NFT Proponents Calm Over Crypto Crash

Those who think the decline in NFT valuations in the wake of cryptocurrencies will dampen the enthusiasm of supporters of these “non-fungible tokens” will have to change their mind. Because for the defenders, in the media and technology sector, of these unique digital tokens, registered in the blockchain and auto-executing contracts (“smart contracts”), they have lost none of their revolutionary potential.

At worst, the analogy with the Internet bubble of 2000 is essential for them: its bursting resulted in a lot of money loss, but freed up the market. Analyst Benedict Evans sums up this argument well. : “All technology has its winter and all financial innovation its bubble (and its scams), and then its crash. NFTs are both and suffer from both. That doesn’t mean they won’t exist, just that 99% of the first wave won’t survive. †

NFTs not salable

Small consolation of course for those who have lost a lot. Bloomberg notes that even high-profile collections like the Bored Ape Yacht Club characters have declined in value (about 30%) more than bitcoin itself. NFT trading volumes have collapsed. The NFT platform launched by Coinbase flopped when it opened.

However, as Joël Hazan, a specialist in these issues at BCG, explains, “NFT prices hold up well in cryptocurrencies”. Then the large collections had risen sharply in April and some are already starting to recover.

But above all, as Frédéric Montagnon, co-founder of Arianee, which helps brands exploit NFTs, explains: “First of all, the NFT market figures are questionable, because there is no aggregation yet that gives confidence, and furthermore, many NFTs not only do not act like in the casino, but not even for sale, for example certificates of authenticity for watches”.

Extend Crowdfunding

For pro-NFTs in particular, the fall in valuations doesn’t diminish their interest in community management: they allow musicians or brands to control access to online experiences. NFTs are also the foundation of “play to earn” in the virtual games world as an exploitable property right, notes Joël Hazan. They are also markers of identity in the online world where we spend more and more time, hence the virtual Nikes associated with NFTs.

Gilles Gaillard, co-founder of N9NE Studio and Mikros (“Asterix”) has no doubts about their interest in his field: animation. “Fictional NFT financing projects like ‘Plush’ or ‘Stoner Cats’ have convinced me despite the current turmoil in the markets,” he explains. In these cases, NFTs have both a use value, that of creating an emotional connection through opportunities to participate in projects, access backstage or previews, etc., but also a value of reversing the financial logic of the industry. Via the project profit-sharing allowed by the NFT, the fan provides equity capital, which replaces financing by third parties to be reimbursed. Their secure, fast and comprehensive contracts renew the potential of crowdfunding, explains Joël Hazan.

The future of personal data

For Frédéric Montagnon, NFTs have an even more fundamental transformative power. “They allow you to manage your social network and are the future of personal data that will no longer belong to middlemen like Twitter or Facebook,” he explains. Brands know that they will communicate with their consumers through these ‘tokens’. †

Nevertheless, two NFT operations that lie ahead in recent days show the right path by then. Yuga Labs’ “Otherside” metaverse virtual lands faced an unexpected spike in blockchain record validation costs due to the influx of requests. Even more problematic, one of the pseudo-designers of the Azuki character collection had to admit that he had abandoned projects in the past just after their speculative runaway phase.

In addition to the energy consumption specific to the blockchain, the universe of NFTs is in fact riddled with scams, most notably “wash trading” where small groups organize to drive prices up by creating buzz, even if it means getting rid of the NFTs. must buy from yourself first, before letting the masses of speculators suffer the losses. The real property rights of NFTs, their immunity from hacking, etc. also need to be better established, experts say. Without these reforms, it is difficult to see how NFTs could achieve their bright future.

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