NFTs: Lack of value around digital assets prompts question to its tangibility, usage
SHAH ALAM - Non-fungible tokens (NFTs) are currently being dropped due to the lack of value around holding a digital asset prompting more to question its tangibility or usage, expert says.
An NFT adopter who was also leading several NFT projects Muhd Farhan Rahmat said that there was a lack of digitalisation supporting NFTs, as the market itself was declining due to the lack of inclusion to push projects into the space.
“There is a crash happening in the market as the market is declining with reductions in the PlayToEarn platforms in the space.
“There’s always a possibility for the market to return, but there’s no clear indication of when that would happen,” he said.
Farhan stated the market for NFTs was currently filled with those holding their assets in hopes that it would increase, while many saw the space as a means for financial gain causing less flow in the market.
“Currently, it’s a game for crypto whales (large spenders) to purchase NFTs at a lower price in hopes of holding it for a higher price.
“Many are setting their sights on financial gain towards NFTs especially with the boom in recent years, but it has slowed down.
“NFTs were primarily dropped due to the lack of infrastructure around it as it featured worthless virtual assets as there were no virtual platforms to utilise it,” he said.
Meanwhile, Putra Business School (PBS) MBA Programme Director Professor Dr Ahmed Razman Abdul Latiff said NFTs could decline and fall lower as it lacked the ways of unleashing its true potential.
“NFTs have a practical applicability that could unleash its true potential and create value for investors and users through virtual spaces.
“However, it is mostly on hype and the value of NFTs may hover near zero eventually,” he said.
Razman also said that the value of digital assets might drop in value as more individuals continue to hold themselves to the assets but supports the idea of a possible future with regulated cryptocurrency or other assets involved in the blockchain space.
“Cryptocurrency is one form of investment, mostly on digital assets. Naturally, holding on to assets rather than spending them will not be good for the economy because it will reduce the liquidity pool.
“I support the use of blockchain technology especially with regards to its ability to enhance, secure and make transparent any economic transactions, and cryptocurrency is one of its applications.
“The form of cryptocurrency that I support and endorse is the one issued by a sovereign body and backed by a commodity, as any form of digital assets which has the characteristics of fiat money will not be sustainable,” he said.
Despite NFTs being a possible step forward into the digital era, it required a watchful eye, as it was a market based on speculation, arts in the field could lead to scams and potential Ponzi schemes.
Certain artists when contacted said they viewed NFTs negatively as it was filled with potential scams or projects that became rug pulls – which meant that art would be sold at a high amount while those who purchased them would suffer losses – eventually caused many to steer clear away from NFTs.
NFTs are part of the blockchain technology after the introduction of cryptocurrency.
Projects on NFTs were currently still being minted or created on the blockchain with data from The Block showing Ethereum mints at around 5,000 daily compared to its peak of over 140,000 last year in September.
The current data of NFTs shared on Sept 27, showed a steady decline in NFTs sold since its peak in February with one-week gaining sales of $358.28 million declining to $62.62 million.
On Sept 24, a study revealed 95 per cent of NFT collections were worthless as there was not enough demand for NFTs to keep up with supply.
NFTs with their lack of applicable platforms still served as a placeholder for a system that did not have much major support and would only see certain use, case in point being the introduction of ‘augmented reality’ projects like the Metaverse.