NFTs have shaken up the digital trading space this year, but a cryptocurrency expert warns that 90% of their value will drop “to little or no value in the next three to five years.”
For those unfamiliar with the concept, non-fungible tokens, described as “digital collectible cards”, are a unique digital asset encrypted with an artist’s signature and which verifies its ownership and authenticity and is securely attached. permanent to the piece.
It sells “original” versions of popular online content – like viral memes, sports highlights, and tweets – as if they were physical works of art.
Fred Ehrsam, crypto expert and co-founder of Coinbase, said the NFT bubble is expected to burst “in three to five years” while comparing it to the dot-com bubble of the late 90s
Ehrsam started Coinbase with Brian Armstrong in 2012, which went public in April at a sky-high valuation of $ 100 billion, according to Observer
NFTs make it possible to sell “original” versions of popular online content – like viral memes, sports highlights, and tweets – as if they were physical works of art
NFTs take digital trading by storm
NFTs quickly became the next big thing in the crypto world, with buyers able to purchase a unique digital asset such as a sporting moment or even a tweet. The non-fungible token is then encrypted with the signature of an artist who verifies its ownership and authenticity and is permanently attached to the coin.
Most NFTs include digital artwork, such as photos, videos, GIFs, and music. Theoretically, anything digital could be turned into NFT.
Currently, NFTs are most commonly sold in so-called “drops,” timed online sales by blockchain-backed markets like Nifty Gateway, Opensea, and Rarible.
There are an array of reasons why someone may want to buy an NFT. For some, the reason may be an emotional value, as DFTs are considered collectibles. For others, they are seen as an investment opportunity similar to cryptocurrencies, as the value could increase.
Writer and podcaster Andrew Steinwold traced the origins of NFTs back to 2012, with the creation of the Colored Coins cryptocurrency. But NFTs didn’t enter the mainstream until five years later, when blockchain game CryptoKitties started selling virtual chats in 2017.
And with big players like Elon Musk and the NBA backing the idea, there is money to be made in NFTs, with over $ 10 million in NFT transactions taking place daily, according to the site. Web DappRadar.
Even the meme makers embraced the idea, offering NFTs of their most viral offerings and making big bucks in the process.
Bad Luck Brian, the meme in Kyle Craven’s hilarious yearbook photo, sold for over $ 45,000.
Overly Attached Girlfriend, born from a YouTube video by Laina Morris satirically showing her love for Justin Bieber, sold for $ 459,260.
And in March, Twitter CEO Jack Dorsey’s first tweet – “I just set up my twttr” – sold as NFT for just over $ 2.9 million.
But the bubble is doomed to burst, according to early cryptocurrency pioneers Fred Ehrsam, Coinbase co-founder giving NFTs three to five years before losing most if not all of their value.
“I go so far as to say that 90% of the NFTs produced will probably have little or no value in three to five years,” Ehrsam said in an interview with Bloomberg TV this week.
“The same could be said of the first Internet companies in the late 90s,” he said.
Ehrsam has seen such crypto concepts crash and burn seemingly overnight, with many such projects relying more on hype than substance.
“People are going to try all kinds of things. There will be millions and millions of cryptocurrencies and crypto assets, just like there were millions and millions of websites. Most of them won’t work, ”Ehrsam revealed.
Ehrsam got his start in Bitcoin trading in 2010 as a forex trader at Goldman Sachs before leaving the company in 2012 to start Coinbase with Brian Armstrong, which went public in April at a whopping $ 100 billion valuation, according to Observer.
In the months following the offer of an IPO, the crypto firm’s market capitalization fell by half amid continued pressure for regulation.
Memes makers have also jumped into the craze, offering NFTs of their most viral offerings and making big bucks in the process.
However, Ehrsam still believes cryptocurrency is truly “the next Internet-sized opportunity for the United States.”
“The world doesn’t change overnight, but you can already see the seeds of exponential growth happening,” he said in the Bloomberg interview.
“I think we’ll live in a future where, to coordinate, we won’t need these centralized platforms today. This is already true for financial services, to the extent that you can be your own bank. You no longer need a central institution to keep your money.