Scrolling through social media, one may come across profile photos that are a little peculiar: perhaps a monkey dressed extravagantly, a colorful pixel art or a digital creature with futuristic features. As intriguing as they may seem, these images are more than avatars. They represent a phenomenon that has shaken the digital world: the NFT, or non-fungible tokens. This journalist asks what goes on behind these images. Is it a revolutionary technology that has transformed many sectors? Digital art? Virtual luxury products? Or merely a passing fad?

What are NFTs?

NFT means non-fungible token. Unlike a coin or banknote, which are interchangeable, an NFT is unique and cannot be replicated. Each NFT has a digital signature, making it distinct and impossible to copy or exchange. It has a certificate of authenticity, engraved in the blockchain, which attests to the ownership and uniqueness of it as an asset.

The rise of the NFT

Once considered the future of digital ownership, NFTs have seen a dramatic turnaround. What started as a niche innovation quickly exploded into a global phenomenon in 2021, with digital assets selling for millions and attracting the attention of celebrities, entrepreneurs and investors. For example, the Bored Ape Yacht Club (BAYC) collection of algorithm-generated monkey drawings became one of the most iconic symbols of the NFT movement. These avatars sold for hundreds of thousands of dollars each, attracting celebrities like Eminem, Snoop Dogg or Neymar, who broadcasted their monkey as profile photos on social networks.

This momentum was not meant to be, as the NFT market collapsed. A recent report by dappGambl, which analysed more than 73,000 NFT collections, found that 95% of them failed to hold their value. This suggests the bursting of a speculative bubble, leaving many once-promising digital assets worthless.

The End of Euphoria

The rapid rise of NFTs has been largely driven by speculative investment. In 2021, stories of digital art and collections sold at astronomical prices captivated the media and the public. This craze proved to be unsustainable, and as the novelty faded, investor interest declined and capital flows in this sector slowed down significantly.

An Oversaturated and Ill-Prepared Market

One of the main factors in the collapse of this seemingly promising market was overproduction. The craze for NFTs has led to an avalanche of rushed projects, many of which were of poor quality or copies of more successful tokens. With more NFTs produced than demand to support them, the value of most NFTs fell.

Added to this is the glaring lack of utility. Most NFTs offered no functionality or lasting value beyond their speculative appeal. Few projects have delivered on their long-term promises or succeeded in building strong communities, leaving collectors with digital assets without real use.

What now?

Despite the collapse, experts see potential in NFTs. Many still believe that the underlying technology has long-term potential, particularly in areas such as video games, digital identity, event tickets or real estate. However, for NFTs to regain their relevance, the market will require a shift from speculative buildup and a focus on useful and concrete applications. In a broader perspective, the idea of a decentralized internet remains attractive, and blockchain technology continues to evolve and innovate.