[Chart] NFT transactions have shrunk sharply, is it falling to the altar? Or is it changing?

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In October 2020, digital artist Beeple (real name Mike Winkelmann) minted a 10-second short film into a unique digital asset form NFT (Non-fungible token, non-fungible token) for $67,000 sold at the price. When the collector resold this work in February of the following year, the bidding amount increased by nearly a hundred times, and it was finally sold for US$6.6 million.

Another collage work by the artist, “Everydays: The First 5000 Days”, was also sold at Christie’s Auction House with a starting price of US$100, and finally sold at a sky-high price of US$69.3 million, setting a new record for the unit price of NFT works that year. Records, set off an NFT boom.

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Since the outbreak of COVID-19 (serious special infectious pneumonia, new crown pneumonia, Wuhan pneumonia) in 2020, countries have closed their borders and physical activities, collectors and investors have instead bet large sums of money on objects that only exist on the Internet. It has become an opportunity for the rapid rise of NFT popularity.

Many people call 2021 the first year of NFT. The well-known online dictionary Collins Dictionary even selected NFT as the representative word of the year because of the 11,000% increase in search results, reflecting the popularity of NFT in 2021.

From social media avatars, NBA player cards to digitally generated artworks, NFT’s extremely wide range of applications has attracted many people to invest in this emerging market, and it has become one of the symbols of wealth for many people.

The NFT boom in 2021 will further drive the value of major trading currencies to increase. From the NFT transaction amount and Ethereum price changes in the figure below, it can be found that the price of Ethereum will gradually rise in 2021 due to the influence of market demand, while the single-day transaction volume of NFT will gradually grow after February, which has a similar growth trend as the price growth of Ethereum.

In May 2021, Ethereum reached its first peak and its price broke through $4,000, becoming the second largest cryptocurrency in the world. Experts pointed out that in addition to the surge in demand for cryptocurrency investment, NFTs that use Ethereum as the mainstream trading currency also contributed.

In addition to the above-mentioned works of art, many celebrities and brands are also vying to invest in the NFT market. For example, Jack Dorsey, the CEO of Twitter at the time, cast his first Twitter tweet in 2006 for auction, and finally won the bid with 1630.58 ethers , converted to a market value of about 78.36 million Taiwan dollars at that time. The well-known trading platform Ebay also announced the opening of NFT trading, grabbing the hottest trading market.

This trend has also spread to Taiwan. Combined with the upsurge of cryptocurrencies, many people have invested in the NFT market to find out. The time-honored Taiwanese salty crispy chicken brand “Shiyuan Salted Crispy Chicken” publicly issued Shiyuan Salted Crispy Chicken NFT on OurSong. Holders can use the NFT to exchange for a copy of the corresponding fried food. The price soared a hundred times within one day of sale.

Jay Chou also jointly launched “Phanta Bear” (Fantasy Bear, also known as Jay Chou Bear) on January 1, 2022 with the platform Ezek. , It was sold out within 40 minutes after it was launched, triggering extensive discussions, and NFT has since entered the public eye in Taiwan.

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After the peak of hype, NFT ushered in a reality test

As more and more celebrities and brands invest in NFT through cross-border cooperation, many business opportunities and business model innovations have been brought, but many criminal incidents have also followed. For example, in November 2021, a series of “Monkey Kingdom” NFTs with the theme of Monkey King, after hype, the price continued to soar, but the Discord community was hacked, resulting in the hacking of the virtual wallets of users waiting to mint NFTs, and theft of cryptocurrencies Let’s wait .

Hackers also took advantage of vulnerabilities on the OpenSea website, a well-known NFT trading platform , to trick users into handing over their NFT assets. In the end, 32 people were victimized, and the hackers got about $2.7 million.

Chen Chong, chairman of the New Generation Financial Foundation, once pointed out in a report that NFT uses blockchain technology to generate Token (tokens) after digital assets are chained, making digital assets irreplaceable, but once it is found that holding NFT There is no expected uniqueness (non-homogeneity), or there is a performance dispute. At present, there is no relevant regulatory mechanism in China to protect the rights and interests of consumers.

In addition, everyone can mint and sell NFT, which also makes relevant experts and scholars worry that the Internet bubble event in early 2000 will be repeated. They are worried that NFT will be overhyped, and more than 98% of the project value will return to zero.

Among them, the representative one is the buyer who purchased the first Twitter tweet from the CEO of Twitter for nearly 80 million yuan in 2021. After a year, he wanted to resell it, but only 7 people participated in the bidding, and the highest bidding amount was only 0.09 ETH (equivalent to about 277 US dollars at the time), which is quite different from last year’s enthusiastic bidding scene.

The volatility of the cryptocurrency market also has a considerable impact on the NFT market. In 2022, due to the impact of the Russia-Ukraine war, U.S. technology stocks will plummet, which will further affect the cryptocurrency market. Stablecoins linked to legal currencies such as the U.S. dollar will face massive blood loss.

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Photo Credit: Shutterstock / Dazhi Image

The last recent NFT sales peak occurred in May. The parent company of the well-known Bored Ape Yacht Club (BAYC for short) sold the metaverse virtual land Otherside, with a total of 200,000 lots of land, triggering a crazy buying spree, raising nearly 2.85 One hundred million U.S. dollars.

But after that, in the event of a cryptocurrency crash, the prices of the top ten stablecoins “TerraUSD” (or UST) and Luna coins evaporated by 99% overnight, and the cryptocurrency market was hit hard. Cryptocurrencies have also been affected one after another. Many investors who have failed to invest in the currency circle have withdrawn from the trading market one after another, resulting in the NFT trading market that uses Ethereum as the main trading currency to gradually sluggish.

The sluggish market has become a turning point for the practical application of NFT

Looking back at major NFT events in the past year, it can be found that compared with the turbulence in 2021, although NFT in 2022 will be affected by the downturn in the overall trading market, we can still see more cross-border brand investment and multi-party attempts. JPG image files on the Internet cloud. Nihon Keizai Shimbun reported that the strong speculative elements of NFT in the past have gradually faded. Instead, companies can use the characteristics of being unable to copy, prevent tampering with data, or hold certified information to transform NFT into more diversified application services, such as making digital assets. Business cards, resumes, etc., are used in corporate marketing and digital transformation strategies.

The on-site report of the NFT Taiepi event that just ended in 2022 also mentioned that for artists, NFT has also been regarded as a new tool for generating income from the initial stage, and has gradually transformed into a part of art media, and even creates new value.

Mahesh Vellanki, co-founder of the venture capital consulting firm Super Layer, mentioned in the report that the decline of the NFT market is not the focus, “what is more important is that the market is changing.” He pointed out that there will only be more innovative projects in the blockchain in the future. based on development. Venture capital expert Li Jin also mentioned that the downturn in the market has gradually shifted NFT from people’s speculative assets to actual assets, and it is expected that there will be more practical or interesting applications in the future.

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