NFT Global Sales Volume is Plunging to New Lows

 NFT Global Sales Volume is Plunging to New Lows

 

As per the CryptoSlam data, NFT global sales have dropped after their record highs in January this year. A downturn is also witnessed in the number of unique buyers and sellers, further dragging down the total transactions. The digital era for trading has been witnessing significant changes, and non-fungible tokens (NFT) are one of them.

NFT became one of the biggest stories in cryptocurrency last year. Their popularity skyrocketed in 2021, but the current year has resulted in a downward slide. The plunging sales volumes make all of us wonder if the craze for NFTs is dimming.

NFT global sales, which stood at a record of over $4.62 billion in January 2022, slumped to over $2.99 billion in February and then nearly halved to $2.44 billion in March. According to the released data, global sales in April totaled $1.21 billion, with 330,499 unique buyers and 361,198 sellers, for a total transaction value of $2,116,657.

Lack of clarity, theft, and risks are some of the major drawbacks for investors looking to enter the cryptocurrency and NFT markets. The sentiments of NFTs have been dampened after numerous thefts and scams. The most high-profile theft that has rocked the blockchain industry is the Ronin Network, which was hacked for $615 million in digital assets. Multiple new scams such as rug pulls, NFT pumps, dump schemes, plagiarised NFTs, art theft, and phishing have turned enthusiastic investors into cold feet.

Chainalysis, in its 2022 crypto crime report, highlighted the popularity of NFT last year while also pointing out the threat of this new technology. As per the software company, a minimum of $44.2 billion worth of cryptocurrency was sent to ERC-721 and ERC-1155 contracts, the two types of Ethereum smart contracts associated with NFT marketplaces and collections, up from $106 million in 2020.

However, Chainalysis in its report stated that "as is the case with any new technology, NFTs offer the potential for abuse." They observed two forms of illicit activity in NFTs. Wash trading to artificially increase the value of NFTs, and money laundering through the purchase of NFTs.

Also, some buyers who bought NFTs at a remarkably higher price are finding it difficult to sell their digital assets. However, not all NFTs are risky. Some investors have strongly held on to their investment in NFTs. As per the released data, Axie Infinity, Cryptopunks, Bored Ape Yacht Club, Art Blocks, and Mutant Ape Yacht Club are the top five all-time NFT collections by sales volume.

 

What makes NFTs unique?

Non-fungible tokens (NFT) are the cryptographic assets on a blockchain that are not exchangeable because of their nature of being distinguished from each other. Simply put, they are not replaceable or interchangeable with any other cryptocurrencies.

NFTs are packed with unique cryptographic tokens. Some of the examples of NFT are unique digital artwork, limited fashion lines, in-game items, an essay, digital collectibles, or tickets that give access to an event, a coupon, and even a domain name among others.

Unlike other cryptocurrencies that are fungible, NFTs are unique. That means, unlike NFTs, other cryptos are exchangeable or replaceable for one another. For example, one Bitcoin is equal to another Bitcoin, or one unit of Tether is similar to another Tether. However, no two digitally unique NFTs are the same.

This means every NFT has a respective owner with a public record and can be easily verified. NFTs give a broader panel to content creators who can sell their work anywhere while accessing the global market. These creators can retain their ownership rights to their work and can also claim resale royalties.

Bringing in market efficiency, NFTs give a platform for converting physical assets into digital ones, which further removes intermediaries such as agents on the blockchain and enables the artist to interact and deal with his or her audiences directly.

That said, NFTs give clarity to identity management. Only one owner can have a NFT at a time. The ownership is managed through the unique ID and metadata that no other token can reproduce. One can either buy or sell the ownership of a specific NFT.

Many cryptocurrencies have opted for NFTs, with Ethereum being the first blockchain to support non-fungible digital assets with its ERC-721. Since then, many other blockchains have added NFTs and many are also warming up to the idea of adding support for NFTs.