Temporary depression or bursting of a bubble? The market for certified digital objects (“NFT”), very flourishing since its eruption last year, has just come to a sudden halt and must now improve to attract the general public and last, according to specialists.
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After generating $44.2 billion in 2021, “NFTs” (“Non-Fungible Tokens” or “non-fungible tokens” in French), these unique digital assets authenticated on the blockchain (or “blockchain”) – the technology that serves as the basis in particular for cryptocurrencies such as bitcoin – recorded a drop in the volume of expenditure of 75% between February and mid-April, according to the firm Chainalysis.
Symbol of the mini-crash: the NFT of the very first tweet in history, bought for nearly $3 million in 2021 and auctioned again on April 7. Its owner expects 48 million dollars but, for the time being, the best offer barely exceeds… 20,000 dollars.
The sale of virtual land in “Otherside”, the “metaverse” (digital universe) of the “Bored Ape Yacht Club”, the most famous club of “NFT” holders, however reached several hundred million dollars in 24 hours at the beginning of May. .
For the general public, it is difficult to understand this very volatile market in the hands of a few large carriers called “whales”, these heavyweights who boost “the NFT buzz” by using their influence, according to Molly White, founder of a specialized site that identifies scams in the world of cryptocurrencies.
So, beyond the fashion effect, on what bases can we rely to define a “fair” price that everyone can understand?
80% scams?
Rather than “usefulness,” it’s the “status” conferred by owning an “NFT” that seems to establish its value, Molly White continues. The “NFTs” available in few versions, such as the “Bored Apes”, give access to very closed groups, and are therefore the most expensive.
The crypto-artist “Louis16art” offers to rely on the reputation of the author, the identity of the previous owners of the “NFT”, the quality of the work, as well as the technique used, some being more demanding than others. ‘others.
Other specialists plead in particular for the creation, in the image of what exists in traditional art, of a database intended for novice buyers and supplied by specialists in digital art.
Problem: these assets are mostly sold on “Opensea”, a deregulated market place. “However, as soon as you have a new technology, you immediately have fraudsters who are on the lookout”, underlines to AFP Eric Barbry, specialized lawyer, associated with the firm Racine.
In January, the platform revealed that 80% of the images transformed for free into “NFT” on its network were fake or stolen. “Opensea is a huge project, we don’t know what we’re buying there,” notes Olivier Lerner, co-editor of the book “NFT Mine d’or” with Sophie Lanoë.
«Far West»
For Molly White, the market will not succeed in attracting the general public without stronger “regulation” and “consumer protection”, even if increased control risks diminishing the interest of this market, based up to now on a strong lure of profit.
“It’s the Wild West”, summarizes Sophie Lanoë, for whom the explosion of the bubble is however an opportunity to start again “on sound bases”.
“As long as we do not have a specific law, we must adapt the normal law to NFT”, warns Me Eric Barbry, for whom an evolution of the regulations will be done “as the maturity sector and its development.
Beyond the security flaws and persistent legal “holes”, which can deter the acquisition of “NFTs”, how to simplify their purchase, which is still complex to understand for a non-tech-savvy public?
“Nobody understands anything about it but everyone loves it”, wants to believe Olivier Lerner.
To help this market, “it is enough that the platforms become easy to access”, by not asking for a specific portfolio for each type of digital asset, he proposes for example.
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