Before Non-fungible tokens (NFTs) came along, it was uncommon to see a picture publicly available on the Internet worth more than a house or a sports car. But this was exactly what happened when NFTs took the Internet by storm in 2021.

From crypto events to news headlines, NFTs were the most talked about crypto innovation in 2021.

Stories about The Merge, an NFT collection, which sold for $91.8m had the world talking about NFTs.

Another artwork called Everydays: the First 5000 Days by Michael Winkelmann, was sold as an NFT for $61 million.

Nigeria’s Anthony Azekwo also got his big break as an artist when he decided to sell his digital art as NFTs.

The NFT trend continued into 2022 with a viral coffin dance meme featuring Ghanaian pallbearers selling for $1 million,.

These stories fuelled people’s  interest in NFTs and it seemed the trend wasn’t going anywhere anytime soon, but discussions about NFTs died down before the end of 2022.

Dune Analytics revealed in September 2022 that NFTs had lost 97% of their trading volume, going from $17 billion in January 2022 to $470 million by September 2022.

NFTs went from the most talked about innovation to having nothing said about them. One can’t but wonder what happened to NFTs; are they dead? In this article, we’ll look at what happened to the NFT trend, and what the future promises for digital art.

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What happened to NFTs?

Michael Ugwu, CEO of FreeMe Digital and an early investor in NFTs, believes NFTs are dead, but there’s a context to the death.

He explains that the relationship between crypto and NFTs is the reason it seems NFTs are dead.

“NFTs are literally just following the crypto, the wider cycle.” 

This means that the performance of NFTs is dependent on the situation with the crypto market.

In 2021 when NFTs were the talk of the town, bitcoin was at an all-time high (ATH) of $69,000. A bitcoin ATH, in most cases, automatically means that the crypto market is in a bull run.

And 2021 was a bull run, the market cap for the entire crypto industry was at its highest of $2.9 trillion before the FTX crash of 2022 decimated the market.

NFTs were also in a bull run. Ugwu spent about $10,000 on NFT collections such as the CryptoPunks — which now have a starting price of $153,000 — and Bored Ape Yacht Club with a current $42,000 starting price.

But unlike crypto, NFTs are illiquid assets. This means that NFT trading could be very difficult in a bear crypto market.

Explaining, Ugwu says cryptocurrencies like bitcoin, ethereum, and USDT can always be sold even in a bear run, but selling NFTs becomes more difficult.

“For bitcoin and ethereum, you can keep selling because there’s always a willing buyer, but with NFTs, it is like trying to sell a car.”

The global economy and art speculators

While NFTs follow the same trajectory as crypto, their survival also depends on the state of the global economy. Crypto enthusiast and writer Patrick McGimpsey believes the state of the global economy towards the close of 2022 played a role in NFTs’ decline.

In his article for Forbes, Patrick McGimpsey says, “the NFT boom coincided with economic uncertainty, with the impacts of the Covid-19 pandemic resulting in higher inflation, interest rates and tighter monetary policy,”

But beyond the crypto and economic downturn, the NFT market also got saturated with people who wanted to make quick money; it went from appreciation of art to speculation.

The saturation of the market with subpar NFT projects could have caused the decline of NFTs.  

But for Ugwu, NFTs go beyond making a quick buck. He is perhaps the largest collector of Nigerian NFT artworks such as that of Azekwoh and Prince Jacon Osinachi.

On the Techpoint Africa Podcast, he discusses how transformational NFTs were for these artists.

NFTs made it possible for local artists to get international recognition and appreciation for their work, something that is very difficult to achieve.

In his view, NFTs broke the physical boundaries that limit the work of local artists almost the same way streaming platforms did for African music.

“It is hard to find an international buyer in the traditional art market. And then if you do, how do you arrange payment?”

NFTs simplify the whole process from the discovery of the artwork to payment with the help of the blockchain. Artists can list their work on NFT platforms and interested buyers pay for them with cryptocurrencies, which are not bound by geography.

This is why Osinachi became “probably the first black artist to actually have an auction with Christie’s, a very famous auction house in the UK,” Uguwu says.

Just like this article explains, what people pay for is not just digital art, but proof of ownership of the piece which is secured on the blockchain.

 Are NFTs coming back?

“NFTs do well when people get crypto rich.”

This is Ugwu’s way of saying NFTs will come back when the crypto market bounces back.

Many crypto enthusiasts and traders believe the market is in a bull run especially as bitcoin reached a new ATH of $72,000 in March 2024.  

Although there isn’t much NFT action yet, Statista predicts that the market could be valued as high as $2.3 billion this year, and even grow at a rate of 10% every year to reach $3.38 billion by 2024.

McGimpsey corroborates these predictions with a look at the current state of the market. According to him some of the biggest NFT projects that pioneered the sale of digital artwork still retain most of their value.

But the true value of NFTs goes beyond digital art. They have the potential to create use cases in the real world such as the sale of real estate and a way to prove ownership.

And for artists who think they have missed the NFT train, the trend could come again, so get your digital canvas and paintbrush ready.