Non-fungible tokens (NFTs) – digital assets that represent a wide range of tangible and intangible items and are recorded on blockchains – reached peak hype a few years ago.
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At the time, they raised a huge amount of money. For example, auction house Christie's sold a collage NFT by digital artist Beeple for $69.34 million in March 2021. Other top NFT sales in 2021 included Sothesby's two-lot Bored Ape Yacht Club (BAYC) auction, which realized $26.2 million for 202 NFTs.
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Are NFTs still a viable investment in 2024?
As Bloomberg detailed at the time, following explosive growth, NFT trading volume has since declined rapidly, dropping by a whopping 97% in September 2022 from an all-time high of $17 billion in January 2022. .
As Benzinga reported, NFT sales have slowed since then, but a huge sale occurred in March, when a CryptoPunk 3100 sold for 4,500 ETH, or $16 million.
And Benzinga went on to point out that this could be a harbinger of an NFT resurgence.
“We have certainly seen the NFT market go through boom and bust hype cycles, and it is a very PFP-focused market. [profile pictures] Collections soar, crash, and never recover,” said Anthony Georgiades, general partner at Innovating Capital.
However, Georgiades also noted that some high-quality collections have been successful, indicating that they are likely to persist for the foreseeable future.
“At the end of the day, people like digital art, so I think this aspect of NFTs will continue to show some strength going forward,” he said.
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At present, there is little speculative market for NFTs.
The NFTs that seem to be making a comeback this year are more about meaningful, real-world applications than speculative hype, according to some experts.
“NFTs are extending their utility beyond digital art to areas such as gaming, real estate, and digital identity, demonstrating the potential for sustainable investment opportunities,” said Lani Dizon, co-founder of Zenza Capital. he said.
Siti Mangani, CEO of NFT gaming app STEPN, echoed the above idea, saying that the true value of NFTs lies in their usefulness.
“If you believe in a certain utility, take it as a guide. But pure price speculation is never a valid reason,” Mangani added.
According to Dizon, there are several benefits to investing in NFTs. NFTs have diverse applications, provide proof of ownership, and are easily accessible through improved platforms.
But disadvantages include its volatility, liquidity issues and legal ambiguity, she added.
Some say a full NFT revival is not in sight.
On the other hand, some experts do not believe in a complete revival of NFTs.
“We will never again be flooded with images of questionable value,” Zent CEO Ilya Stadnik said.
If chosen carefully, NFTs can be a good investment in some cases, he said.
“I would say that 99.9% of them are not worth considering. As previously stated, no resurgence is occurring, but new technology is poised to transform the NFT market and further integrate it into industries such as gaming and online entertainment.” “It brings hope to the future,” he added.
Critic: Not a viable investment at all.
Finally, some experts do not believe in the value of NFTs at all, arguing that even at their peak, in the past they were not a viable investment, but rather a vehicle for speculation.
“It's very important to distinguish between speculation and investment. Many of the speculators in NFTs, GameStop (or other meme stocks) were, and are, engaged in speculation, not investment.” said Robert R. Johnson, professor of finance at Creighton University's Heider College of Business. “Speculators can certainly make huge profits. But they also take on huge risks.”
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This article originally appeared on GOBankingRates.com: Are NFTs Still Viable Investments In 2024?
