NFTs have shaken the digital trading space this year, but a cryptocurrency expert warns that 90 percent of their value will plummet ‘to little or no value over the next three to five years.’
For those unfamiliar with the concept, non-scalable tokens, described as ‘digital trading cards’, are a unique digital asset encrypted with an artist’s signature that verifies its ownership and authenticity and is permanently linked to the piece.
This allows original versions of popular online content – such as viral memes, sports highlights and tweets – to be sold as if they were physical works of art.
Crypto expert and Coinbase co-founder Fred Ehrsam said the NFT bubble will appear “in three to five years” while being compared to the late ’90s Internet bubble
Ehrsam started Coinbase with Brian Armstrong in 2012, which was released in April for a $ 100 billion estimate, according to the Observer
With NFTs, original versions of popular online content – such as viral memes, sports highlights and tweets – can be sold as if they were physical works of art.
NFTs are taking digital commerce by storm
NFTs have quickly become the next big thing in the crypto world, with buyers buying a unique digital asset as a sports highlight or even a tweet. The Non-Fungible Token is then encrypted with an artist’s signature that verifies its ownership and authenticity and is permanently attached to the piece.
Most NFTs include some form of digital artwork, such as images, videos, GIFs, and music. Theoretically, everything can be digitally converted into an NFT.
At the moment, NFTs are most often sold in so-called ‘drops’, timed online sales of blockchain-supported marketplaces such as Nifty Gateway, Opensea and Rarible.
There are a number of reasons why someone might want to buy an NFT. For some, the reason may be emotional value, because NFTs are seen as collectibles. For others, they are seen as an investment opportunity similar to cryptocurrencies, because the value can increase.
Author and podcaster Andrew Steinwold traces the origins of NFTs back to 2012, with the creation of the Colored Coins cryptocurrency. But NFTs did not move into the mainstream until five years later, when the blockchain game CryptoKitties began selling virtual cats in 2017.
And when big players like Elon Musk and the NBA come up with the idea, there is money to be made in NFTs, with more than $ 10 million in NFT transactions now taking place daily, according to the DappRadar website.
Even meme producers have come up with the idea, offering NFTs of their most viral offerings and making a lot of money in the process.
Bad Luck Brian, a meme for Kyle Craven’s funny, bad yearbook photo, sold for more than $ 45,000.
Overly Attached Girlfriend, created from a YouTube video of Laina Morris satirically showing her love for Justin Bieber, has sold for $ 459,260.
And in March, Twitter CEO Jack Dorsey sold his first tweet – ‘just setting up my twttr’ – as an NFT for just over $ 2.9 million.
But the bubble is going to burst, according to early cryptocurrency pioneer Fred Ehrsam, with Coinbase co-founder giving NFT three to five years before losing most if not all of its value.
‘I go so far as to say that 90% of NFTs produced, they probably will have little or no value in three to five years,’ Ehrsam said in an interview with Bloomberg TV this week.
‘You can say the same about early internet businesses in the late’ 90s, ‘he said.
Ehrsam has seen such crypto-concepts crash and burn apparently 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 cryptocurrencies, just as there were millions of millions of websites. Most of them will not work, Ehrsam revealed.
Ehrsam began trading Bitcoin back in 2010 as a currency trader at Goldman Sachs before leaving the company in 2012 to start Coinbase with Brian Armstrong, which was released in April at a calculated valuation of $ 100 billion, according to the Observer.
In the months since an IPO was offered, the crypto company’s market value has fallen by half in the midst of ongoing pressure for regulation.
Meme producers have also gotten into mania, offering NFTs of their most viral offerings and making a lot of money in the process
However, Ehrsam still believes that cryptocurrency is truly ‘the next opportunity for the Internet for the United States.’
“The world is not changing overnight, but you can see that the seeds of exponential growth are already happening,” he said in the Bloomberg interview.
‘I think we will live in a future where we do not need these centralized platforms today for us to coordinate. This already applies to financial services, in that you can be your own bank. You do not need a central institution to keep your money anymore. ‘