{"id":161091,"date":"2023-10-25T13:50:36","date_gmt":"2023-10-25T19:50:36","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=161091"},"modified":"2023-11-07T13:28:12","modified_gmt":"2023-11-07T20:28:12","slug":"two-years-after-cryptos-boom-investors-are-stuck-with-worthless-nfts","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/two-years-after-cryptos-boom-investors-are-stuck-with-worthless-nfts","title":{"rendered":"Two Years After Crypto\u2019s Big Boom, Investors Are Stuck With Worthless NFTs"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Remember NFTs? Remember how the crypto boom of late 2021 had investors scratching their heads? Well, apparently, most of those digital assets are now worth next to nothing.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A groundbreaking&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/dappgambl.com\/nfts\/dead-nfts\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">report by dappGambl<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;found that most NFT (non-fungible token) collections are worthless. dappGambl analyzed 73,257 NFT collections and found that, shockingly, 69,795 of them had a value of 0 Ether (Ethereum). Some 23 million people worldwide, with some reportedly losing their life savings, now own worthless NFTs.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">How could investors have got it so wrong with the hot crypto trend, and what were some of the mistakes that led to the implosion of the NFT market?<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_65397103953c0: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_65397103953c0\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/two-years-after-cryptos-boom-investors-are-stuck-with-worthless-nfts', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/two-years-after-cryptos-boom-investors-are-stuck-with-worthless-nfts',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/two-years-after-cryptos-boom-investors-are-stuck-with-worthless-nfts', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The NFT Market Became Quickly Oversaturated<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The hype over NFTs was built around the idea of digital scarcity. In a sense, NFT investing is modeled on the fine art market.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The value of a particular artist or artwork can change over time, and owning the original is much more valuable than owning copies. A simple example would be a Picasso painting. Sure, you can buy good-quality, original-sized prints, but it\u2019s not the same as owning the real thing, which could be worth millions, even if it\u2019s just an early sketch and was worth nothing a century ago.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">It should be the same with digital art\u2014except that it isn\u2019t. Or not anymore, as things currently stand.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">To use a crude analogy, there aren\u2019t that many Picassos among NFT producers. Or, imagine that there suddenly are thousands and thousands of Picassos out there, all producing very similar stuff, a lot of it low-quality.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">While the idea of Nyan Cat crypto art was funny and novel, thus selling for $590,000 at auction, numerous subsequent copycats (excuse the pun) oversaturated the market, diluting the value of NFTs. People quickly lost interest in repetitive NFT collections lacking the unique element that was appealing at first.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The dappGambl report puts it bluntly: \u2018\u2019Projects that lack clear use cases, compelling narratives, or genuine artistic value are finding it increasingly difficult to attract attention and sales.\u2019\u2019 The value of NFTs rested on the idea of ownership, but only 21% of NFT collections have found full ownership, according to the research. And if no one is interested in owning something, its value plummets.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A lot of NFTs tried to compensate for the lack of originality and artistic value with the promise of future added value. Many claimed that the tokens they were selling would eventually become part of an innovative new video game or metaverse. Needless to say, these promises never materialized, leaving investors with NFTs that had no real value.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Copyright Laws Are Essentially Unenforceable in the NFT Space<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Another big mistake investors made was taking all of the claims about the ownership of NFTs in good faith.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The fundamental problem with digital-only products such as NFTs is that it&#8217;s basically impossible to ensure the copyright remains intact. Hacking, plagiarism, and piracy are rife in the NFT world. And what happens if you buy ownership of a work that\u2019s been stolen from someone else? You\u2019ve guessed it: It\u2019s worthless.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Theoretically, artwork creators\/NFT sellers can protect owner-investors by ensuring the work they are selling comes with a copyright license. In practice, very few do this, creating endless problems for investors who can\u2019t be certain that they\u2019ve invested in the genuine article\u2014or even that they actually hold the rights to what they\u2019ve bought.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">NFT Valuations Are Often Overinflated and Always Speculative&nbsp;<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If there\u2019s just one thing that all investors should know about NFTs: It is \u2018\u2019a highly speculative and volatile market,\u2019\u2019 per the report.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Any projected value of the investment is based entirely on predictions and, all too often, wishful thinking. There is no solid ROI maturation plan because there is no basis in precedent. There are only subjective hopes about the future.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Take virtual real estate as an example. It seems to operate according to the same rules as real estate in the physical world. You buy virtual land or a virtual property. It\u2019s yours. You get to do what you want with it and then hold on to it or sell it later.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Furthermore, just like real neighborhoods, some virtual neighborhoods are more desirable than others. Someone reportedly paid $450,000 to be Snoop Dogg\u2019s neighbor on the metaverse platform Sandbox. You might choose to use this newly purchased virtual real estate as a virtual meeting space, gallery, or as a virtual reality gaming experience. You and others can explore this world as digital avatars. So far, so good.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Except, where you buy real estate is locked to the platform you use to buy it, and if the platform loses interest, as was the case with Decentraland<\/span><em><span data-preserver-spaces=\"true\">,&nbsp;<\/span><\/em><span data-preserver-spaces=\"true\">then your property\u2019s value is&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/futurism.com\/the-byte\/virtual-metaverse-real-estate-trouble\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">effectively gone<\/span><\/a><span data-preserver-spaces=\"true\">. That\u2019s just one of the drawbacks. The elephant in the room is that the real estate you hold isn\u2019t based in reality, and it&#8217;s just hard to logically conclude that it\u2019s a good idea to spend any considerable amount of money on it.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As Mark Stapp, professor and director for real estate theory and practice at Arizona State University, told&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/2022\/01\/12\/investors-are-paying-millions-for-virtual-land-in-the-metaverse.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">CNBC<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in early 2022: \u2018\u2018I would not put money into this that I didn\u2019t care about losing. If it continues the way it\u2019s going, it is most likely going to be a bubble. You\u2019re buying something that isn\u2019t tied to reality.\u201d&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Could crypto have another boom? Maybe. But it seems like most investors have wisened up to its sheer lack of intrinsic value.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_d00d16468e0a6f88d76b79b24e0b37ce\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_cd72cebad94503e4b346f7ba55803dd5\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_e3d9f27abfce3a90222b45874d0f8877 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/two-years-after-cryptos-boom-investors-are-stuck-with-worthless-nfts&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/two-years-after-cryptos-boom-investors-are-stuck-with-worthless-nfts&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Remember the hype around crypto and NFTs in late 2021? Remember the promise of &#8220;virtual real estate&#8221; and the incredible returns it would bring? Well, it hasn&#8217;t panned out like that&#8230;yet.<\/p>\n","protected":false},"author":613618,"featured_media":161095,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7385,7399],"tags":[],"class_list":["post-161091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-management","category-diversifying-investments"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/161091","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=161091"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/161091\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/161095"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=161091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=161091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=161091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}