NFTs Are Dead: Panic! We're All Doomed

By Monk Antony

Paragraph 1: "NFTs were pitched as a way for artists to make life-changing money....Only, the money didn’t pour in—unless your name was Beeple."

First, most artists are simply happy to make a living selling their work. The bar does not need to be set at "life-changing money" for artists to benefit from distributing their work via NFTs, particularly in the creative field where revenue figures do not determine an artist's value.

Second, if we play along and set the "life-changing" money bar to one million USD in total sales (based on current conversion values), then 221 different artists or projects achieved that in only 2 years. Beeple is not even the highest grossing artist in NFT sales (that would be Pak).

From the very beginning one of the major flaws of this article is exposed, a lack of basic research. It won't be the last time.

Paragraph 2: "NFTs are becoming an unattractive piece of history. People aren’t trading them, and the only ones talking about them are those trying to sell them."

Paragraph 3: "Since the beginning of this year, monthly transaction volume on OpenSea, the most popular NFT marketplace, has fallen by 90 percent."

Cherry picking one data point with an arbitrary timeframe undermines the validity of an argument and in statistics would have low statistical power.

If we look at fxhash and objkt sales volume data for January and August 2022, a different picture emerges.

Fxhash volume has actually increased 41.86% in Tezos (XTZ) terms since January while objkt's has increased 60.19%.

Meanwhile, Art Blocks volume (ETH) declined 44.7% compared to an 81.8% decline in OpenSea volume (ETH).

Sources: HEN Activity Dashboard by Tezos NFT Reporter, CryptoSlam, Dune Analytics

This data underscores the other fatal flaw of Castor's article: the repeated failure to segment the NFT market. The numbers indicate that the art market is performing considerably better than the NFT market as a whole, a point that would presumably be of interest to a publication like Artnet.

Finally, the decline is the USD value of ETH and XTZ can be largely attributed to the broader macro, risk-off climate.

Paragraph 4: "The biggest indication that the hype was dissipating came in July when OpenSea announced it was laying off 20 percent of its staff."

Layoffs, a story in 2022 across many sectors, particularly tech, retail, automotive and financial services, are certainly not surprising given current macro conditions.

According to Crunchbase, "as of mid September, more than 42,000 workers in the U.S. tech sector have been laid off in mass job cuts so far in 2022."

Business sentiment remains severely dampened due to a high interest rate environment combined with geo-political tensions and rising inflation.

Paragraph 5: "Bitcoin has lost 57 percent of its value since January, falling to $20,000. Ether, the second most popular crypto, has plummeted 58 percent, to $1,500, over the same timeframe."

See above about global macro conditions and risk-off sentiment.

Paragraph 6: "The last thing retailers want to invest in right now are illiquid NFTs."

Paragraph 7: "The floor price for popular NFT projects is falling."

Castor again cherry picks, gives only one example (Bored Apes) and ignores the fact that year-over-year the BAYC floor has increased in ETH terms by 75.61%.

Paragraph 8: "In a space marked by rampant frauds and hacks, “NFT” is starting to become a dirty word in many circles."

"There were also tons of concerns about security, fraud, hackers, and porn" with online shopping in the '90s.

Paragraph 9: "Queen Elizabeth II’s death saw a flood of Queen Elizabeth-themed NFT collections and special-edition NFTs in various existing projects enter the market."

NFTs are a reflection of contemporary culture. Castor fails to mention the $60 million raised as aid for Ukraine from Crypto donations (as of April 6, 2022). Millions came from NFT sales.

Paragraph 10: "When the David Bowie estate announced plans to launch NFTs with OpenSea, fans were irate."

Castor again fails to mention the purpose of these NFTs: "100% of the proceeds [are] to be donated to CARE, a nonprofit organization focused on fighting world hunger and global poverty. "

Paragraph 11: "Big brands that enter into the space are now feeling an especially harsh backlash."

Meanwhile, the world's largest brands (e.g. McDonald’s, Coca-Cola, Nike, Louis Vuitton) continue to enter the space.

Paragraph 12: "Starbucks must have known the reaction to its NFT launch would be bad, as it instantly disabled replies on its Twitter announcement. "

My favorite one: The Starbucks News Twitter account does not have replies enabled on any of its tweets. This comment sums up Castor's article pretty well.

Paragraph 13: "Celebrities who once shilled so-called “blue-chip” NFTs may be less inclined to do so."

Celebrities like Reese Witherspoon, Eva Longoria, and Shonda Rimes who "shill" initiatives like World of Women's charitable donations, including $262,000 raised for the charity, WOMEN & CLIMATE.

Let's hope these celebrities do not become less inclined to support grassroots giving.

Paragraph 14: "While NFTs continue to be obnoxious, the bad news is that they will be slow to die off completely."

This unprofessional language begs the question as to whether this is all one big, clickbait-y, engagement-farming troll.

Paragraph 15: "The venture-capital firm Andreessen Horowitz announced it had raised a $4.5 billion crypto fund, the industry’s largest to date."

The space being well funded with a healthy runway is a negative apparently and indicates assured failure. The title of this article expresses the author's beliefs that NFTs have already gone the way of Beanie Babies, yet I do not recall a multibillion dollar VC funding round for the plush toys.

Paragraph 16: "The only thing that might make a difference in how the world views NFTs is that Ethereum, the blockchain that most NFTs live on, is shifting to a more energy-efficient proof of stake."

This should read: "has already shifted."

Paragraph 17: "We’re also seeing a move away from art NFTs to gaming."

Her evidence for this is...

Paragraph 18: "Yuga Labs, the company behind Bored Apes Yacht Club, has shifted to creating a massively multiplayer game."

Referring to Yuga Labs as "art NFTs" (the only mention of "art" in the article is used inaccurately) again highlights the main flaws of this article: it is poorly researched and fails to segment the NFT market.

Paragraph 19: "Even when common sense says that NFTs have gone the way of Beanie Babies, venture capitalists, and their over-funded projects, will still be shilling them long past the point where we’ve all stopped listing."

This comment implies a lack of demand, which can be refuted again by paragraph 6's steady increase in OpenSea users.

Also, the last line is a typo or does she mean "we've all stopped listing?" In that case: Hello supply shock!

Finally, isn't Artnet an art magazine? The word "art" appears in this article one time. The article does not mention Art Blocks, Tezos, Fxhash or objkt a single time.

Is the work of digital pioneers like Herbert Franke, Casey Reas and LIA as well as the next generation of Dmitri Cherniak, Tyler Hobbs and Zancan unworthy simply because they choose to distribute their work via a token that proves digital ownership?

The art, culture, talent and community are here. Like many previous avant-garde movements, it takes the establishment time to notice.