Crypto expert: „Hype around NFTs will die down, but technology still has a lot of potential“.
The trend around crypto collectibles will die down, but the technology behind them still offers much more value, according to a crypto expert.
Non-fungible tokens (NFTs), i.e. crypto tokens that are particularly suitable as digital securitisation for unique items due to their design, have Bitcoin Bank experienced a real boom in recent months. Some NFTs have even been sold for several million dollars as a result.
Kosala Hemachandra, the CEO and founder of MyEtherWallet, assumes that the hype around the technology will calm down again, but in his opinion the basic idea behind it will endure and holds much greater potential.
„NFTs are all the rage right now, but I’m sure the hype will die down at some point,“ Hemachandra tells Cointelegraph. He further explains, „It’s like ERC-20 tokens, which were the hot topic in 2017 because of the boom around ICOs. Now there’s not as much hype around them as their use has become commonplace in the crypto industry.“
Non-fungible tokens, as the name suggests, literally have no fungibility. This means that the individual coins are unique and cannot be replaced at will. This makes them the perfect vehicle for assets whose value stems from their limitedness and uniqueness. Thus, NFTs are used primarily for digital art, music and collectibles.
„The value of an NFT is based on what a person is willing to pay for it,“ Hemachandra says. To this effect, he elaborates:
„If someone is super interested in an NFT collectible that was sold in 2021, that person might be willing to pay many times more for it in 2030. So we can’t say now, for example, that the CryptoKitties of 2017 are worthless. Even now, there are certainly people who would buy these unique collectibles for a higher price than the current owner paid.“
The CryptoKitties are digital „kittens“ that were popular in the crypto community in 2017 as the first major NFT project.
In fact, the hype around NFTs has similarities to the boom around ICOs, which also took place in 2017. Initial Coin Offerings (ICOs) were an alternative method of raising capital where crypto projects raised investment capital by selling proprietary coins or crypto tokens. However, as many of these projects did not succeed in the market, some of them were even fraudulent, the ICOs‘ flight of fancy later came to an abrupt end.
Nadav Hollander, co-founder of Dharma, therefore also sees the similarity to the NFTs, writing on Twitter: „I have the feeling that it will go the same way for the NFTs as for the ICOs. First 6 – 9 months of constant growth and staggering sales totals before the multi-year crash.“
Nonetheless, Hemachandra sees great potential in NFT technology, only wanting to question the current hype
„Is it about the actual ownership or the status symbol? At the moment, the focus is definitely on the status symbol of an NFT collectible,“ as he differentiates. To this he adds:
„NFTs are currently hot for the same reason as a Lamborghini. But I am sure that the technology will develop into a much wider field of application. Let’s think of real estate, for example, the possibility of being able to prove ownership of a tangible object beyond doubt. NFTs can help speed up legal and bureaucratic processes significantly. When we get there, only then will it become really interesting.“