The first tweet by Jack Dorsey, the founder and former CEO of the microblogging site, Twitter, which was sold as a non-fungible token (NFT) last year for $2.9 million, could be up for grabs for less than $14,000. Incidentally, data from Coinmarketcap.com also shows that the total sales of NFTs in the last seven days have declined by 17.24 per cent. Does this indicate a decline in people’s interest in NFTs? Is the NFT market crumbling?
For the uninitiated, NFTs are a type of digital assets that use blockchain to document the ownership of items, such as images, videos and other collectibles.
Some industry experts believe that the NFT market and other crypto assets have slowed down a bit because of the global uncertainty over the Russia-Ukraine War, inflation, and other factors.
“It cannot be said that the craze for NFTs is declining. Besides the several uncertainties related to the regulations, there are several other factors, too. But, even though the market has been a bit low, NFTs still have great potential for authentication using blockchain technology in the long run,” says Edul Patel, CEO and co-founder of Mudrex, a global algorithm-based Crypto Investment Platform.
For India, experts believe that NFT trading in India is on a go-slow mode, mostly due to the 30 per cent tax, as people will want to hold on to the assets till they get better clarity on tax laws, or, maybe till a reduction in the tax rate is announced.
“There have been reports of exchanges facing payment issues, yet again, and I believe this could be a reason as to why there is a slowdown. Once we can get some changes effected in the tax rules, we will see these transactions get back to normal,” says Anshul Dhir, co-founder and COO, EasyFi, a DeFi lending protocol platform.
Some experts believe that on a global level, there is no inherent danger to the NFT market, and that NFTs have a defined use case, helping creators and artists monetise their content, while also having a prominent community building aspect. “These are strong fundamentals, which will serve this sector well in the long-term. Having said that, the hype-based rise of certain NFTs has led to potential over-inflation in values. It is essential for investors to do their research and due diligence before investing in a particular NFT,” says Kazim Rizvi, founding director, The Dialogue, a public-policy think tank.
Crime has also touched the NFT domain in recent times. Singapore-based Chainalysis, in its 2022 crypto crime report, pointed out the threat of this new technology. According to the software company, a minimum of $44.2 billion worth of cryptocurrency has been sent to two types of smart contracts associated with the NFT marketplace. This is up from $106 million in 2020.
