The world went ape for digital drawings of primates in 2022. In 2023, we got bored.
Non-fungible tokens, or NFTs, were touted as a revolutionary technology that would upend the concept of ownership 鈥� and, more broadly, the global economy. These digital identifiers of ownership are stored on the blockchain, the same technology that underpins cryptocurrencies like bitcoin, but for most people the phrase calls to mind strange images sold at high prices.
Because NFTs can be traded like cryptocurrencies, speculators poured into the market. Perhaps the most well-known NFTs are those created by the Bored Ape Yacht Club, a series of algorithmically generated, slack-jawed primates.
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At the height of their fame in May 2022, the average Bored Ape was trading for , but 2023 changed all that. By January, the average price was down to around $100,000. By June, it was $70,000. By the end of November, it was $60,000.
While many people lost money on Bored Apes, they have actually outperformed the wider NFT market. An , which tracks the NFT trading market, suggests that 95 per cent of NFTs held by investors are now worthless.
What went wrong? Primarily, there was a traditional boom and bust, for all that NFTs鈥� proponents want to claim that the underlying economics behind NFTs and crypto were immune to that. At the same time, NFTs were constantly plagued with worries that the majority of interest was confected through so-called 鈥渨ash trading鈥�, where people buy from themselves to bump up prices. And increased regulatory interest 鈥� including from tax authorities 鈥� made investing in NFTs less attractive for lay traders.
Controversies around cryptocurrencies, the underlying method of buying and selling NFTs, also harmed the reputation of these digital goods. The collapse of FTX, a large crypto exchange run by Sam Bankman-Fried, hampered belief in cryptocurrencies, making people worry that some were using the potentially transformative change in how to run financial systems for their own gain, rather than the benefit of society.
