Why NFTs are not a fad

Spotify is using NFTs to curate playlists; a liquidator is selling NFTs to recover losses at a bankrupt hedge fund; and a new NFT marketplace called Blur has come out of nowhere to take the crown of longtime top dog OpenSea. All of this occurred in the past week or so.

I could go on—including on how big-time gaming execs are raising big sums for NFT-based video games—but I think you get the point. Far from disappearing as a fad, as many predicted, non-fungible tokens are becoming more ubiquitous than ever. As Axios noted in a smart newsletter last week, “When headlines declare death, it pays to check the data.”

What Axios found is that NFTs are still racking up $500 million in monthly sales volume—a far cry from the $4 billion figure that occurred at the height of the early 2022 bubble, but still nothing to sneeze at. And for a longer perspective, I recall reporting on the popping of an earlier NFT bubble in 2018 during which primitive collectibles called CryptoKitties had sold for the then-unfathomable amount of $100,000. Today, that figure is below the so-called floor price for any of the 10,000 critters in the Bored Apes collection.

While all this is a testament to the enduring interest in NFTs—whose value stems from the fact they prove unique ownership of a digital artifact stamped on a blockchain—I’m more intrigued by what comes next. I predict that we are on the cusp of a design breakthrough as companies and crypto wallet makers develop an interface that makes using NFTs as intuitive as pulling up an airline boarding pass with your phone. Meanwhile, the speculative market for NFTs has been turbocharged thanks to a new tactic popularized by Blur called “floor sweeping,” which entails buying batches of the lowest-price NFT in a given collection.

All of this is to say that, despite the hype and obnoxious culture associated with some elements of the NFT world, the underlying token technology is here to stay. If you want to keep abreast of the latest developments in NFTs and the larger digital worlds being built around them, I recommend reading my colleague Marco Quiroz-Gutierrez’s column, This Week in the Metaverse. And if any of you have thoughts on the future of NFTs—or want to make the case that they are indeed a fad—I’m always happy to hear your opinion. Have a great weekend.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

Coinbase launched a layer-2 blockchain called Base using open-source code from Optimism, winning applause from crypto purists. (Fortune)

Dapper Labs, best known for NBA Top Shot NFTs, laid off 20% of its staff for the second time in four months. (The Block)

An updated DOJ indictment shows how Sam Bankman-Fried used straw donors to make tens of millions in illegal political contributions. (Fortune)

Binance is introducing a “semiautomated” system to manage its reserves following repeated episodes of commingling collateral. (Bloomberg)

An employee stole $18,000 worth of electricity in order to mine crypto in the crawl space of a Massachusetts middle school. (Boston Globe)