-Fungible Assets (NFTs) enthusiasts and investors at the TechNext Coinference 3.0 as they reflect on the market in line with the recent crash.
A recent report by dappGambl that reviewed data from NFT Scan and CoinmarketCap, found that 69,795 out of 73,257 NFT collections have a market cap of zero Ether, leaving 95 percent of those holding NFT collections – or 23 million people – with worthless investments.
“This highlights the incredibly high-risk nature of the NFT market and underscores the need for careful due diligence before making any purchases, especially ones of high–value,” the authors of the report noted. “This daunting reality should serve as a sobering check on the euphoria that has often surrounded the NFT space. Amid stories of digital art pieces selling for millions and overnight success stories. It is easy to overlook the fact that the market is fraught with pitfalls and potential losses.”
NFTs refer to assets that come in the form of art, music, in-game items, videos, and more. They can be bought and sold online using cryptocurrency or fiat money of other NFTs. it often depends on the value the market and owners have placed on them. For instance, you could use an exchange to create a token for an image of a banana. Some people might pay millions for the NFT, while others might think it worthless.
NFTs’ hype peaked in the 2021 to 2022 bull run that saw nearly $2.8 billion in monthly trading volume recorded in August 2021, according to the dappGambl report. The feat caught the interest of the global market. Investors in African countries like Nigeria also wanted to be part of the NFT party. It became so popular that several NFT communities began to spring up on social media platforms including X, formerly Twitter.
Since the crash, those communities ave lost their excitement. Some of them haven’t posted messages to members since the beginning of this year.
Experts at the Coinference 3.0 by TechNext were of the consensus that many NFT activities during the bull run were motivated by mostly greed or driven by a gambling mindset. There was little consideration as to the understanding of the fundamentals of the market or other used cases of NFTs that solve real problems.
“NFTs crashed because realities didn’t meet expectations and we realised that the infrastructure needed to drive acceptance wasn’t there yet,” said Venn Oputa, co-founder of Afrobubble. Oputa was the creator of one of Africa’s first NFT collections, which sought to immortalise the legendary Queen Amina. His collections caused quite a buzz at the time.
Oputa says he doesn’t believe NFTs are dead yet as they hold solutions for different challenges that face economies on the continent. While he is nursing hope of a rebound, he believes NFTs will help to prove owners and help creators protect and democratise the spread of their content.
In the past, some experts attempted to refocus the direction of the market and help new entrants. But the prevalence of many scam projects which projected massive earning opportunities lured many people. Analysis of the market by Forkcast which tracks the market daily indicates the downturn in the NFT market is not going away anytime soon.
“With NFTs still feeling overvalued, Uptober in crypto almost certainly spells bad news for NFTs this month. Until we see fresh liquidity injected into the market or another catalyst, we’ll see the previous two-year trend continue in NFTs, and Uptober will be Floptober once again in NFTs,” Forkcast noted.