NFTs Aren’t Dead: A Look at the Future of Digital Collectibles

2023-10-26, 17:05

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## TL; DR

Greed and speculation were responsible for the NFT craze in recent years.

The crypto winter of 2022 and NFT oversupply resulted in loss of value of many non-fungible tokens.

Many people have lost interest in NFTs that do not have intrinsic value.

The emergence of new use cases will reignite interest in NFTs.

## Introduction

Non-fungible tokens are facing a difficult period at the moment as the number of buyers have decreased remarkably. Due to the very low trading activities in the NFT market some people have declared that NFTs are dead. The purpose of this article is to justify that NFTs are not dead as they have many use cases in the real-world.

## The Current State of NFTs

The market [for NFTs](https://www.gate.io/learn/articles/what-are-nfts/4 "for NFTs") is not as robust as before due to various reasons. In fact, the hype for NFTs started cooling off during the 2022 crypto winter when the demand for most digital assets including cryptocurrencies dropped remarkably.

Nevertheless, some people believe that NFTs are dead due to the decrease in their popularity. Notably, this is not the first time to hear of the death of certain digital assets. In the past, there was a time when some people declared “<a href="/ru/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> dead”. Usually crypto winters are responsible for the emergence of such sentiments.

As for bitcoin, it surged even after a proclamation that it was dead. Similarly NFTs may follow that trajectory considering that they also experience market cycles just like cryptocurrencies. Now, let’s look at [what made NFTs popular](https://www.gate.io/nft/drops "what made NFTs popular") in the first place and how that hype faded.

Read also: [Static vs Dynamic NFTs](https://www.gate.io/learn/articles/static-vs-dynamic-nfts/515 "Static vs Dynamic NFTs")

## 95% of NFTs are Dead

According to a recent study by dappGambl, 95% of NFT collections which more than 23 million people hold are now worthless. More interestingly, dappGambl found that 69,795 out of 73,257 NFT collections have market capitalizations of zero (0) ETH.

It also concluded that in July NFTs had an average weekly trading volume of $80 million which represents a 3% increase from the peak recorded in 2021. 3% is not a modest increase considering that thousands of new NFTs have come onto the market since 2021.

The dappGambl study report said, “The statistic effectively means that 95% of people holding NFT collections are currently holding worthless investments.” Can this mean that NFTs are really dead?

Read also: [What is NFT Lending?](https://www.gate.io/learn/articles/what-is-nft-lending/775 "What is NFT Lending?")

## Factors that Contributed to the Surge in NFT Popularity

One factor that contributed to the popularity of NFTs during the earlier days was the low entry barrier in the market. Anyone who was creative or artistic would create his/her NFTs on various platforms. The cost of minting NFTs has been very low as well. Also, a person [could create an NFT in a very short time.](https://www.gate.io/article/27611 "could create an NFT in a very short time.")

Another catalyst for the early surge in the values of NFTs was greed. The fact that the earliest NFTs fetched much value enticed many artists and collectors to join the market with the aim of generating much profit.

Someone who owns an NFT would search around for a “fool” who was willing to purchase it at a higher price. There were many people who included celebrities who acquired the NFTs with the hope of selling them when their values increased. For example, Eminem purchased a Bored Ape that looked like him.

Celebrities like Rapper KSI were responsible for hyping NFTs which increased their popularity. The following screenshot illustrates this.

![](https://gimg2.gateimg.com/image/article/1698339891NFTs 1.png)
NFT Hype - Twitter

As seen above, many prominent people advertised the NFTs they owned to their followers. That generated much interest in these digital assets leading to their price rises. As you can also note, the offers had high values like $101,692.07 and $99,504.85.

Read also: [7 NFT Applications that You Need to Know](https://www.gate.io/learn/articles/nftapplicationneedtoknow/50 "7 NFT Applications that You Need to Know")

## Reasons for Cooling Down of NFT Popularity

Basically, the NFT frenzy increased in 2021 which led to a strong market response. As a result, many NFTs came on the market during 2021 and 2022. It seemed that during 2022 the market realized that some of the NFTs hold no intrinsic value, something that created a negative sentiment against these digital assets in some quarters.

Some people started labeling NFTs as mere JPEGs that have no value. From there the NFT hype subsided amid growing disinterest in them. As a result, the value of popular NFT plummeted. For instance, the value of a Bored Ape NFT which singer Justin Bieber purchased for a record $1.3 million dropped by 97% to trade at $37,000.

In March 2021 Sina Estavi purchased an NFT for US$2.9 million. However, when he tried to resell it a year later it had a highest bid of US$6,800.

An oversupply of NFTs in the market led to the gradual loss of interest in them. Basically, many artists and celebrities created their NFTs which flooded the digital market. According to the dappGambl research 79% of the NFTs remained unsold by July 2023. That was due to surplus in the market.

The dappGambl research report also said, “As a result, projects that lack clear use cases, compelling narratives, or genuine artistic value are finding it increasingly difficult to attract attention and sales.”

It added, “It is a stark reminder that, while the NFT space has introduced a revolutionary new model for ownership and the monetization of digital assets, it remains a highly speculative and volatile market.”

## Signs that NFTs are Not Dead

There are compelling developments in the digital world that show that NFTs are not dead at all. There are well-established companies that aim to get involved in NFTs. For example, a recent report shows that PayPal filed a patent application to facilitate the transfer of NFTs.

Doodles has also partnered with Crocs, a casual footwear brand, to offer both physical assets and NFTs. The partnerships between Gary Vee’s Veefriends and Reebok will also facilitate the use of NFTs. On the other hand, top auction houses like Christies continue to bring new NFT artists on the market.

Many firms have devised ways to incorporate NFTs into their business models. Some [plan to use NFTs](https://www.gate.io/bitwiki/detail/147/non-fungible-token "plan to use NFTs") as certificates of authenticity and ownership. Also, the tokenization of real world assets like real-estate will increase the utility of NFTs.

## The Future of NFTs

In the future, we are likely to have NFT projects which are commercially viable. Their digital assets will likely offer utility to a wide sector of the economy. Of course, NFTs that will not have real-world use cases are likely to disappear from the market.

For example, government agencies may produce their own NFTs that offer utility to the citizens. Specifically, governments can use NFTs as digital certificates that support important documents like digital identity, property ownership, health records as well as Licenses and certifications.

The artists, collectors and other NFT enthusiasts will play a significant role in the NFT sector. Emerging and existing artists will bring valuable NFTs to the market which shows innovation and creativity.

We are likely to see more individual and institutional collectors that acquire [valuable NFTs](https://nftandgamefi.com/2022/02/06/value-of-nfts-how-it-is-formed/ "valuable NFTs"). Also, the collectors should find artists who are real, whose work has an impact in the future. The cooperation of these market participants will recreate a vibrant NFT market.

## Conclusion

The decrease in the NFT market vibrancy due to various factors including the crypto winter has made many people conclude that NFTs are dead. The oversupply of NFTs and their lack of intrinsic values led to the cooling of the market. However, an increase in their use cases will likely reignite people’s interest in them.

## FAQs for NFTs

### Is the NFT trend dead?

The NFT trend is not dead as there are still many profitable non-fungible tokens on the market. Several big companies like PayPal are willing to join the NFT sectors which may boost its performance. In the future we may have new use cases for NFTs which are likely to increase their demand.

### Is there really a future in NFT?

The NFT sector will likely continue into the unforeseeable future if new use cases come onto the market. The greater adoption of NFTs in key areas of the economy such as the public sector may ignite the hype in the industry.

### Do people still invest in NFT?

There are many people who still invest in NFTs. Although the trading volume of NFTs on exchanges and NFT marketplaces is comparatively low, [investors still buy and sell NFTs](https://www.gate.io/blog_detail/1681/how-to-buy-and-store-non-fungible-tokens "investors still buy and sell NFTs"). More creators are still joining the sector.

### Is NFT still profitable in 2023?

Although trading of digital assets like cryptocurrencies and NFTs is risky, many investors still participate in the market. Some of them make profit when they trade NFTs. The low NFT demand and trading volume do not mean that traders cannot make profit.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>