Will NFTs Die Out? What You Need To Know
Over the course of just the past few years, NFTs have experienced meteoric rises in price followed by massive crashes.
Currently, it looks like NFTs are in a state of near collapse, especially considering our current global economic situation. But will NFTs die out in the long run, or are they set to make a big comeback?
Some NFT projects will die out — but that doesn’t mean they all will. The problem is separating the NFTs that are doomed to fail from those that are likely to succeed.
Thankfully, there are certain things to look for when buying NFTs that’ll help you select the ones with the highest chances of long-term success.
In this article, we’ll examine how NFTs die out. Plus, we’ll examine which NFTs will likely still be around in a decade, and what types of NFTs you should avoid.
Are NFTs dead?
The NFT market looks like it’s on a downward trajectory at the moment.
The volume of daily NFT sales has dropped from over $6 billion to only $850 million since its peak in January 2022. That’s nearly a 90% decline — certainly cause for concern!
But to be honest, the cryptocurrency market as a whole — and even the stock market — are also significantly down from their prices a year ago.
So we think it’s a bit premature to ask whether NFTs will die out.
To borrow from the words of Mark Twain, the reports of NFTs’ death are greatly exaggerated.
It’s only natural that, in a time of inflation and economic uncertainty, people stop buying risky assets like NFTs.
We need to remember that NFTs, having been around for less than a decade, are a very new asset class.
Just like with the dot-com bubble of the late 1990s, it’s not unheard of to see rapid increases and declines in value for such new, disruptive pieces of technology.
NFTs are simply changing and evolving, which is only natural for new technology.
The good news is that as the NFT market continues to grow and mature, and as more use cases for NFTs develop, we’re seeing a decrease in this volatility.
While the heyday for digital art and profile picture NFTs may be reaching an end, NFTs as a whole are far from dead.
Will NFTs die out?
We’d be very shocked if NFTs as a whole died out. They simply offer too much utility and benefit. So the idea of them becoming as obsolete as a VCR or rotary phone anytime soon seems highly unlikely.
Without a doubt, certain NFT projects — perhaps even entire categories of NFTs — will die out or lose popularity. But the overall idea and technology behind NFTs are here to stay.
The most basic concept behind NFTs is still sound and has many applications. At their roots, NFTs are simply about ownership that’s verifiable through blockchain technology.
Even Bitcoin isn’t immune to being declared dead. Since 2010, articles have claimed that it’s the end of Bitcoin at least 450 times. Anyone predicting the death of NFTs is likely to look just as foolish in the future.
The above image shows the Gartner hype cycle, a model that NFTs will go through in the same way every new technology does.
There’s always a peak of inflated expectations where a bubble is created, followed by a trough of disillusionment where interest wanes and the technology doesn't live up to the hype in the short term.
We’d argue that currently, NFTs are likely near the bottom of the trough.
How could NFTs die out?
Let’s play the devil’s advocate for a moment and entertain possible reasons for NFTs dying out. Although we don’t think any of these are going to lead to the downfall of the entire NFT market, they’re still worth considering.
People stop creating new NFTs
It’s possible that non-fungible tokens are just a fad, and people will suddenly stop being interested in making them. Maybe new technology will come along that can do everything an NFT can do, but even more effectively.
People stop buying NFTs
The other side of the equation is that NFTs might continue getting made, but nobody is there to buy them up.
At least some portion of the NFT market is only around to make a quick profit. If that turns out to no longer be possible, those people could choose to invest their money elsewhere.
People may even choose to boycott NFTs for ideological reasons, withholding their money from companies that use NFTs to facilitate their products.
One of the most legitimate concerns that people currently have with NFT technology has to do with the environment.
In their current state, the majority of NFTs take a lot of electricity and processing power to mint and transfer.
If NFT adoption becomes widespread enough, it could put a strain on electrical grids around the world and contribute to climate change.
The good news is that the technology behind NFTs is becoming more environmentally friendly. It should become significantly greener in the near future.
High gas fees
You pay an Ethereum gas fee whenever you mint or transfer an NFT.
These gas fees go up and down every day based on demand. There are even times when the gas fee of a transaction could be more than the cost of the NFT.
It’s not all that uncommon to pay $100 for an NFT and then have to add another $30 in gas fees on top of that. Those gas fees are purely the cost of keeping the blockchain network going.
Just like the environmental problems facing NFTs, the dilemma of high gas fees is something that’s being actively worked on. So, in the future, it’ll hopefully cost only a few cents to buy or sell an NFT, instead of being cost-prohibitive.
NFTs that will likely stand the test of time
Some NFTs will undoubtedly stand the test of time.
In our opinion, the most important factor in an NFT project’s success is that it must offer long-term utility and value.
As broader sections of the NFT market, the ones we see as having the most staying power are:
- In-game digital items
- Collectibles and memorabilia
- Consumer loyalty programs
- Memberships and subscriptions
- Community building
Of course, within each of these categories, there’ll be plenty of low-quality NFTs. But generally, we think that some long-term winners will emerge from these groups.
Some things to consider when evaluating an NFT for purchase include:
Moderately priced NFTs
Avoid overspending on NFTs when it’s unlikely you’ll ever get your money back.
The cheapest NFTs may be of lower quality. But it’s unlikely that you’ll get your money’s worth from an NFT that costs thousands of dollars, either.
The less you invest, the less you’ve got to lose.
We recommend finding a sweet spot of moderately priced NFTs that offer good value and real utility in exchange for what you pay for.
A good project team
Look for NFTs with a solid team behind them that has a good track record of providing support and interacting with the community.
NFT projects that constantly add features are also a good sign. The more utility an NFT has, the greater the chance that its value will increase over time.
Avoid promises of future features from new projects, though, as these are often used by scammers to help sell projects with no future.
Get in early on trends
Being a trendsetter in the NFT space is difficult, as you need to really do your research and be in touch with the ecosystem.
However, if you’re able to find new, unique NFT projects early on, you’ll likely be rewarded.
Groundbreaking new projects tend to solidify themselves in the industry and stick around for years.
For example, when we issued our Stack NFT, early adopters had the opportunity to get a Stack PRO lifetime license for just $99.
Those Stack NFT owners now have unlimited rooms to collaborate and categorize their web content. If they had to pay an annual fee for these features, it'd easily cost thousands of dollars over their lifetime.
NFTs to avoid
73% of NFTs have only had one transaction in the past 90 days.
So if you’re just picking NFTs at random, chances are you’re going to hit a dud. That’s why it’s critical to do your research.
Going forward, it’ll become increasingly important to know how to pick the right NFTs.
That means no more screenshots of tweets, memes, or other low-effort projects created just to turn a profit.
You’ll want to avoid the following NFTs:
- Celebrity NFT projects
- Oversaturated NFTs (those with 50,000 or more editions)
- NFTs from unknown artists
- Copycats or direct ripoffs
- Screenshots, memes, and other low-effort NFTs
During the height of NFT popularity, you could pick pretty much any NFT project and watch your asset drastically increase in value every month.
But those days are over. As the NFT ecosystem matures, there’ll be less room for projects that don’t offer real utility and value.
NFTs face a few problems, including their environmental impact and high gas fees. However, it seems like NFT technology as a whole will be around in the long term.
The real question is whether your NFT of choice will be around for years to come.
Check out our blog for more NFT articles and to make sure you stay up-to-date on the latest NFT information. It’ll give you a better understanding of NFTs and what you should be looking for when selecting NFTs that will stand the test of time.