If your 401k looks like something out of a Spaghetti Western, just be glad it’s not filled with NFTs.

Bloomberg, citing data from Dune Analytics, reported Wednesday that non-fungible token trading in September has returned to pre-bubble levels, with monthly volume falling 97% from a January peak. Barring a wholly unexpected last-minute rush of sales, NFT trading volume will land around $500 million in September, a 15-month low.  (NFTs, as a reminder, are unique digital assets recorded on a blockchain.)

It’s not all horrendous news for NFT owners. Most NFT sellers in the past 30 days still turned a profit on their digital assets, according to NFTGo data. Many others are holding on for dear, dear life, hoping to ride out the crash.

But the barren demand for NFTs shows few signs of returning to its early 2022 heyday, when unrestrained hype and frothy global markets turned Bored Ape and CryptoPunks into a peculiar phenomenon.

So where does the NFT ecosystem go from here?

It’s a question that blockchain bulls are increasingly having to answer following the disintegration of NFT values. And unfortunately for owners of NFT collectibles, which drove much of the recent craze, the most common responses focus on commerce over art.

Take Vitalik Buterin, the cofounder of the Ethereum blockchain and a semi-skeptic of this year’s NFT madness. In an interview with WIRED published this week, the 28-year-old wunderkind predicted that the NFT ecosystem will gravitate more toward utilitarianism over market-driven enthusiasm. As an example, Buterin cited the popularity of Ethereum Name Service domains, which allow users to convert long blockchain addresses into simple names that can be bought, sold, and traded.

“I think the NFTs that are going to be sustainable are the NFTs that are going to be useful,” Buterin said. “In the beginning stages, there is tradable art and cat pictures, and a lot of that stuff really has cratered. For an NFT to have lasting value there needs to be some benefit of holding it other than just being able to say that you hold it.”

A quartet of partners at Bain & Company, which consults with companies on digital asset strategy, similarly sees practical applications for NFTs. In a commentary published earlier this month in Fortune, the four partners wrote that event tickets, rewards programs, and redeemable items could soon become digital assets on a blockchain.

“Set aside the wild spending on JPEGs of art, sports, and entertainment for a bit, as well as the recent crash in cryptocurrency prices,” the authors wrote. “More relevant and promising for consumer businesses are the underlying technologies. NFTs provide an ideal set of capabilities to reimagine how companies engage their customers, not only in rewards and loyalty programs but also in other creative ways.”

Big-dollar investors, meanwhile, remain bullish on the long-term prospects of NFTs mixing well with business. 

Despite the collapse of NFT trading volume and cryptocurrency prices, venture capital funding for NFTs and NFT-driven gaming (in which players are rewarded with digital assets) hasn’t completely evaporated. In the three-month period ending in August, investors pumped an monthly average of roughly $625 million into NFT and gaming ventures, according to The Block Research. In the previous nine months, the average investment totaled just shy of $1 billion.

“For venture capital firms investing in digital-asset startups, NFTs are a gateway to broader mainstream usage of crypto,” Bloomberg reporter Hannah Miller wrote last week. “Games involving these tokens are often fun, low-stakes ways to introduce people to blockchain. The widespread success of one could ultimately legitimize and popularize NFTs to the point where they find a firmer real-world presence and represent things like airline tickets, house deeds or music singles.”

Could demand for the NFT collectibles market rebound? Sure. Such is the nature of highly cyclical markets driven by tastes and trends. 

In the meantime, the best case for widespread acceptance of NFTs looks more practical and businesslike than ever. Making money, after all, never goes out of style.

Want to send thoughts or suggestions for Data Sheet? Drop me a line here.

Jacob Carpenter

NEWSWORTHY

Slicing its order. Apple has told suppliers to reverse course on plans for increasing iPhone 14 production this year, the result of slower-than-expected sales of its latest smartphone, Bloomberg reported Tuesday. Citing sources familiar with the matter, Bloomberg said Apple now expects to produce about 90 million iPhones in the second half of 2022, down roughly 6 million units from earlier forecasts but still in line with output over the same period in 2021. The shortfall in demand appears to be concentrated in the standard model of the iPhone 14, while sales of the more expensive Pro model have been strong. Apple shares fell 3% in mid-day trading Wednesday on the news.

Might need a third opinion? Lawyers for Twitter argued in court Tuesday that Elon Musk’s own consultants disputed his claims that the social media company drastically undercounts the number of spam accounts on its platform, the Financial Times reported. At a hearing ahead of a trial tied to Musk’s move to back out of buying the company, Twitter officials said that Musk’s two consultants estimated that bots account for 11% and 5%, respectively, of the platform’s users. Twitter executives routinely say that bots make up less than 5% of active accounts, an estimate that Musk has claimed—without hard evidence—is misleadingly low.

Messaging rules applied. Global financial institutions accused of failing to monitor employees’ use of unauthorized messaging apps will pay $2 billion in fines to settle the matter with U.S. regulators, Bloomberg reported Tuesday. The penalties levied against 12 banks, including Bank of America, Citigroup, and JPMorgan Chase, stem from staffers using unofficial communication channels to discuss business matters, which hinders regulators’ ability to track misconduct. Investigators alleged bank employees were using encrypted apps, including Signal and Meta-owned WhatsApp, to evade scrutiny.

Back in the game. Intel unveiled plans Tuesday to begin selling graphic chips designed for computer video game players, re-entering a space dominated by Nvidia and AMD, the Wall Street Journal reported. CEO Pat Gelsinger said the semiconductor giant will target gamers looking for lower-priced graphics cards, which have ballooned in price in recent years. Intel’s products won’t match the specs of its established competitors, though its $329-and-up price could attract gamers willing to prioritize cost over performance.

FOOD FOR THOUGHT

All-in on Adobe. Figma co-founder and CEO Dylan Field might become a whole lot richer soon, but he’s maintaining his humble, low-key demeanor. In his first extended interview since Adobe announced plans last week to acquire the collaborative digital editing company for $20 billion, Field made a straightforward, no-frills case to The Verge and Platformer about how the acquisition would benefit customers. Field said Adobe’s investment and infrastructure should allow Figma to expand its suite of creative assets, while giving it the bandwidth to explore new technologies. The 30-year-old also argued that the purchase will “give our users a ton more functionality” in response to a question about potential antitrust concerns.

From the article:

[Q:] So any time a beloved tool gets bought, users worry that this could be the beginning of the end, or at least of a slow decline. What’s your case that Figma can keep innovating inside a bigger company?

[A:] First of all, autonomy. Second of all, I’m not going anywhere. Figmates are stuck with me.

And I’m really excited about what’s ahead — I think this is our opportunity to like press the gas even more. We’re currently playing in the product development world; we’re pretty excited about what we can do to accelerate on productivity use cases.

IN CASE YOU MISSED IT

ARK’s Cathie Wood is entering venture capital. That’s a problem, by Jessica Mathews

What the Helium ‘grift’ tells us about crypto, by Jeff John Roberts

A.I. is solving traffic problems to get you where you’re going safely, by Stephanie Cain

Expanding access to cutting edge A.I. might be the key to resolving the A.I. talent shortage, by Jeremy Kahn

Solana founder Anatoly Yakovenko on ‘the biggest bottleneck in crypto’, by Taylor Locke

A flying taxi just completed its first flight test as major airlines bet big on the new technology, by Prarthana Prakash

Here’s what 2 hours as a Roblox avatar in Walmart Land really feels like, by Marco Quiroz-Gutierrez

BEFORE YOU GO

Wishing for a slow news day. Fast Company had an unexpected visitor Tuesday night. The business publication said a hacker gained access to its online publishing platform and used it to send two racist, obscene Apple News alerts. In response, Fast Company officials shut down their entire website, which remained offline as of late Wednesday morning. Before Fast Company shuttered its site, the purported hacker outlined how they gained access to the company’s systems, writing on fastcompany.com that the outlet used a “ridiculously easy” password across multiple administrator accounts. It wasn’t immediately clear why the hacker targeted the publication, which endured a similar hack on Sunday.